<PAGE>
As filed with the Securities and Exchange Commission on November 8, 1999
Registration No. 333-85029
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
Amendment No. 1
to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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WYNDHAM INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-2878485
(I.R.S. EmployerIdentification No.)
(State or other jurisdiction of
incorporation or organization)
----------------
1950 Stemmons Freeway, Suite 6001, Dallas, Texas 75207
(214) 863-1000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
James D. Carreker
Chairman of the Board and Chief Executive Officer
1950 Stemmons Freeway
Suite 6001
Dallas, Texas 75207
(214) 863-1000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
J. Kenneth Menges, Jr., P.C.
N. Kathleen Friday, P.C.
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4675
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Approximate date of commencement of proposed sale to the public: As soon as
practicable following the effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
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The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this registration statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion, dated November 8, 1999
PROSPECTUS
Rights Offering of 3,000,000 Shares
WYNDHAM INTERNATIONAL, INC.
1950 Stemmons Freeway, Suite 6001
Dallas, Texas 75207
(214) 863-1000
Series A Convertible Preferred Stock
-----------
We are conducting this rights offering of 3,000,000 shares of our series A
convertible preferred stock to settle class action litigation relating to the
recent $1 billion equity investment in our series B convertible preferred stock
and our related restructuring in accordance with our right to conduct a single
rights offering under the terms of the purchase agreement related to the $1
billion investment. On September 17, 1999, we entered into a stipulation of
settlement agreement with the other parties to this litigation to settle this
litigation. On November 1, 1999, the court issued an order approving the
stipulation of settlement agreement.
Because you held either our class A common stock or limited partnership units
in Patriot American Hospitality Partnership, L.P. or Wyndham International
Operating Partnership, L.P. as of the close of business on September 30, 1999,
we have granted you rights to purchase shares of our series A preferred stock
for a price of $100.00 per share. We have granted you one right for each share
of our class A common stock that you held on that date. We have also granted
you 0.95 rights for each limited partnership unit of the Patriot partnership
and 0.05 rights for each limited partnership unit of the Wyndham partnership
that you held on that date. You may purchase one share of our series A
preferred stock for every 56.2772 rights granted to you.
Our class A common stock is traded on the New York Stock Exchange under the
symbol "WYN". On November 5, 1999, the last reported sale price for our class A
common stock was $3.0625 per share. We have applied for listing of our series A
preferred stock on the Nasdaq National Market under the symbol "WYNDP". We can
give you no assurances that our series A preferred stock will meet the
requirements for listing or that there will be an active trading market for our
series A preferred stock. We do not intend to list the rights on any exchange.
We cannot assure you that there will be an active trading market for the
rights. For more information on stock market risks, see "Risk Factors--Risks
Relating to Our Rights Offering--Stock Market Risks" on pages 11-12.
The rights expire at 5:00 p.m., New York City time, on December 8, 1999 if
not properly exercised before that date.
Our Board of Directors makes no recommendation to you about whether you
should exercise any rights.
<TABLE>
<CAPTION>
Total
(assuming this
offering is
Per Share completed in full)
--------- ------------------
<S> <C> <C>
Public Offering Price........................... $100 $300,000,000
Underwriting Discount........................... $ 0 $ 0
Proceeds, before expenses, to us................ $100 $300,000,000
</TABLE>
-----------
Investing in our series A preferred stock involves certain risks. See "Risk
Factors" beginning on page 11.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
The date of this prospectus is , 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING........................... 1
SUMMARY................................................................... 4
The Rights Offering..................................................... 4
Where You Can Find More Information..................................... 8
THE RESTRUCTURING......................................................... 10
RECENT DEVELOPMENTS....................................................... 11
RISK FACTORS.............................................................. 11
Risks Relating to Our Rights Offering................................... 11
Influence by New Investors.............................................. 12
We have substantial debt obligations; we may incur additional
indebtedness; most of our debt bears interest at a variable rate....... 13
We have grown rapidly and have acquired new businesses, which requires
us to integrate operations............................................. 14
Hotel Industry Risks.................................................... 14
Real Estate Risks....................................................... 15
Risks of Operating Hotels under Franchise or Brand Affiliations......... 17
Risks Relating to Gaming Operations..................................... 17
Year 2000 Compliance.................................................... 18
UNCERTAINTY OF FORWARD-LOOKING STATEMENTS................................. 20
USE OF PROCEEDS........................................................... 20
THE RIGHTS OFFERING....................................................... 21
Reasons for the Rights Offering......................................... 21
Neither our Board nor any committee of our Board makes any
recommendation on the Rights Offering.................................. 21
General Terms of the Rights Offering.................................... 21
The subscription agent is ChaseMellon Shareholder Services, L.L.C....... 22
The Rights.............................................................. 22
Purchase Price of Series A Preferred Stock.............................. 23
When the Rights Offering expires........................................ 23
Conditions relating to the Rights Offering.............................. 23
How to exercise your rights............................................. 23
How you should pay when you exercise your rights........................ 24
We will not issue fractional shares of series A preferred stock......... 24
Special Procedure under "Notice of Guaranteed Delivery" Form............ 24
What happens if you provide incomplete forms or make an insufficient or
excess payment......................................................... 25
What happens if you exercise less than all of your rights............... 25
Instructions to Nominee Holders......................................... 25
You bear the risk of loss on delivery of subscription warrant forms and
payments............................................................... 25
We resolve all procedural and other questions........................... 26
Do you have any questions or need assistance concerning exercising your
rights?................................................................ 26
You cannot revoke your exercise of rights............................... 26
How to transfer your rights............................................. 26
Procedures for Nominees who are DTC Participants........................ 27
Foreign and Unknown Addresses........................................... 27
We may reject your exercise for regulatory issues....................... 28
</TABLE>
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<TABLE>
<CAPTION>
Page
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<S> <C>
We will make no adjustment to outstanding stock options or other
stock awards........................................................ 28
Amendment, Extension and Withdrawal.................................. 28
Issuance of Stock Certificates....................................... 28
Certain Federal Income Tax Consequences.............................. 28
DESCRIPTION OF SERIES A PREFERRED STOCK................................ 31
Dividends............................................................ 31
Conversion into class A common stock at the option of the holder..... 31
Optional Redemption.................................................. 34
Voting Rights........................................................ 34
Consolidation or Merger.............................................. 34
Ability to receive preferential cash payment or convert upon change
of control or liquidation........................................... 35
No Preemptive Rights................................................. 37
DESCRIPTION OF CLASS A COMMON STOCK.................................... 37
LEGAL MATTERS.......................................................... 38
EXPERTS................................................................ 38
CERTIFICATE OF DESIGNATION OF SERIES A CONVERTIBLE PREFERRED STOCK..... Annex A
</TABLE>
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QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING
What is a right?
A right enables you to purchase our series A preferred stock. You may purchase
one share of our series A preferred stock at $100.00 per share for every
56.2772 rights granted to you.
How many rights will I receive?
You will receive one right for each share of our class A common stock held by
you on the record date, which was the close of business on September 30, 1999.
You will also receive 0.95 rights for each limited partnership unit of the
Patriot partnership and 0.05 rights for each limited partnership unit of the
Wyndham partnership held by you at the close of business on September 30, 1999.
You will receive a certificate evidencing these rights.
Why do I need to exercise 56.2772 rights to purchase one share of series A
preferred stock?
As of the close of business on September 30, 1999, we had outstanding
167,661,671 shares of our class A common stock, 1,169,966 limited partnership
units of the Patriot partnership and 1,169,966 limited partnership units of the
Wyndham partnership. Because we have granted one right for each share of class
A common stock, 0.95 rights for each limited partnership unit of the Patriot
partnership and 0.05 rights for each limited partnership unit of the Wyndham
partnership held, we granted in the aggregate 168,831,637 rights. As a result,
because we are offering 3,000,000 shares of series A preferred stock in this
rights offering, you must exercise 56.2772 rights to acquire one share.
Can I buy more shares of series A preferred stock than the number of rights
that I receive?
No. If any holders of our class A common stock or limited partnership units do
not exercise their rights, the series A preferred stock subject to those rights
will not be sold in this offering. However, the rights are transferable. If you
purchase additional rights in the market, you may exercise those rights as
well.
Why did you grant rights?
In connection with the settlement of litigation relating to the recent $1
billion equity investment in our series B preferred stock and our related
restructuring, we agreed to offer our series A preferred stock to existing
holders of our class A common stock and limited partnership units of the
Patriot partnership and the Wyndham partnership in accordance with our right to
conduct a single rights offering under the terms of the purchase agreement
related to the $1 billion equity investment. For more information on our
reasons for this offering, please see page 21.
How will you use the proceeds from this offering?
We will use the proceeds from this offering to repurchase a portion of the
series B preferred stock.
How does your series A preferred stock compare to your series B preferred
stock?
Except for voting rights, our series A preferred stock is substantially
identical to our series B preferred stock, including the same purchase price of
$100.00 per share, the same dividend rate, and the same conversion rate into
our common stock. In addition, each share of our series B preferred stock is
convertible at any time into one share of our series A preferred stock.
Finally, our series B preferred stock is not publicly traded but the holders
thereof may demand that we register their series B preferred stock for public
trading.
What forms and payment are required to purchase shares?
You received along with this prospectus a subscription warrant and instructions
on how to purchase shares. You must properly fill out, execute and deliver the
subscription warrant along with full payment to ChaseMellon Shareholder
Services, L.L.C., the subscription agent, before the expiration date of the
rights offering. You may also use an alternate procedure called "Notice of
Guaranteed Delivery," which allows an extra three days to deliver the
subscription warrant if full payment is
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received before the expiration date and a securities broker or qualified
financial institution signs the form to guaranty that the subscription warrant
will be timely delivered. See pages 24-25 for further information regarding
this procedure.
When does the rights offering expire?
The rights offering expires at 5:00 p.m., New York City time, on December 8,
1999 (unless we extend this date). You must return, and ChaseMellon Shareholder
must actually receive, your required documents and payment before that time.
Does the Wyndham Board of Directors recommend exercising the rights?
Our Board of Directors makes no recommendation to you about whether you should
exercise any rights.
How will I be affected if I do not exercise any rights?
You are not required to exercise any rights or otherwise take any action in
response to this offering. If you do not exercise any rights, the number of
shares that you own will not change. But, if this offering is completed, your
beneficial ownership of our outstanding class A common stock will decline when
compared to other holders of class A common stock or limited partnership units
who exercise their rights. However, because we will use the cash proceeds of
this offering to repurchase shares of series B preferred stock, you will still
beneficially own the same percentage of our class A common stock when compared
to all beneficial owners.
What if a broker, bank or other nominee is the record holder of my class A
common stock?
If you wish to exercise your rights and purchase our series A preferred stock,
please promptly contact the broker, bank or other company holding your class A
common stock. Your broker or other nominee record holder must exercise the
rights on your behalf for shares you wish to purchase or arrange for a
subscription warrant to be issued in your name so that you may directly
exercise the rights.
May I transfer rights?
You may transfer or sell rights according to the instructions that accompany
this prospectus through your broker or ChaseMellon Shareholder. We cannot
ensure that the rights will have any value or can be sold. We do not intend to
list the rights on any exchange.
You may also wish to transfer rights to allow your broker or another person to
exercise your rights for you. The forms on the reverse side of the subscription
warrant contain instructions for these types of transfers. For more information
regarding your ability to transfer rights, please see pages 26-27.
Do I have to pay the purchase price in cash?
You must timely pay the purchase price by wire transfer, certified or cashier's
check drawn on a U.S. bank, U.S. postal money order, or personal check that
clears before the expiration date.
What if my rights result in fractional shares?
You may not purchase fractional shares of our series A preferred stock. If your
rights would allow you to purchase a fractional share, you may exercise them
only by rounding down to and paying for the nearest whole share, or paying for
any lesser number of whole shares.
Will my money be returned if this offering is cancelled?
Yes, but without any payment of interest.
What fees or charges apply if I purchase shares or attempt to sell my rights?
We are not charging any fee or sales commission to issue rights to you or to
issue series A preferred stock to you if you exercise rights. If you exercise
rights through a broker or other holder of your shares, you are responsible for
paying any fees that person may charge. If you elect to sell your rights, you
are also responsible for any fees or sales commissions that may apply to that
transaction.
May I change or cancel my exercise of rights after I send in the required
forms?
No.
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To whom do I direct questions?
If you have any questions or requests for assistance concerning how to exercise
your rights or if you need additional copies of the offering documents, please
call or write ChaseMellon Consulting Services, L.L.C., the information agent,
at:
ChaseMellon Consulting Services, L.L.C.
450 W. 33rd Street
Fourteenth Floor
New York, NY 10001
Telephone: (888) 224-2745
You will not pay any fees for your questions or requests. If you wish to call
us for additional copies of the offering documents, please call our Shareholder
Relations department at (214) 863-1000.
3
<PAGE>
SUMMARY
This summary highlights some of the information provided elsewhere in this
prospectus. The summary is not complete and may not provide all the information
you should consider before deciding whether or not to exercise the rights. You
should read the entire prospectus carefully. Certain portions of this
prospectus, such as "Risk Factors," are not summarized below. See "Risk
Factors" beginning on page 11.
The Rights Offering
For further details concerning this part of the summary, please see "The
Rights Offering" beginning on page 21.
Securities Offered............ We are offering 3,000,000 shares of our series
A preferred stock, which we will issue upon
exercise of the rights.
Record Date...................
September 30, 1999.
Expiration Date and Time......
The rights offering expires at 5:00 p.m., New
York City time, on December 8, 1999 (unless we
extend the expiration date). If you do not
exercise your rights before the expiration
time, your rights will be void and you will not
be able to exercise your rights in the future.
Rights........................
We have granted each person who was a record
holder of our class A common stock as of the
close of business on the record date one right
for each share of our class A common stock then
held. We have also granted each person who was
a record holder of a limited partnership unit
in the Patriot partnership as of the close of
business on the record date 0.95 rights for
each unit then held, and we have granted to
each person who was a record holder of a
limited partnership unit in the Wyndham
partnership as of the close of business on the
record date 0.05 rights for each unit then
held.
Number of Rights You Must
Exercise to Purchase a Share
of Series A Preferred
Stock........................
You may purchase one share of our series A
preferred stock for every 56.2772 rights
granted to you. As of September 30, 1999, we
had outstanding 167,661,671 shares of our class
A common stock, 1,169,966 limited partnership
units of the Patriot partnership and 1,169,966
limited partnership units of the Wyndham
partnership. Because we have granted one right
for each share of class A common stock, 0.95
rights for each limited partnership unit of the
Patriot partnership and 0.05 rights for each
limited partnership unit of the Wyndham
partnership held, we granted in the aggregate
168,831,637 rights. As a result, because we are
offering 3,000,000 shares in this rights
offering, you must exercise 56.2772 rights to
acquire one share of series A preferred stock.
Purchase Price................ $100.00 per share of series A preferred stock,
payable in cash.
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Terms of Our Series A Our series A preferred stock will have the
Preferred Stock.............. following terms, among others:
. dividends payable quarterly, on a cumulative
basis, at a rate of 9.75% per year (the
first quarterly dividend payment will be pro
rated based on the number of days in the
first quarterly dividend period that the
series A preferred stock is actually
outstanding);
. through June 30, 2005, the dividends are
structured to ensure a fixed cash dividend
payment of $2.925 per year for each share of
series A preferred stock; dividends through
June 30, 2005 are payable partly in cash and
partly in additional shares of Series A
preferred stock, with the cash component
initially equal to approximately 30% for the
first dividend and declining over the period
to approximately 19.8% for the final
dividend in 2005;
. from June 30, 2005 through June 30, 2009,
dividends are payable in cash or additional
shares of series A preferred stock as
determined by our Board of Directors;
. after June 30, 2009, dividends are payable
only in cash;
. if any dividends (other than dividends
payable in additional shares of class A
common stock) are paid on our class A common
stock, additional dividends will be paid on
our series A preferred stock on an as-
converted basis;
. if a change in control or a liquidation of
us occurs on or before June 30, 2005, any
dividends remaining for the period will be
accelerated and paid;
. not redeemable by us on or before June 30,
2005;
. voting rights as specified by law; and
. convertible, at the holder's option, into a
number of shares of our class A common stock
equal to $100.00 divided by the conversion
price, initially equal to $8.59 but subject
to potential downward adjustments.
Reasons for this Offering.....
We agreed to conduct this offering to settle
class action litigation relating to the recent
$1 billion equity investment in our series B
preferred stock and our related restructuring
in accordance with our right to conduct a
single rights offering under the terms of the
purchase agreement related to the $1 billion
equity investment. On September 17, 1999, we
entered into a stipulation of settlement
agreement with the other parties to this
litigation to settle this litigation. On
November 1, 1999, the court issued an order
approving the stipulation of settlement
agreement. For more information on our reasons
for this offering, please see page 21.
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Use of Proceeds............... We will use the proceeds from this offering to
redeem a portion of the series B preferred
stock.
Basis for Purchase Price of
Series A Preferred Stock.....
The purchase price was agreed upon by the
parties to the litigation initiated in
connection with our recent restructuring. Our
Board of Directors approved the purchase price.
No Board or Committee
Recommendation............... Neither our Board of Directors nor any
committee of our Board makes any recommendation
to you regarding the exercise of rights under
this offering.
Participation or Trading by
Officers, Directors and Our officers and directors and their respective
Investors.................... affiliates, as well as the investors who
purchased our series B preferred stock, may
buy, exercise or sell rights.
Conditions to the Rights
Offering..................... The following conditions must be met or waived
before the rights offering can be completed:
. there must be no pending court order,
motion, legal proceeding or other action to
enjoin, prevent or delay this offering;
. this offering and the redemption of a
portion of the series B preferred stock with
the proceeds from this offering must be
completed on or before December 17, 1999;
and
. the court order approving the stipulation of
settlement agreement must become final and
non-appealable.
Transferability of Rights..... The rights are transferable. We do not intend
to list the rights on any exchange. We cannot
assure you as to whether a trading market for
the rights will develop. We provide no
assurance that you will be able to transfer or
sell your rights or as to the price that you
may transfer or sell your rights.
No Revocation.................
If you exercise any rights, you are not allowed
to revoke or change the exercise or request a
refund of monies paid.
Subscription Agent............ ChaseMellon Shareholder Services, L.L.C.
Information Agent.............
ChaseMellon Consulting Services, L.L.C.
Telephone: (888) 224-2745.
Procedure for Exercising
Rights.......................
To exercise rights, you must complete the
subscription warrant and deliver it to
ChaseMellon Shareholder Services, L.L.C. with
full payment for the rights you elect to
exercise. ChaseMellon Shareholder must receive
the proper forms and payments on or before the
expiration date. You may deliver the documents
and payments by mail or commercial courier. The
ChaseMellon Shareholder addresses for this
delivery are on page 22 and on
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the subscription warrant instructions
accompanying this prospectus. If you use
regular mail for this purpose, we recommend
using insured, registered mail. You may use an
alternative "Guaranteed Delivery Procedure" if
you are unable to deliver the subscription
warrant before the expiration date. There are,
however, certain requirements of this
procedure. Please see "Special Procedure under
Notice of Guaranteed Delivery' Form" beginning
on pages 24-25 for further information on this
procedure.
Payment Adjustments...........
If you send a payment that is insufficient to
purchase the number of shares requested, or if
the number of shares requested is not specified
in the forms you return, ChaseMellon
Shareholder will apply the payment received to
exercise rights to the extent of the payment.
If your payment exceeds the purchase price for
the full exercise of rights, ChaseMellon
Shareholder will refund that excess as soon as
practicable. We will not pay interest on any
payments received in this offering.
Nominee Accounts.............. If you wish to purchase shares in this offering
and your class A common stock is held by a
securities broker, bank, trust company or other
nominee, you should promptly contact those
record holders and request that they exercise
rights on your behalf. You may also contact the
nominee and request that the nominee send a
separate subscription warrant to you.
If you are a record holder who wishes an
institution such as a broker or bank to
exercise your rights for you, you should
contact that institution promptly to arrange
that method of exercise. If you are a nominee
that desires subscription warrants re-issued in
smaller denominations, you must act promptly
under special procedures described under "How
to Transfer Your Rights" beginning on page 26.
You are responsible for the payment of any fees
that brokers or other persons holding your
class A common stock may charge.
Exercise by Foreign and
Certain Other Stockholders...
ChaseMellon Shareholder will hold subscription
warrants for holders of our class A common
stock or holders of limited partnership units
in the Patriot partnership or the Wyndham
partnership having addresses outside the United
States. In order to exercise rights, these
holders must notify ChaseMellon Shareholder and
timely follow the other procedures discussed in
this prospectus on or before the expiration
date.
U.S. Income Tax
Consequences.................
For United States federal income tax purposes,
if you received rights as a holder of our class
A common stock, we intend to take the position
that you should not recognize taxable income
upon receiving rights. If you received rights
as a holder of limited partnership units of the
Patriot partnership or the
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Wyndham partnership, you could, in certain
circumstances, recognize taxable income upon
receiving rights. In either case, you will not
recognize taxable income upon exercising
rights. Also, if you sell the rights, you may
recognize either a gain or loss depending on
the amount realized and your basis in the
rights. You should consult your own tax adviser
concerning the tax consequences of this
offering under your own tax situation. This
prospectus does not summarize tax consequences
arising under state tax laws, non-U.S. tax
laws, or any tax laws relating to special tax
circumstances or particular types of taxpayers.
For further information on tax consequences,
please see pages 28-31.
Stock Certificates............
We will deliver as soon as practicable after
the expiration date stock certificates
representing shares of our series A preferred
stock to those who purchase shares by
exercising rights.
Amendment, Extension and We will hold open our rights offering until the
Termination.................. expiration date. We may extend the expiration
date. However, we may not amend or withdraw our
rights offering.
Where You Can Find More Information
We file annual, quarterly and special reports and other information with the
Securities and Exchange Commission. You may read and copy any document we file
with the SEC at its public reference rooms in Washington, D.C., New York, New
York and Chicago, Illinois. You may call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available
to you free of charge at the SEC's web site at http://www.sec.gov. In addition,
our SEC filings are also available from the New York Stock Exchange, 20 Broad
Street, New York, New York 10005.
We filed a registration statement on Form S-3 to register with the SEC the
shares of our series A preferred stock to be offered hereby and the shares of
our class A common stock that our series A preferred stock may be converted
into. This prospectus is a part of that registration statement. As allowed by
SEC rules, this prospectus does not contain all of the information you can find
in the registration statement or the exhibits to the registration statement.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The
information incorporated by reference is considered to be part of this
prospectus, and information that we file later with the SEC will automatically
update and supersede the information in this prospectus.
We incorporate by reference the documents listed below and, until this
offering has been completed, any future filings we will make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934:
1. Annual Report on Form 10-K (as amended on May 10, 1999, May 24, 1999,
and May 28, 1999) of Patriot American Hospitality, Inc. and us for the
year ended December 31, 1998;
2. Our Quarterly Report on Form 10-Q for the three months ended June 30,
1999;
3. Quarterly Report on Form 10-Q of Patriot and us for the three months
ended March 31, 1999;
4. Our Current Reports on Form 8-K dated: (1) August 19, 1999 (filed August
24, 1999); (2) September 17, 1999 (filed September 22, 1999); (3)
November 8, 1999 (filed November 8, 1999);
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5. Current Reports on Form 8-K of Patriot and us dated: (1) January 5, 1998
(filed January 13, 1998); (2) February 9, 1998 (filed February 12,
1998); (3) March 23, 1998 (filed March 30, 1998); (4) April 2, 1998
(filed April 8, 1998); (5) April 20, 1998 (filed April 22, 1998); (6)
May 27, 1998, as amended (filed May 27, 1998 and May 28, 1998); (7) June
2, 1998, as amended (filed June 17, 1998, August 6, 1998 and March 26,
1999); (8) November 9, 1998, as amended (filed November 9, 1998 and
November 10, 1998); (9) November 30, 1998 (filed November 30, 1998);
(10) December 16, 1998 (filed December 16, 1998); (11) December 16, 1998
(filed December 18, 1998); (12) December 20, 1998 (filed December 22,
1998); (13) January 29, 1999 (filed February 4, 1999); (14) February 16,
1999 (filed February 16, 1999); (15) March 2, 1999 (filed March 2,
1999); (16) February 26, 1999 (filed March 3, 1999); (17) March 26, 1999
(filed March 26, 1999); (18) March 26, 1999, as amended (filed on March
29, 1999, May 10, 1999, May 24, 1999 and September 3, 1999); (19) June
29, 1999 (filed July 12, 1999); (20) June 30, 1999 (filed July 13,
1999);
6. The description of our series A preferred stock, which is contained in
our Registration Statement on Form 8-A/A, dated November 4, 1999;
7. The description of our class A common stock, which is contained in our
Registration Statement on Form 8-A/A, dated August 11, 1999; and
8. The description of our series C junior preferred stock purchase rights,
which is contained in our Registration Statement on Form 8-A/A, dated
August 11, 1999.
You may request free copies of these filings by writing or telephoning us at
the following address:
Wyndham International, Inc.
1950 Stemmons Freeway
Suite 6001
Dallas, Texas 75207
Attn: Shareholder Relations
(214) 863-1000
You should rely on the information incorporated by reference or provided in
this prospectus. We have authorized no one to provide you different
information. We are not making an offer of these securities in any state where
the offer is not permitted. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the front of the
document.
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THE RESTRUCTURING
On June 30, 1999, we consummated the $1 billion equity investment in our new
series B convertible preferred stock and our related restructuring. With
respect to this investment, investors including affiliates of Apollo Real
Estate Management III, L.P., Apollo Management IV, L.P., Thomas H. Lee Equity
Fund IV, L.P., Beacon Capital Partners, L.P., and Strategic Real Estate
Investments I, LLC purchased for $1 billion in cash shares of our series B
preferred stock representing 41% of the voting power of our capital stock then
outstanding. In connection with this investment, we restructured our existing
organization. Patriot American Hospitality, Inc. became a wholly-owned
subsidiary of us and the pairing agreement between Patriot and us was
terminated. In addition, Patriot's status as a real estate investment trust
terminated effective January 1, 1999, and Patriot became a taxable corporation
as of that date. As a result of the termination of Patriot's REIT status, we
took a one-time accounting charge of approximately $675 million relating to a
deferred tax liability. As part of this investment, the following, among other
things, also occurred on June 30, 1999:
. we entered into a new $1.8 billion senior credit facility with The Chase
Manhattan Bank consisting of $1.3 billion in term loans with a term
expiring on June 30, 2006 and a $500 million revolving credit facility
with a term expiring on June 30, 2004;
. we entered into a $650 million increasing rate loan facility maturing
June 30, 2004 with The Chase Manhattan Bank and The Bear Stearns
Companies, Inc.;
. we entered into (1) a $346 million mortgage loan with Bear, Stearns
Funding, Inc. secured by a first lien on 25 of our hotel properties, and
(2) a $235 million mortgage loan with Lehman Brothers Holding, Inc.
secured by a first lien on 10 other of our hotel properties;
. we used proceeds from the $1 billion equity investment to settle all
forward equity contracts in cash;
. we retired or refinanced all of our bank debt that existed immediately
before we consummated this investment; and
. our Board of Directors was restructured to consist of eight "class A"
directors designated by our Board members who were serving immediately
before we consummated this investment, eight "class B" directors
designated by the investors, and three "class C" directors agreed upon
by our Board members serving immediately before the investment and the
investors.
For more information on the restructuring, please see our Quarterly Report
on Form 10-Q for the quarter ended June 30, 1999. If you wish to obtain copies
of and examine our Form 10-Q, please see "Summary--Where You Can Find More
Information" on pages 8-9.
In May, 1999, we hired Richard Mahoney as Chief Financial Officer and, on
July 12, 1999, we hired Fred J. Kleisner as President and Chief Operating
Officer. Messrs. Mahoney and Kleisner together have more than 35 years of
experience in the hotel industry. Mr. Kleisner most recently served with
Starwood Hotels and Resorts Worldwide, Inc. where he directed operations for
all the Starwood Hotel Group brands in North America, Central America, South
America, Hawaii and the Caribbean. Mr. Mahoney previously served as executive
vice president and chief operating officer of Starwood's gaming division and
before that as chief financial officer of Westin Hotels & Resorts.
We are currently pursuing ways to strengthen our competitive position by
capitalizing on the financial and operating flexibility provided by our
restructuring. Our growth strategy will focus on upgrading existing properties,
maximizing our portfolio mix, including exploring strategic divestitures, and
maximizing the value of our Wyndham brand. In addition, we are undertaking
several measures to streamline our organization. We believe that if our
strategic initiatives are successful, we will enhance stockholder value.
However, we cannot assure you that any or all of these initiatives will be
successful.
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RECENT DEVELOPMENTS
Announcement of Third Quarter Results
On November 8, 1999, we announced our operating results for the three months
ended September 30, 1999. We have filed this announcement with the SEC as part
of a Current Report on Form 8-K dated November 8, 1999, and the Form 8-K is
incorporated by reference into this prospectus. The announcement contains
information about our recent operating results, our business plans and our
expectations about our future results. If you wish to obtain copies of and
examine our Form 8-K dated November 8, 1999, please see "Summary--Where You Can
Find More Information" on pages 8-9.
Announcement of Our Intent to Sell the Arcadian and European Development
Properties
On June 14, 1999, we announced our intention to sell the 11 historic styled
hotels of Arcadian International Limited based in the United Kingdom. We also
plan to sell our European development properties. Since June 14, 1999, we have
actively publicly marketed these assets. However, we cannot assure you that we
will obtain terms satisfactory to us in order to complete the sales of these
assets or that any proposed sale of these assets, if completed, will result in
either a profit or a loss against the recorded book value of these assets.
RISK FACTORS
You should carefully consider the risks described below and the other
information in this prospectus before deciding to purchase series A preferred
stock in this offering. Our series A preferred stock is subject to significant
investment risks. Many factors, including the risks described below, could
cause our operating results to be different from our expectations and plans.
Risks Relating to Our Rights Offering
Dilution. Holders of our class A common stock or limited partnership units
in the Patriot partnership or the Wyndham partnership who do not exercise their
rights will not acquire shares of our series A preferred stock. Thus, they will
beneficially own a smaller percentage of our outstanding class A common stock
when compared to the other holders of our class A common stock or limited
partnership units who exercise their rights. However, because we will use the
cash proceeds of this offering to repurchase shares of the investors' series B
preferred stock, the holders who do not exercise their rights will still
beneficially own the same percentage of our class A common stock when compared
to all beneficial owners of our class A common stock, even if the investors
acquire rights in the open market and whether or not they choose to exercise
them.
Stock Market Risks. We do not intend to list the rights on an exchange. We
do not know the extent to which a trading market will develop for the rights,
how liquid that market might be, or the price at which the rights may trade.
Future prices of our capital stock may be affected positively or negatively by
our future revenues and earnings, changes in estimates by analysts, our ability
to meet analysts' estimates, speculation in the trade or business press about
us, and overall conditions affecting our industry, general economic trends and
the stock market. We cannot assure you that the purchase price set by this
offering will remain below any trading prices of our series A preferred stock,
or that trading prices of our series A preferred stock or our class A common
stock will not decline during or after this offering.
The $100 purchase price for our series A preferred stock was agreed to by
the parties to the litigation related to the investors' $1 billion equity
investment in our series B preferred stock and our related restructuring. The
trading price of our series A preferred stock will most likely be based on the
market price of the underlying class A common stock and the value given to the
dividend rights and other rights and preferences of our series A preferred
stock. As of November 5, 1999, the closing price per share of our class A
common stock was $3.0625. Therefore, if the market price of our class A common
stock does not increase, our series A preferred stock may trade, if at all, at
a price that is less than the $100 per share purchase price you will pay.
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There is currently no public market for our series A preferred stock. We
have applied for listing of our series A preferred stock on the Nasdaq National
Market. We can give you no assurances that our series A preferred stock will
meet the requirements for listing on the Nasdaq National Market, including the
requirements that there be at least 1.1 million publicly-held shares and at
least 400 round lot shareholders. If our series A preferred stock does not meet
these listing requirements, it could trade in the over-the-counter market.
However, we can give no assurances that a trading market will develop in the
over-the-counter market. Even if our series A preferred stock is listed on the
Nasdaq National Market, we do not know if a public market for this stock will
develop, how liquid any market may be, or the price at which this stock may
trade. In addition, until June 30, 2005, a portion of each quarterly dividend
on the series A preferred stock will be paid in additional shares (including
fractional shares) of series A preferred stock. The fractional shares cannot be
traded on the Nasdaq National Market.
No Revocation. You are not allowed to revoke or change your exercise of
rights after you send in your subscription forms and payment. If certain
conditions to this offering are not met and it is canceled, we will only refund
payments actually received, without interest.
Need to Act Promptly and Follow Subscription Instructions. If you wish to
purchase series A preferred stock in this offering or to transfer or sell your
rights, you must act promptly to ensure that all of your required forms and
payments are actually received by ChaseMellon before the expiration date. If
you fail to complete and sign the required subscription forms, send an
incorrect payment amount, or otherwise fail to follow the subscription
procedures that apply to your desired transaction, ChaseMellon may, depending
on the circumstances, reject your subscription or accept it to the full extent
of the payment received. Neither we nor ChaseMellon undertake to contact you
concerning, or to attempt to correct, an incomplete or incorrect subscription
form. We have the sole discretion to determine whether a subscription exercise
properly follows the subscription procedures.
Risk of Personal Checks. If you pay for series A preferred stock by personal
check, it must clear before the expiration date. The check clearing process may
take five or more business days.
Delay in Ability to Resell Shares. If you exercise rights, you cannot resell
your series A preferred stock until you (or your broker or other nominee) have
received a stock certificate for that stock. Although we will attempt to issue
the appropriate certificates as soon as practicable after we complete this
offering, there may be some delay between the expiration date and the time we
issue new stock certificates.
Influence by New Investors
As a result of their $1 billion investment in our series B preferred stock,
as of June 30, 1999, the investors held approximately 41% of the voting power
of our capital stock. The investors are entitled to vote on all matters voted
on by the holders of our capital stock except that special rules apply in the
case of the election of directors under which the holders of our class A common
stock effectively control the election of the class A directors. Each share of
our series B preferred stock held by the investors entitles the holder to cast
the same number of votes as the holder would have been able to cast if its
shares were converted into our class B common stock. On this "as converted"
basis, the investors held as of June 30, 1999 approximately 41% of the voting
power of our capital stock. Because a portion of dividends paid to the
investors on their series B preferred stock is to be paid in additional shares
of series B preferred stock, assuming we issue no other voting shares and
without taking into account any redemption of series B preferred stock with the
cash proceeds from this offering, the "as converted" voting power of the
investors would rise to approximately 52% by June 30, 2005. As part of their
investment, however, the investors agreed not to acquire or hold, at any time
before June 30, 2005, any shares of our common stock or any securities
convertible into our common stock, except by conversion of their series B
preferred stock and other exceptions. Also, the investors' voting power would
be reduced to approximately 33% immediately following this offering, and 43% by
June 30, 2005, if this offering is completed in full and the proceeds are used
to redeem $300 million of the investors' series B preferred stock. In addition,
the investors' voting power would be further reduced to approximately 29%
immediately following
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this offering, and 36% by June 30, 2005, if all of the series A preferred stock
were immediately converted into class A common stock following this offering.
The investors are not prohibited from purchasing rights in the market or from
exercising such rights or allowing them to expire. To the extent the investors
do so, their equity interest in us will not decrease.
As of the date of this prospectus, the investors are entitled to appoint
eight of 19 members of our Board of Directors. The investors also have the
right to vote with the holders of our class A common stock on an "as converted"
basis for the election of three additional directors. The investors therefore
have significant influence over the election of our directors.
The investors' influence may have the effect of discouraging a third party
from making an acquisition proposal for us and, consequently, may delay or
prevent a future change of control of us. In addition to their significant
voting power discussed above, the investors have special voting rights
concerning amendments to our certificate of incorporation affecting Board
composition, voting rights of stockholders and indemnification of stockholders
and directors. The investors also have special voting rights on amendments to
our shareholders rights plan and special approval rights over "change of
control" transactions. Upon a change of control, the investors may either
redeem for cash or convert for our class B common stock all of their series B
preferred stock, together with all dividends that would have been paid through
June 30, 2005. All accelerated dividends would be treated as if they were paid
solely in the form of additional shares of series B preferred stock rather than
cash.
We have substantial debt obligations; we may incur additional indebtedness;
most of our debt bears interest at a variable rate
As of September 30, 1999, our outstanding debt was approximately $3.5
billion and our ratio of debt to total stockholders" equity was approximately
154%. Our aggregate outstanding debt includes the following:
. Senior Credit Facility. We have a senior credit facility comprised of
(1) term loans in an aggregate principal amount of $1.3 billion expiring
on June 30, 2006, and (2) a revolving loan facility in an aggregate
principal amount of up to $500 million expiring on June 30, 2004. As of
September 30, 1999, we had borrowed $100 million under the revolving
loan facility. The senior credit facility is guaranteed by our domestic
subsidiaries and secured by pledges of our equity interests and the
equity interests of our subsidiaries.
. Increasing Rate Loans. We have an increasing rate loan facility in the
aggregate principal amount of $650 million which expires on June 30,
2004. The lenders under the increasing rate loans receive the benefit of
the same guarantees and pledges of security provided under the senior
credit facility.
. New Mortgage Debt. On June 30, 1999, we closed on a $346 million
mortgage loan secured by first liens on 25 of our hotel properties
located throughout the United States and closed on a $235 million
mortgage loan secured by first liens on 10 other of our hotel properties
located throughout the United States. A separate special purpose entity
subsidiary of ours owns each of the hotel properties subject to the
liens.
. Other Mortgage Debt. As of September 30, 1999, we had outstanding $883
million of other mortgage and secured debt. The mortgage debt has a
weighted average interest rate of 7.75% and a weighted average remaining
life of 5.5 years. This mortgage debt is secured by 48 of our
properties.
We also may borrow additional amounts from the same or other lenders in the
future, may assume debt in connection with acquisitions, or may issue corporate
debt securities in public or private offerings. Our organizational documents do
not limit the amount of indebtedness we may incur. However, our ability to
borrow under the revolving credit facility is subject to our compliance with a
number of customary financial and other covenants, including total leverage and
interest coverage ratios. Our inability to borrow under the revolving credit
facility could adversely affect our ability to fund operations or expand our
business. Further,
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substantially all of our debt bears interest at a variable rate. Economic
conditions could result in higher interest rates, which could increase debt
service requirements on variable rate debt. Our debt service requirements will
require the use of a substantial portion of our operating cash flow to pay
interest on our debt instead of for other corporate purposes.
There can be no assurance that we will be able to meet our debt service
obligations and, to the extent that we cannot, we may lose some or all of our
assets, including hotel properties. Adverse economic conditions could cause the
terms on which we borrow to worsen. Those circumstances, if we are in need of
funds to repay indebtedness, could force us to liquidate one or more
investments in properties at times that may not permit realization of the
maximum return on those investments.
The foregoing risks associated with our debt obligations may inhibit our
ability to raise capital in both the public and private markets and may have a
negative impact on our credit rating.
We have grown rapidly and have acquired new businesses, which requires us to
integrate operations
We have recently experienced a period of rapid growth. We are responsible
for the management and operation of several new businesses, including direct
hotel management, and branding and franchising, which previously were not part
of our operations. In addition, we may acquire other new businesses in the
future. The integration of departments, systems and procedures presents a
significant management challenge, and the failure to integrate new acquisitions
into existing management and operating structures could have a material adverse
effect on our results of operations and financial condition.
Hotel Industry Risks
Operating Risks. Our primary business is buying, selling, leasing and
managing hotels. This business is subject to operating risks common to the
hotel industry, including:
. competition for guests from other hotels, a number of which may have
greater marketing and financial resources and experience than us and our
hotel management companies;
. increases in operating costs due to inflation and other factors, which
may not be offset by increased room rates;
. dependence on business and commercial travelers and tourism, which may
fluctuate and be seasonal;
. increases in energy costs and other travel expenses, which may deter
travelers; and
. adverse effects of general and local economic conditions.
These factors could adversely affect our ability to generate revenues and
our financial condition and results of operations.
We may be unable to obtain or transfer necessary operating licenses in hotel
acquisitions. When we acquire hotels or hotel operating companies, we may be
unable to transfer certain operating licenses or obtain new licenses in a
timely manner, such as food and beverage licenses. Although hotels can sell
alcoholic beverages under interim licenses or licenses obtained before we
acquire them, there can be no assurance that these licenses will remain in
effect until we (or the hotel management company) obtain new licenses. If a
hotel fails to have a food and beverage license or other operating licenses,
this failure would adversely affect the hotel's ability to generate revenues
and could adversely affect our financial condition and results of operations.
Hotel Renovation Costs and Capital Expenditures. In general, hotels have an
ongoing need for renovations and other capital improvements, particularly in
older structures, including periodically replacing or refurbishing furniture,
fixtures and equipment. Under the terms of participating leases, we must
establish a reserve to pay for certain capital expenditures and for
periodically replacing or refurbishing furniture, fixtures
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and equipment. If capital expenditures exceed our expectations, this excess
would have an adverse effect on our available cash. In addition, we may acquire
hotels that require significant renovation. When we renovate hotels, we incur
risks, including the risk of environmental problems, construction cost overruns
and delays, uncertainties as to market demand after we renovate, market demand
deterioration after we begin renovating, and unanticipated competition emerging
from other hotels.
Competition For Hotel Acquisition Opportunities. We may be competing for
hotel acquisition opportunities with entities that have substantially greater
financial resources. These entities may generally be able to accept more risk
than we can prudently manage, including risks of a hotel operator's
creditworthiness or a target hotel's geographic location. Competition may
generally reduce the number of hotel acquisition opportunities that we believe
suitable.
Seasonality. The hotel industry is seasonal in nature. Revenues at certain
hotels are greater in the first and second quarters of a calendar year and at
other hotels in the second and third quarters of a calendar year. Seasonal
variations in hotel revenues may cause quarterly fluctuations in our operating
revenues.
Real Estate Risks
General Risks. Our ability to generate revenues from our hotels may be
adversely affected by risks common to the ownership, lease or operation of real
property, including:
. changes in national economic conditions;
. changes in local market conditions due to changes in general or local
economic conditions and neighborhood characteristics;
. changes in interest rates;
. changes in the availability, cost and terms of mortgage funds;
. the impact of present or future environmental legislation and compliance
with environmental laws;
. the ongoing need for capital improvements, particularly in older
structures;
. changes in real estate tax rates and other operating expenses;
. adverse changes in governmental rules and fiscal policies;
. adverse changes in zoning laws;
. civil unrest;
. acts of God, including earthquakes and other natural disasters (which
may result in uninsured losses); and
. other factors that are beyond our control.
Value and Illiquidity of Real Estate. Real estate is a relatively illiquid
asset. Therefore, our ability to respond to changes in economic and other
conditions will be limited. If we must sell a property, there can be no
assurance that we will be able to dispose of it in the time period we desire or
that the sales price of any property will equal or exceed the amount of our
initial investment in the property.
Property Taxes. Our properties are subject to real property taxes. The real
property taxes on our properties may increase or decrease as property tax rates
change and as the value of the properties are assessed or reassessed by taxing
authorities. Increases in property taxes may adversely affect our financial
condition and results of operations.
Consents of Ground Lessors Required For Sale of Certain Hotels. Some of our
properties are subject to ground leases with third party lessors. In addition,
we may acquire properties in the future that are subject to
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ground leases. If we wish to sell a property that is subject to a ground lease
or wish to assign our leasehold interest in the ground lease, we may need the
consent of third party lessors. As a result, we may not be able to sell or
assign our interest in these properties without the consent of these lessors.
Environmental Matters. Our operating costs may be affected by the cost of
complying with existing and future environmental laws, ordinances and
regulations. Under various federal, state and local environmental laws,
ordinances and regulations, we may be liable for the costs of removing or
remediating hazardous or toxic substances on, under, or in real property
currently or previously owned or operated by us. These laws often impose
liability whether or not we knew of, or were responsible for, the presence of
hazardous or toxic substances. In addition, our ability to borrow by using real
property as collateral may be adversely affected by the presence of hazardous
or toxic substances, or the failure to remediate the property properly. By
arranging for the transportation, disposal or treatment of hazardous or toxic
substances, we may also be liable for the costs of removing or remediating
these substances at the disposal or treatment facility, even if we never owned
or operated the disposal or treatment facility. We could be held liable under
environmental laws used to impose liability for releases of hazardous
materials, including asbestos-containing materials, into the environment. Third
parties may seek recovery from us for personal injuries associated with
exposure to hazardous materials on real property owned or operated by us.
Environmental laws may also impose restrictions on the manner in which we may
use or transfer a property or in which we operate our business on a property.
In connection with our hotels, we may be potentially liable for any
environmental costs. The cost of defending against claims of liability or
remediating contaminated property and the cost of complying with environmental
laws could materially adversely affect our results of operations and financial
condition. Qualified independent environmental engineers have conducted Phase I
environmental site assessments on substantially all of our properties. The
purpose of these environmental assessments was to identify potential sources of
contamination for which any of our properties may be responsible and to assess
the status of environmental regulatory compliance. The environmental
assessments have not revealed any environmental liability or compliance
concerns that we believe would have a material adverse effect on our business,
assets, results of operations or liquidity, nor are we aware of any
environmental liability or compliance concerns. Nevertheless, these
environmental assessments may not have revealed all environmental liabilities
or compliance concerns. Also, there may be material environmental liabilities
or compliance concerns of which we are currently unaware. We have not been
notified by any governmental authority, and we have no other knowledge of, any
material noncompliance, liability or claim relating to hazardous or toxic
substances or other environmental substances in connection with any of our
properties.
Uninsured and Underinsured Losses. Each of the leases with third parties
specifies comprehensive insurance to be maintained on each of the applicable
leased hotels, including liability, fire and extended coverage. We believe this
specified coverage is of the type and amount customarily obtained for hotels.
Leases for subsequently acquired hotels will contain similar provisions.
However, there are certain types of losses, generally of a catastrophic nature
such as earthquakes and floods, that may be uninsurable or not economically
insurable. Our Board of Directors and management will use their discretion in
determining amounts, coverage limits and deductibility provisions of insurance,
with a view to maintaining appropriate insurance coverage on our investments at
a reasonable cost and on suitable terms. This may result in insurance coverage
that, in the event of a substantial loss, would not be sufficient to pay the
full current market value or current replacement cost of the lost investment.
Inflation, changes in building codes and ordinances, environmental
considerations, and other factors also might make it impractical to use
insurance proceeds to replace the property after it has been damaged or
destroyed. Under these circumstances, the insurance proceeds received might not
be adequate to restore our economic position with respect to the damaged
property.
Acquisition and development risks. We currently intend to pursue
acquisitions of additional hotels and hotel operating companies and, under
appropriate circumstances, may pursue development opportunities. Acquisitions
entail risks that the acquired hotels or hotel operating companies will fail to
perform according to our expectations or that our cost estimates to market,
acquire and operate properties will prove inaccurate. In addition, hotel
development is subject to other risks, including risks of construction delays
or cost overruns that
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may increase project costs, new project commencement risks such as receiving
zoning, occupancy and other required governmental approvals and permits, and
incurring development costs for projects that are not pursued to completion.
We depend on management contracts. We manage hotels for third party owners
pursuant to management contracts. These contracts may be acquired, terminated,
renegotiated or converted to franchise agreements in the ordinary course of our
business. As of the date of this prospectus, the average remaining term of our
management contracts was approximately 9.5 years. However, the hotel property
owner may terminate these management contracts if we fail to meet certain
performance standards, if the property is sold to a third party, if the owner
defaults on indebtedness encumbering the property, upon a foreclosure of the
property, closing of the property and certain business combinations involving
us in which our name or current management team does not survive.
There can be no assurance that we will be able to replace terminated
management contracts, or that the terms of renegotiated or converted contracts
will be as favorable as the terms that existed before such renegotiation or
conversion. We also will be subject to the risk that a hotel property owner
will be unable to pay management fees to us. In addition, in certain
circumstances, we may be required to make loans to or capital investments in
hotel properties in connection with management contracts. If any of these hotel
properties suffers poor operating results or if we lose our management
contract, we may not recover our loan or capital investment.
Risks of Operating Hotels under Franchise or Brand Affiliations
We operate some of our hotels under franchise or brand affiliations. In
addition, we may acquire hotels in the future which are operated under
franchise or brand affiliations. Each franchised hotel must meet specified
operating standards and other terms and conditions to continue its franchise
license. The continued use of a brand generally depends upon the continuation
of the management agreement related to that hotel with the hotel's management
entity. Franchisors typically inspect licensed properties periodically to
confirm adherence to operating standards. Actions by us, our affiliates or the
hotel management entities could cause a breach of these standards or other
terms and conditions of a franchise license or the loss or cancellation of a
franchise license. It is possible that a franchisor could condition the
continuation of a franchise license on the completion of capital improvements
which our Board of Directors determines are too expensive or otherwise
unwarranted in light of general economic conditions or the operating results or
prospects of the affected hotel. In that event, our Board of Directors may
elect to allow the franchise license to lapse which could result in our
incurring significant termination costs. If a franchise or brand affiliation is
terminated for any reason, we may try to obtain a suitable replacement
franchise or brand affiliation, or to operate the hotel independent of a
franchise or brand affiliation. If we lose a franchise or brand affiliation, we
will lose the associated name recognition, marketing support and centralized
reservation systems provided by the franchisor or brand owner. This loss could
adversely affect the value of the hotel and our results of operations.
Risks Relating to Gaming Operations
Regulation of Gaming Operations. We own and operate several casino gaming
facilities at some of our hotels, including El San Juan, El Conquistador,
Condado Plaza and Old San Juan in Puerto Rico. Each of these gaming operations
is subject to extensive licensing, permitting and regulatory requirements
administered by various governmental entities.
Typically, gaming regulatory authorities have broad powers related to the
gaming operations licenses. They may revoke, suspend, condition or limit our
gaming approvals and licenses, impose substantial fines and take other actions,
any of which could have a material adverse effect on our business and the value
of our hotel/casinos. Our directors, officers and some key employees are
subject to licensing or suitability determinations by various gaming
authorities. If any of those gaming authorities were to find someone
unsuitable, we would have to sever our relationship with that person.
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Risks Associated with High-End Gaming. The high-end gaming business is more
volatile than other forms of gaming. Fluctuations in customers' high-end gaming
activities could have an adverse impact on our financial condition and results
of operations. In addition, a significant portion of our table gaming is
attributable to a relatively small number of international customers. If the
most significant of these customers reduces or quits his or her gaming, it
could have an adverse effect on our financial condition and results of
operations.
Year 2000 Compliance
Many computer systems were not designed to interpret any dates beyond 1999,
which could lead to business disruptions in the United States and
internationally. We recognize the importance of minimizing the number and
seriousness of any disruptions that may occur as a result of the Year 2000
issue and have adopted an extensive compliance program. Our compliance program
involved three major program areas:
. corporate information technology infrastructure and reservation systems;
. other electronic assets, which include automated time clocks; point-of-
sale systems; non-information technology systems, such as embedded
technologies that operate fire-life safety systems, phone systems,
energy management systems; and other similar systems; and
. third parties with whom we conduct business.
We applied a three phase approach to each program area:
. Inventory Phase--identified systems and third parties that may be
affected by the Year 2000 issue
. Assessment Phase--prioritized the inventoried systems and third parties,
assessed their Year 2000 readiness, and planned corrective actions
. Remediation Phase--implemented corrective actions, verified
implementation, and formulated contingency plans
Working with our consultants, we identified various systems that were not
Year 2000 compliant and developed appropriate remediation plans. To determine
which of our systems were not compliant, we inventoried and assessed our
corporate information technology infrastructure and reservation systems, and
the information technology and other electronic assets located in those hotels
(the "Wyndham compliance hotels") of ours that we could implement independently
or were authorized to implement our Year 2000 compliance program. We could not
initiate independently, nor were we authorized to implement, our compliance
program at 31 hotels, which were either managed, but not owned, by us or owned,
but not operated, by us (the "third party compliance hotels"). We believe that
we have effected or will effect the necessary remediation of our systems and
other electronic assets that were identified as failing to be Year 2000
compliant, and thereby will avoid substantial problems arising from the Year
2000 issue. We continue to monitor and randomly test our systems to confirm
their successful remediation. As a result of these efforts, we may undertake
additional reprogramming, upgrading and systems replacements in limited
circumstances in order to further correct any problems that did not surface
during the initial implementation and testing of those systems. Other than
those limited circumstances, we have completed our remediation efforts
involving our corporate information technology infrastructure and reservation
systems, and the information technology and other assets located in the Wyndham
compliance hotels, other than 16 hotels that will be completed during the
fourth quarter of 1999. To avoid any additional Year 2000 issue-induced
conflicts in our existing systems or to avoid the introduction of new non-
compliant systems, we expect to limit any non-essential changes to our
information technology systems and related equipment until after January 1,
2000.
Of the 31 third party compliance hotels, the owners of 26 hotels committed
to effecting their own remediation. As of September 30, 1999, we have been
informed that 7 hotels were completed and the remaining 19 were to be completed
during the fourth quarter of 1999. The owners of the remaining 5 third party
compliance hotels have neither informed us of whether they have taken any
action to effect any necessary
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remediation nor authorized us to effect any remediation on their behalf. The 24
third party compliance hotels that have either not yet completed their
compliance efforts or informed us of their compliance plans represent, as of
September 30, 1999, 11 percent of our hotels (based on number of rooms).
We have surveyed the Year 2000 compliance of the hotels that are franchised
under our brand but are not managed by us. We have informed the owners of those
hotels of the appropriate standards to make their equipment, which operates or
interacts with our systems, Year 2000 compliant. As of September 30, 1999, 5 of
the 11 owners had informed us that their hotels were Year 2000 compliant. An
additional 6 owners provided assurances to us that they would be Year 2000
compliant before December 31, 1999. One owner has yet to confirm the status of
its hotel. As the systems at these hotels are not under our control, we must
rely on the information provided by those owners or operators and will not be
able to test the assessment or remediation effected at these hotels.
As of September 30, 1999, we have expended or committed to expend
approximately $24 million in connection with Year 2000 issues, and expect to
spend an additional $6 million. We do not expect the anticipated expenditures
for Year 2000 issues to increase materially during the fourth quarter of 1999.
As part of the settlement of litigation arising out of our merger with
Interstate Hotels, we agreed to contribute to a new company the management
rights that were acquired in that merger, and then dispose of substantially all
of that new company's stock by means of a spin-off or otherwise. We completed
that spin-off as of June 18, 1999, and we do not expect to bear any of the
costs related to the inventory, assessment or remediation of those hotels.
We have identified the vendors and service providers that are critical to
our businesses and have requested those parties to provide information
concerning their Year 2000 compliance and remediation efforts. We have received
responses from 59 percent of those parties as of September 30, 1999. Based on
preliminary responses, we believe that our most critical vendors and service
providers will not cause our operations to be materially disrupted as a result
of Year 2000 issues. We are continuing to seek additional information from the
parties that did not respond or did not provide sufficient information. We
cannot guarantee that all vendors or service providers will comply with our
requests. Also, we must rely on the information provided by the third parties
and will not be able to test their Year 2000 compliance. As a result, we may
not be able to accurately determine whether they are Year 2000 compliant. We
intend to continue to evaluate the extent to which we will be able to replace
vendors and service providers that are expected to be non-compliant. Due to the
lack of responses from vendors and the lack of alternate sources, however, in
most instances we will be required to remain with non-compliant vendors or
service providers.
In addition to those systems within our control and the control of our
vendors and suppliers, there are other systems that could have an impact on our
businesses as a result of not being Year 2000 compliant by January 1, 2000.
These systems could affect the operations of the air traffic control system and
airlines or other segments of the lodging and travel industries, or the economy
and travel generally. In addition, the systems of the third party compliance
hotels or the hotels franchised under our brands whose owners and operators are
implementing their own compliance programs may fail to become Year 2000
compliant. The systems that are outside of our control or influence could
adversely affect our financial condition, results of operations or business
reputation.
We believe that the most likely consequences of the Year 2000 issues will be
local in nature and will result in disruptions to utilities, transportation and
food services. We have developed contingency plans to address these types of
potential Year 2000 induced failures in addition to contingency plans that
anticipate the failure of one or more of our information systems. Our
contingency plans are based on existing plans for operations during storms and
other natural disasters resulting in the disruption of these types of services
and are intended to permit a hotel to continue its operations for a reasonable
short-term period without these services. While we have developed an
individualized contingency plan for each hotel we manage and operate, any
disruption in
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utilities or other key local services could have the effect of disrupting
operations of several hotels located in that geographic area, thereby
eliminating the potential back-up services from another hotel and impairing the
implementation of our contingency plans.
Our financial condition, results of operations and our business reputation
could be affected adversely as a result of Year 2000 issues if:
. Our remediation efforts were unsuccessful and our contingency plans were
not effective or implemented successfully;
. third parties' failures to become Year 2000 compliant disrupts the
operation of our hotels or decreases the demand for our services
generally;
. the third party compliance hotels" remediation efforts were
unsuccessful;
. the third-party operators of hotels owned by us fail to develop
effective contingency plans or to implement them successfully; or
. demand for hotel services decreases due to travelers" general concerns
in regard to Year 2000 issues.
UNCERTAINTY OF FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. The words "believe,"
"expect," "anticipate," "intend," "estimate," and other expressions that are
predictions of or indicate future events and trends and that do not relate to
historical matters identify forward-looking statements. These statements
include statements regarding our intent, belief or current expectations. You
are cautioned that any forward-looking statements are not guarantees of future
performance and involve a number of risks and uncertainties that may cause our
actual results to differ materially from the results discussed in the forward-
looking statements. In addition to those factors discussed under "Risk
Factors," other factors that could cause actual results to differ materially
from those indicated by the forward-looking statements are:
. the impact of general economic conditions in the United States;
. industry conditions, including competition;
. capital expenditure requirements;
. legislative or regulatory requirements; and
. access to capital markets.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those anticipated, expected or projected. The forward-looking statements
reflect our current views with respect to future events and are subject to
these and other risks, uncertainties and assumptions relating to our
operations, results of operations, growth strategy and liquidity. All
subsequent written and oral forward-looking statements attributable to us or
individuals acting on our behalf are expressly qualified in their entirety by
this paragraph. You should specifically consider the various factors identified
in this prospectus and the documents incorporated by reference herein which
could cause actual results to differ.
USE OF PROCEEDS
We will use any net cash proceeds that we receive in this offering to redeem
shares of our series B preferred stock.
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THE RIGHTS OFFERING
Reasons for the Rights Offering
On January 12, 1999, a purported class action lawsuit was filed on behalf of
our stockholders and the stockholders of Patriot in the Delaware Chancery
Court. The lawsuit, captioned Charles Fraschilla v. Paul A. Nussbaum, et al.,
No. 16895NC, names as defendants the former directors of Patriot, as well as
the investors. The lawsuit alleges that the directors breached their fiduciary
duties to Patriot's stockholders by "effectively selling control" of Patriot to
the investors for inadequate consideration and without having adequately
considered or explored all other alternatives to this sale or having taken
steps to maximize stockholder value. The lawsuit also alleges that the
investors aided and abetted the directors in their purported breaches of
fiduciary duty. The plaintiffs sued seeking an unspecified amount of monetary
damages from the directors as well as an injunction preventing the completion
of the $1 billion equity investment. On January 19, 1999, three nearly
identical purported class action lawsuits were filed in the same court on
behalf of different purported class representatives: (1) Sybil R. Meisel and
Steven Langsam, Trustees, No. 16905NC; (2) Crandon Capital Partners, No.
16906NC; and (3) Robert A. Staub, No. 16907NC.
The terms of the purchase agreement related to the $1 billion equity
investment permit us to conduct a single rights offering in accordance with the
terms of the purchase agreement. In April 1999, the parties to the litigation
entered into a memorandum of understanding to settle the lawsuits related to
the $1 billion equity investment and our related restructuring described above.
In the memorandum of understanding we agreed, subject to certain conditions, to
make this offering no earlier than 60 days after the closing of the $1 billion
equity investment, which was on June 30, 1999, and to hold this offering open
for a period of not less than 30 days pursuant to our right to conduct a rights
offering under the terms of the purchase agreement relating to the $1 billion
equity investment.
On September 17, 1999, we entered into a stipulation of settlement agreement
with the other parties to this litigation to settle this litigation. The
stipulation of settlement agreement provides that we will not be required to
make or complete this offering if: (1) there is a pending court order, motion,
legal proceeding or other action to enjoin, prevent or delay this offering; (2)
this offering and the related redemption of a portion of the series B preferred
stock with the proceeds from this offering cannot be completed, despite our
good faith efforts, on or before December 17, 1999; or (3) the court order
approving the stipulation of settlement agreement fails to become final and
non-appealable. On November 1, 1999, the court issued the order and final
judgment approving the stipulation of settlement agreement.
We will use net cash proceeds from this offering to redeem outstanding
shares of our series B preferred stock.
For more information regarding conditions to our completing this offering,
please see "Conditions relating to the Rights Offering" on page 23.
Neither our Board nor any committee of our Board makes any recommendation on
the Rights Offering
Neither our Board of Directors nor any committee of our Board makes any
recommendation to you about whether you should exercise any rights. For more
information on risks related to this offering, please see "Risks Relating to
Our Rights Offering" on pages 11-12. For other risk factors, please see "Risk
Factors" beginning on page 11.
General Terms of the Rights Offering
. The record date is September 30, 1999.
. Only holders of record of our class A common stock or of limited
partnership units in the Patriot partnership or the Wyndham partnership
at the close of business on the record date, or those to whom
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rights have been validly transferred, may exercise rights. You are a
record holder only if your name is registered as a class A common
stockholder or a limited partner of the Patriot partnership or the
Wyndham partnership. You have received this prospectus and the
accompanying documents because as of the close of business on the record
date your name was registered on our books and records as a holder of
our class A common stock or a limited partnership unit in one of the
partnerships.
. If your class A common stock is held in a brokerage, bank or other
custodial or nominee account, you should promptly send the proper
instruction form to your broker or other person holding your stock to
exercise your rights. Your broker or other person holding your stock is
the record holder and will have to act on your behalf for you to
exercise your rights. We have asked the brokers and other nominee
holders of our class A common stock to contact you to obtain your
instructions concerning the rights you are entitled to exercise.
. We will not pay interest on funds you deliver to exercise your rights,
regardless of whether the funds are used to purchase series A preferred
stock or returned for any reason.
. We will not issue fractional shares. We will eliminate fractional shares
in allocating our series A preferred stock under this offering. If your
exercise of rights would result in a fractional share of our series A
preferred stock, you must round down to purchase the nearest whole share
or any lesser number of whole shares.
The subscription agent is ChaseMellon Shareholder Services, L.L.C.
ChaseMellon Shareholder is acting as the subscription agent for this
offering under an agreement with us.
All subscription warrants, payments of the purchase price, nominee holder
certifications, and notices of guaranteed delivery must be delivered to
ChaseMellon Shareholder Services, L.L.C. as follows:
IF BY MAIL: IF BY HAND: IF BY OVERNIGHT COURIER:
P.O. Box 3301 120 Broadway 85 Challenger Road
South Hackensack, NJ 07606 13th Floor Mail Stop-Reorg
Attn: Reorganization New York, NY 10271 Ridgefield Park, NJ 07660
Department Attn: Reorganization Attn: Reorganization
Department Department
ChaseMellon Shareholder's facsimile number (for eligible institutions only)
is (201) 296-4293.
The telephone number for confirmation of receipt of facsimiles only is (201)
296-4860.
We will pay the fees and expenses of ChaseMellon Shareholder, except for
fees, applicable brokerage commissions, taxes and other expenses relating to
the sale of rights by ChaseMellon Shareholder for the account of a seller of
rights. We have also agreed to indemnify ChaseMellon Shareholder against
certain liabilities in connection with this offering.
The Rights
As soon as practicable after the date of this prospectus, we will distribute
to you transferable rights to purchase shares of our series A preferred stock.
We will distribute one right for each share of our class A common stock. We
will also distribute 0.95 rights for each limited partnership unit of the
Patriot partnership and 0.05 rights for each limited partnership unit of the
Wyndham partnership.
We have sent you a subscription warrant, along with this prospectus and
related instructions, to evidence your rights. To exercise your rights, you
must fill out and sign the subscription warrant and timely deliver it along
with full payment for the series A preferred stock you wish to purchase to
ChaseMellon Shareholder.
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A depository bank, trust company or securities broker or dealer that is a
record holder for more than one beneficial owner of class A common stock may
divide or consolidate subscription warrants to represent shares or units held
on the record date by their beneficial owners upon properly notifying
ChaseMellon Shareholder.
You may purchase one share of our series A preferred stock for every 56.2772
rights exercised. As of the close of business on September 30, 1999, we had
outstanding 167,661,671 shares of our class A common stock, 1,169,966 limited
partnership units in the Patriot partnership and 1,169,966 limited partnership
units in the Wyndham partnership. Because we have granted one right for each
share of class A common stock, 0.95 rights for each limited partnership unit in
the Patriot partnership and 0.05 rights for each limited partnership unit in
the Wyndham partnership held, we granted in the aggregate 168,831,637 rights.
As a result, because we are offering 3,000,000 shares in this rights offering,
you must exercise 56.2772 rights to acquire one share of series A preferred
stock. We have reserved a total of 3,000,000 shares of our series A preferred
stock for the exercise of rights.
Purchase Price of Series A Preferred Stock
The purchase price is $100.00 per share, payable in cash.
When the Rights Offering expires
The rights offering expires at 5:00 p.m., New York City time, on December 8,
1999. After the expiration time, no one can exercise rights. We may extend the
expiration date.
To exercise rights in a timely manner, ChaseMellon Shareholder must actually
receive before the expiration time your properly executed and completed
subscription warrant (or a form of "Notice of Guaranteed Delivery," see pages
24-25), together with full payment for all shares you wish to purchase.
Conditions relating to the Rights Offering
We will terminate this offering in its entirety if any condition to the
completion of this offering is not fulfilled. If this offering is terminated
for any reason, we will instruct ChaseMellon Shareholder to refund without
interest all payments received by it from you for the exercise of your rights.
The material conditions to the completion of this offering under the
stipulation of settlement agreement and court order approving the agreement
include the following, which must be satisfied or waived on or before the
expiration date:
. there is no pending court order, motion, legal proceeding or other
action to enjoin, prevent or delay this offering;
. this offering and the related redemption of a portion of the series B
preferred stock with the proceeds from this offering must be completed
on or before December 17, 1999; and
. the court order approving the stipulation of settlement agreement must
become final and non-appealable.
How to exercise your rights
You should read carefully the forms of subscription warrant and other forms
and related instructions that accompany this prospectus. You should call
promptly ChaseMellon Consulting with any questions you may have regarding how
to exercise your rights.
You may exercise your rights by delivering to ChaseMellon Shareholder at the
address specified in this prospectus and in the instructions accompanying this
prospectus before the expiration time:
. the properly completed and executed subscription warrant(s) that
evidence your rights, and
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. payment of the purchase price in full for each share of series A
preferred stock you wish to purchase.
Please do not send subscription warrants or related forms to us. Please send
the properly completed and executed form of subscription warrant with full
payment to ChaseMellon Shareholder.
If you are not a broker, bank or other eligible institution, you must obtain
a signature guarantee on the subscription warrant from a broker, bank or other
institution eligible to guarantee signatures to transfer your subscription
warrant or to transfer a portion of your rights.
How you should pay when you exercise your rights
To timely exercise your rights, ChaseMellon Shareholder actually must
receive your payment of the purchase price before the expiration time in the
form of:
. a certified or cashier"s check or bank draft drawn upon a U.S. bank, or
a U.S. postal money order, payable to ChaseMellon Shareholder;
. a personal check that must have cleared payment;
. a wire transfer of funds to the account maintained by ChaseMellon
Shareholder for this offering at: The Chase Manhattan Bank; New York, NY
10001; ABA #021 000 021; Credit Acct. #323-133703; ChaseMellon
Shareholder Services, L.L.C. (Wyndham).
Funds paid by uncertified personal check may take at least five business
days to clear. Thus, if you pay the purchase price by means of an uncertified
personal check, you should make payment sufficiently in advance of the
expiration date to ensure that your check actually clears and ChaseMellon
Shareholder receives your payment before that time. We are not responsible for
any delay in payment by you. We recommend that you consider payment by means of
a certified or cashier's check, money order or wire transfer of funds.
We will not issue fractional shares of series A preferred stock
You may not purchase fractional shares of our series A preferred stock. If
your rights would allow you to purchase a fractional share, you may exercise
them only by rounding down to and paying for the nearest whole share, or paying
for any lesser number of whole shares.
We will accept any subscription that inadvertently indicates a purchase of a
fractional share by rounding downward to the nearest whole share. We will
refund without interest the payment for that fractional share as soon as
practicable.
Special Procedure under "Notice of Guaranteed Delivery" Form
If you wish to exercise your rights but are not sure whether ChaseMellon
Shareholder will actually receive your executed subscription warrant before the
expiration time, as an alternative, you may exercise your rights by causing all
of the following to occur within the timeframe noted:
. ChaseMellon Shareholder must receive full payment for all shares you
desire to purchase before the expiration time.
. ChaseMellon Shareholder must receive a properly executed "Notice of
Guaranteed Delivery" substantially in the form we distributed to you
along with this prospectus before the expiration time.
. Both you and one of the following must execute the "Notice of Guaranteed
Delivery": a member firm of a registered national securities exchange,
an NASD member, a commercial bank or trust company having an office or
correspondent in the United States, or other eligible guarantor
institution qualified under a guarantee program acceptable to
ChaseMellon Shareholder. The cosigning institution must guarantee in the
Notice of Guaranteed Delivery that the subscription warrant will be
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delivered to ChaseMellon Shareholder within three NYSE trading days
after the date of the Notice. You must also provide in the Notice other
relevant details concerning your exercise of rights.
. ChaseMellon Shareholder must receive your properly completed and
executed subscription warrant(s) with any required signature guarantee
within three NYSE trading days after the date of the related Notice of
Guaranteed Delivery.
You may deliver a Notice of Guaranteed Delivery to ChaseMellon Shareholder
in the same manner as subscription warrants at the addresses set forth on page
22 or by facsimile transmission (facsimile no. (201) 296-4293). To confirm
facsimile deliveries, please call (201) 296-4280.
You may obtain additional copies of the form of Notice of Guaranteed
Delivery upon request from ChaseMellon Consulting, whose address and telephone
numbers are set forth on page 26.
What happens if you provide incomplete forms or make an insufficient or excess
payment
If you do not indicate the number of rights being exercised, or do not
forward sufficient payment for the number of rights that you indicate are
being exercised, then we are entitled to accept the subscription forms and
payment for the maximum number of rights that may be exercised based on the
actual payment delivered.
We will return any payment not applied to the purchase of shares under
these procedures to those who made these payments as soon as practicable by
mail.
What happens if you exercise less than all of your rights
If you subscribe for fewer than all of the shares represented by your
subscription warrant, you may (1) direct ChaseMellon Shareholder to attempt to
sell your remaining rights, or (2) receive from ChaseMellon Shareholder a new
subscription warrant representing the unused rights. For more information on
how to transfer rights, please see pages 26-27.
Instructions to Nominee Holders
If you are a broker, trustee or depository for securities or other nominee
holder of class A common stock for beneficial owners of the class A common
stock, we request you contact the beneficial owners as soon as possible to
obtain instructions and related certifications concerning their rights. We
have included along with this prospectus a suggested form of letter of
instructions from nominee holders to beneficial owners. Our request is
discussed further in that form.
If instructed by beneficial owners, nominee holders should complete
appropriate subscription warrants on behalf of those owners and submit the
warrants on a timely basis to ChaseMellon Shareholder with the proper payment.
You bear the risk of loss on delivery of subscription warrant forms and
payments
You bear all risk of the method of delivery to ChaseMellon Shareholder of
subscription warrants and payments of the purchase price.
If you send subscription warrants and payments by mail, we urge you to send
these by registered mail, properly insured, with return receipt requested, and
to allow a sufficient number of days to ensure delivery to ChaseMellon
Shareholder and clearance of payment before the expiration time.
Because uncertified personal checks may take at least five business days to
clear, we strongly urge you to pay, or arrange for payment, by means of
certified or cashier's check, money order or wire transfer of funds.
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We resolve all procedural and other questions
We will resolve all questions concerning the timeliness, validity, form and
eligibility of any exercise of rights. Our resolution will be final and
binding. We may in our sole discretion waive any defect or irregularity, or
permit a defect or irregularity to be corrected within such time as we may
determine, or reject the purported exercise of any right because of any defect
or irregularity.
We will not consider subscription warrants as received or accepted until we
have waived or you have cured all irregularities within the time period we
determine in our sole discretion. Neither we nor ChaseMellon Shareholder have
any duty to notify you of any defect or irregularity in your submission of
subscription warrants or any other required documents. Neither we nor
ChaseMellon Shareholder will incur any liability for failure to notify you of
any defect or irregularity.
We reserve the right to reject your exercise of rights if it does not comply
with the terms of this offering, is not in proper form, or if the exercise
would be unlawful. For more information regarding our right to reject your
exercise because it would be unlawful, please see "We may reject your exercise
for regulatory issues" on page 28.
Do you have any questions or need assistance concerning exercising your rights?
If you have any questions or requests for assistance concerning the method
of exercising your rights, or if you need additional copies of this prospectus,
forms of instructions or the Notice of Guaranteed Delivery, please contact
ChaseMellon Consulting Services, L.L.C. at 450 W. 33rd Street, Fourteenth
Floor, New York, NY 10001 (telephone: (888) 224-2745). You will not pay any
fees for your questions or requests for assistance or documents. You may
contact us at 1950 Stemmons Freeway, Suite 6001, Attn: Shareholder Relations
department, Dallas, Texas 75207 (telephone: (214) 863-1000) for additional
copies, free of charge, of this prospectus, forms of instructions or the Notice
of Guaranteed Delivery.
You cannot revoke your exercise of rights
Once you have exercised your rights, you may not revoke or change your
exercise.
How to transfer your rights
We do not intend to list the rights on any exchange. There has been no prior
trading in the rights. We cannot ensure that a trading market for the rights
will develop, that any market that does develop will continue throughout this
offering or remain available for a sufficient time for you to transfer your
rights, or that you will be able to sell your rights. If a trading market for
the rights develops, the rights will be eligible for trading until the close of
business on the last trading day before the expiration date.
You may elect to request ChaseMellon Shareholder to sell all or part of your
rights by delivering to it your subscription warrant properly executed for it
to sell. If you request that only a portion of your rights be sold, you should
indicate in writing whether you wish (1) to receive a new subscription warrant
covering the rights you did not sell or (2) to have ChaseMellon Shareholder
sell your retained rights in the manner described below.
If you request ChaseMellon Shareholder to sell your rights, it must receive
your subscription warrant properly executed for sale on or before 11:00 a.m.,
New York City time, on December 3, 1999.
Promptly after the expiration date, ChaseMellon Shareholder will send you a
check for the net proceeds of its sale of your rights. To the extent
ChaseMellon Shareholder has sold your rights, all of these sales shall be
considered together and effected at the weighted average sale price of all
rights sold by ChaseMellon Shareholder in this offering, less the pro rata
portion of its brokerage commissions, taxes and other expenses, if any.
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We cannot ensure that ChaseMellon Shareholder will be able to sell any
rights. ChaseMellon Shareholder's obligation to execute orders is subject to
its ability to find buyers. If ChaseMellon Shareholder cannot fill all sales
orders that it receives, the sales proceeds will be prorated among those
requesting the sales based upon the number of rights each holder has requested
ChaseMellon Shareholder to sell. All sale orders properly received by the
above deadline will be treated on a pro rata basis without regard to the
actual delivery date.
ChaseMellon Shareholder will return promptly any rights not sold by it by
5:00 p.m., New York City time, on December 3, 1999 by mail to the holders who
delivered them.
If you wish to transfer all or a portion of your rights, you should allow a
sufficient amount of time before the expiration time for (1) ChaseMellon
Shareholder to receive and process your transfer instructions, (2) ChaseMellon
Shareholder to issue and deliver new subscription warrants and (3) the
intended recipients to exercise or sell the rights evidenced by the new
subscription warrants.
Transfers of rights may require from two to ten business days, or more, to
complete, depending upon how you deliver the subscription warrant and payment
and the number of transactions you request. Neither we nor ChaseMellon
Shareholder will be liable to you or any transferee if your subscription
warrants or any other required documents are not received in time for exercise
or sale before the expiration time.
If you exercise or sell rights in part, ChaseMellon Shareholder will issue
to you a new subscription warrant for the remaining rights only if it receives
a properly endorsed subscription warrant from you no later than 5:00 p.m., New
York City time, on the fifth business day before the expiration date. It will
not issue new subscription warrants for partially exercised or sold rights
submitted after that time and date. If you do submit a partial exercise or
sale after that time and date, you will not be able to exercise the
unexercised or unsold rights. Unless you make other arrangements with it,
ChaseMellon Shareholder will hold for pick-up by you at its hand delivery
address provided above any new subscription warrants issued after 5:00 p.m.,
New York City time, on the fifth business day before the expiration date.
If you request a reissuance of a subscription warrant, the delivery of that
document will be at your risk.
You will be responsible for paying any commissions, fees and other expenses
(including brokerage commissions and transfer taxes) that you may incur for a
purchase, sale or exercise of rights.
If you do not exercise your rights before the expiration time, your rights
will expire and will no longer be exercisable.
Procedures for Nominees who are DTC Participants
We anticipate that you may transfer or exercise your rights through the
facilities of the Depository Trust Company, generally known as the "DTC."
Foreign and Unknown Addresses
We are not mailing subscription warrants to participants whose addresses
are outside the United States or who have an APO or FPO address. In those
cases, ChaseMellon Shareholder will hold the subscription warrants for these
foreign participants. To exercise their rights, these foreign participants
must notify ChaseMellon Shareholder prior to 11:00 a.m., New York City time,
on December 3, 1999. At that time, if a foreign participant has not given any
other instructions, ChaseMellon Shareholder will sell its rights, subject to
availability of buyers. If ChaseMellon Shareholder can sell these rights, it
will send the foreign participant a check by mail for the proceeds from that
sale, less a pro rata portion of any applicable brokerage commissions, taxes
and other expenses. ChaseMellon Shareholder will aggregate these sales so that
each foreign participant will receive a weighted average price for the sales,
if any.
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<PAGE>
If you sell rights through ChaseMellon Shareholder but it does not know your
address or cannot otherwise deliver sale proceeds to you, it will hold your
proceeds in a special account. ChaseMellon Shareholder will deliver these
proceeds to us if you do not claim them within two years after the expiration
date of this offering.
We may reject your exercise for regulatory issues
We may refuse your exercise of rights if you would, in our opinion, be
required to obtain prior clearance or approval from any state, federal or
foreign regulatory authorities for your exercise of rights or ownership of
additional shares if, at the expiration time, this clearance or approval had
not been obtained. We are not undertaking to pay for any expenses incurred in
seeking that clearance or approval.
We are not offering or selling, or soliciting any purchase of, rights or
underlying shares in any state or other jurisdiction in which that is not
permitted. We reserve the right to delay the commencement of this offering in
certain states or other jurisdictions if necessary to comply with local laws.
However, we may elect not to offer rights to residents of any state or other
jurisdiction whose laws would require a change in this offering in order to
carry it out in that state or jurisdiction.
We will make no adjustment to outstanding stock options or other stock awards
We will not, solely as a result of this offering, adjust the number of
shares of capital stock reserved for issuance under our stock award plans for
employees and other eligible participants or the number of shares subject to
outstanding awards of stock options or restricted stock.
Amendment, Extension and Withdrawal
We may not amend or withdraw this offering. However, we may extend the
expiration date. We will terminate this offering in its entirety if any of the
conditions described in "Conditions relating to the Rights Offering" on page 23
are not satisfied before the expiration time.
Issuance of Stock Certificates
We will issue stock certificates for series A preferred stock purchased in
this offering as soon as practicable after the expiration date. ChaseMellon
Shareholder will deliver subscription payments to us only after the offering is
completed and we have issued stock certificates to those who exercised rights.
If you exercise rights, you will have no rights as a stockholder until we
issue you stock certificates representing the shares you purchased. Unless
otherwise instructed in your subscription warrant form, we will register shares
purchased by your exercise of rights in the name of the person exercising the
rights.
Certain Federal Income Tax Consequences
General. This section discusses certain federal income tax consequences of
this offering to (1) beneficial owners of our class A common stock or limited
partnership units in the Patriot partnership or the Wyndham partnership upon
distribution of the rights, and (2) holders of rights who exercise and/or
dispose of their rights. This discussion is based on the Internal Revenue Code
of 1986, as amended, the Treasury regulations promulgated thereunder, judicial
authority, and current administrative rulings and practice, all of which are
subject to change prospectively or retroactively.
This discussion is limited to U.S. taxpayers who hold our class A common
stock or limited partnership units in the Patriot partnership or the Wyndham
partnership and who hold the rights and any shares acquired upon the exercise
of rights as capital assets (generally, property held for investment). This
discussion does not include any tax consequences under state, local and foreign
law. Financial institutions, broker-dealers, nominee holders of our class A
common stock or rights, life insurance companies, tax-exempt organizations and
possibly
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<PAGE>
other types of taxpayers may be subject to special provisions of the tax law or
subject to other tax considerations not discussed below.
You should consult your own tax advisors concerning your tax situation or
special tax considerations that may apply to you, including foreign, state and
local laws that may apply.
Distribution of Rights to Holders of the Class A Common Stock. As a holder
of the class A common stock, the characterization of your receipt of rights
should depend in what capacity you receive the rights. We intend to take the
position that the rights should be treated as a distribution with respect to
your class A common stock. Consistent with this position, you would not
recognize taxable income solely as a result of receiving your rights from us.
However, the Internal Revenue Service (the "IRS") could take the position that
the distribution of rights would result in a taxable dividend in the amount of
the fair market value of the rights to the holders of our class A common stock,
to the extent of our accumulated earnings and profits. In addition, if the IRS
were to attempt to treat the rights as being received by you as consideration
for your release of all claims against us, the fair market value of the rights
on the date of distribution should reduce your tax basis in your class A common
stock, with any excess of the fair market value over your tax basis being
treated as long-term capital gain to the extent you are treated as having held
that stock for more than one year.
If you are treated as having received rights with respect to your class A
common stock as a non-taxable distribution, the tax basis of your rights
related thereto should be zero. However, if either (1) the fair market value of
your rights, on the date of distribution, is 15% or more of the fair market
value of your class A common stock held on such date, or (2) you elect, with
your federal income tax return for this year, to allocate the tax basis of your
class A common stock to your rights related thereto, then the tax basis in your
class A common stock should be allocated between your stock and your rights
related thereto in proportion to the fair market value of each as of the date
we distributed the rights. Otherwise, if you are deemed to receive the rights
as a taxable distribution or as consideration for your release of all claims
against us, the tax basis of your rights should be the fair market value of the
rights on the date of distribution. The holding period of your rights should
include the holding period of your class A common stock with respect to which
the rights were distributed.
To the extent you are treated as receiving rights as a taxable distribution
or as consideration for your release of all claims against us, your holding
period with respect to the rights should start as of the date we distributed
the rights.
Distribution of Rights to the Holders of Units in the Patriot and Wyndham
Partnerships. We intend to treat the distribution of rights to you, as holders
of limited partnership units of the Patriot or Wyndham partnerships, as a
distribution by the partnerships to you with respect to your limited
partnership units. Consistent with this position, you should be treated as
having received a distribution of a "marketable security" within the meaning of
the partnership provisions of the Internal Revenue Code. As a result, you will
recognize gain to the extent the value of the rights distributed to you exceeds
your adjusted tax basis in your units. This gain, if any, should be
characterized in the same manner as a gain from an actual sale or taxable
exchange of your limited partnership units. If the IRS were to attempt to treat
the distribution of the rights to you as a consent payment to you in
consideration for your vote in connection with the $1 billion investment in us
and our related restructuring, the fair market value of the rights as of the
date of distribution should be considered ordinary income to you. In addition,
if the IRS were to attempt to treat you as having received the rights in
consideration for your release of all claims against us, you should recognize
gain only to the extent the fair market value of the rights distributed to you
exceeds your adjusted tax basis in your units. This gain, if any, should be
characterized in the same manner as a gain from an actual sale or taxable
exchange of your limited partnership unit.
Your tax basis in your limited partnership units should be equal to the sum
of: (1) the lesser of your tax basis in your limited partnership units or the
tax basis of the relative limited partnership in the rights distributed; and
(2) the amount of gain, if any, recognized by you on the distribution of the
rights. If your
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<PAGE>
receipt of rights, as a unit holder, is treated as a consent payment or as
consideration for your release of all claims against us, the rights should have
a tax basis in your hands equal to their fair market value as of the date of
distribution.
The holding period of your rights should begin on the date of distribution.
YOU ARE URGED TO CONSULT WITH YOUR PERSONAL TAX ADVISOR REGARDING THE PROPER
TREATMENT OF YOUR RECEIPT OF, YOUR TAX BASIS IN, AND YOUR HOLDING PERIOD WITH
RESPECT TO THE RIGHTS YOU RECEIVE.
Exercise of the Rights and Basis and Holding Period of the Series A
Preferred Stock. You should not recognize any gain or loss upon your exercise
of rights. Your basis in the series A preferred stock acquired through your
exercise of rights should be equal to the sum of the tax basis in the rights
(if any) plus the purchase price paid to acquire the series A preferred stock.
The holding period for this series A preferred stock should begin on the date
you exercise the rights.
Sale of Shares or Rights. If you sell either shares of series A preferred
stock or rights, you should recognize gain or loss upon the sale of the shares
or the rights in an amount equal to the difference between the amount realized
and your basis (if any) in the shares or rights, as the case may be. The gain
or loss recognized on your sale of shares or rights should be a long-term or
short-term capital gain or loss, depending on whether you held the shares or
rights, as the case may be, for more than one year.
Lapse of the Rights. If the rights expire before you, as holder of class A
common stock who is treated as receiving the rights in a non-taxable
distribution, sell or otherwise dispose of your rights, you should not
recognize any gain or loss on the expiration, and no adjustment should be made
to the basis of your class A common stock.
On the other hand, if your rights expire before you exercise or sell them,
you, as a holder of limited partnership units, or as a holder of class A common
stock to the extent the IRS were to treat the distribution of the rights as
being received by you as a taxable distribution or as consideration for your
release of all claims against us, should recognize a loss equal to your tax
basis in the rights. Any loss recognized on the expiration of the rights should
be a capital loss.
Dividends on Shares of Series A Preferred Stock. With respect to cash
distributions on series A preferred stock, you should recognize taxable
ordinary dividend income to the extent of our current and accumulated earnings
and profits. These dividends may be eligible for the dividends received
deduction allowed to corporations under the Internal Revenue Code provided you
meet the requirements described therein. To the extent the amount of the cash
distribution exceeds our current and accumulated earnings and profits, your tax
basis in your series A preferred stock would be reduced until your basis is
reduced to zero, and any excess should be treated as a capital gain.
With respect to distributions of additional series A preferred stock, you
should not recognize any taxable income. The tax basis in your series A
preferred stock should be allocated between your series A preferred stock with
respect to which the dividend is made and the series A preferred stock you
receive as a distribution, in proportion to the fair market value of each as of
the date of such stock distribution. Your holding period for the new series A
preferred stock you receive as a distribution should include the period of time
you held the series A preferred stock with respect to which the dividend is
made. For more information regarding dividends on our series A preferred stock,
please see page 31.
Cash Redemption of Series A Preferred Stock. We intend to take the position
that any redemption of series A preferred stock should be treated as a sale or
exchange of such stock. This treatment should give rise to capital gain or loss
equal to the difference between the amount received by you for the redemption
and your tax basis in the series A preferred stock.
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Receipt of Class A Common Stock Upon Conversion of Series A Preferred
Stock. You should not recognize any taxable income solely as a result of your
conversion of shares of series A preferred stock into shares of class A common
stock. Your basis and holding period in the class A common stock received
should be the same as your basis and holding period in the series A preferred
stock converted.
Constructive Dividend. The conversion price of the series A preferred stock
is subject to adjustment in certain circumstances. Adjustments that would have
the effect of increasing the proportion of your interest in our assets or
earnings could give rise to a deemed distribution to you. In this case, the
deemed distribution would be taxable as ordinary income to you to the extent of
our current and accumulated earnings and profits.
Information Reporting and Backup Withholding. If you sell rights and receive
payments, you may be subject to backup withholding at the rate of 31% on the
payments unless you (1) are a corporation or are otherwise exempt and you
demonstrate the basis for the exemption if so required, or (2) provide a
correct taxpayer identification number and certify under penalties of perjury
that the taxpayer identification number is correct and that you are not subject
to backup withholding. Any amount withheld under these rules should be credited
against your federal income tax liability. We may require you to establish your
exemptions from backup withholding or to arrange for payment of backup
withholding.
DESCRIPTION OF SERIES A PREFERRED STOCK
The following summarizes the material terms of our series A preferred stock.
We have attached hereto as Annex A a copy of the series A certificate of
designation establishing the series A preferred stock. This discussion is not a
complete description of the terms of the series A preferred stock, so you
should read it together with the series A certificate of designation.
The series A certificate of designation designates 31,840,000 shares of our
preferred stock as "Series A Convertible Preferred Stock," and fixes a stated
amount of $100.00 per share. The series A preferred stock will rank equal as to
dividends and liquidation preference to our series B preferred stock and will
rank senior or equal to any of our future preferred stock.
Dividends
We will pay dividends on the series A preferred stock quarterly, on a
cumulative basis at an annual rate of 9.75%, compounded quarterly. Until June
30, 2005, we will pay the dividends partially in cash and partially in
additional shares of series A preferred stock (including fractional shares)
with the cash component initially equal to approximately 30% for the first
dividend and declining over the period to June 30, 2005 to approximately 19.8%
for the final dividend, except that we will pro rate the first quarterly
dividend for the number of days in the period beginning on the date of issuance
of the series A preferred stock and ending on the date we must pay the first
quarterly dividend. This dividend structure is intended to ensure a fixed cash
dividend payment of $2.925 per year for each share of series A preferred stock
(as adjusted for any pro rata amount). From June 30, 2005 through June 30,
2009, we may pay the dividends either in cash or in additional shares of series
A preferred stock (including fractional shares). Following June 30, 2009, we
must pay the dividends entirely in cash. In addition, holders of the series A
preferred stock will, except for dividends payable in additional shares of our
common stock, be entitled to receive all dividends paid on our common stock on
an as-converted basis. We may elect to pay a portion of these dividends in the
form of additional shares of series A preferred stock.
Conversion into class A common stock at the option of the holder
At its option, a holder of series A preferred stock may convert each share
of its series A preferred stock into shares of our class A common stock at any
time. For so long as our class A common stock remains a separate class of our
common stock, any conversion of our series A preferred stock into common stock
will be
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<PAGE>
into shares of our class A common stock. For each share of series A preferred
stock converted into class A common stock, the holder will receive that number
of shares of class A common stock equal to $100.00 divided by the conversion
price of the series A preferred stock, which is initially $8.59 per share, and
will also receive accrued but unpaid cash dividends. If a holder of series A
preferred stock elects to convert its shares of series A preferred stock in
connection with a "change in control" that occurs before June 30, 2005, all
dividends on the shares of series A preferred stock held by the holder that
would have accrued through June 30, 2005 will be accelerated and paid in the
form of additional shares of series A preferred stock, assuming that all such
subsequent dividends would have been paid solely in shares of series A
preferred stock rather than cash.
The conversion price is subject to adjustment if any of the following events
happen:
. the issuance of common stock as a dividend or distribution on our common
stock;
. a subdivision, combination, consolidation or reclassification of our
common stock;
. the issuance of our common stock, or options, rights, warrants or other
securities convertible into or exchangeable for shares of our common
stock, at a price per share less than the then current market price of
our common stock, except for issuances authorized by our employee
benefit plans and other options of and issuances in private placements
at not less than 95% of the then current market price of the common
stock; and
. any reductions in the conversion price as we deem advisable to prevent
any distribution of stock or stock rights, or similar transactions, from
being taxable to the holders of our common stock which could occur if a
stock or stock rights distribution increased the interest of the common
stockholders relative to the preferred stockholders as a result of the
failure to adjust the conversion ratio.
The conversion price is subject to reduction to the same extent of any
reduction in the conversion price of the series B preferred stock in the event
we are required to indemnify the investors under the terms of the purchase
agreement relating to the $1 billion equity investment. In order to understand
the possible extent of the reductions in the conversion price of the series B
preferred stock, and therefore the series A preferred stock, that may result
from these indemnification obligations, it is important that you first
understand the general features of the indemnification obligations. The general
features of our indemnification obligations are as follows:
. If we breach the general representations and warranties set forth in the
purchase agreement, our indemnification obligations arise after, and
only to the extent that, losses exceed a threshold amount of $20
million.
. If we incur losses in connection with "special costs" related to the
completion of the transactions described in the restructuring plan or in
connection with stockholder suits, our indemnification obligations arise
after, and only to the extent that, losses exceed $25 million. These
"special costs" include the following:
. costs of obtaining consents in connection with our restructuring;
. uninsured payments relating to stockholder suits;
. cash payments made to redeem shares of the Patriot series A preferred
stock in excess of $25.00 per share; and
. the fair market value of any excess shares of class A common stock
issued in order to complete our restructuring.
. If losses related to breaches by us of general representations and
warranties do not exceed $20 million, we may apply the difference
between the losses and the $20 million threshold to increase the $25
million threshold applicable to losses incurred in connection with
"special costs."
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. We must indemnify the investors for any breaches of the covenants set
forth in the purchase agreement, and this indemnification obligation is
not subject to any threshold.
. We must indemnify the investors in the event any of the counterparties
to the forward equity contracts sells shares of our class A common stock
released as collateral under the forward equity contracts after December
31, 1998 with net proceeds to us of less than $8.75 per share. The net
proceeds to us would be reflected as a reduction in their obligations to
the selling counterparties under the forward equity contracts. The
amount of the reduction would be equal to the proceeds received by the
counterparties upon the sale of the shares of our class A common stock.
This obligation is not subject to any threshold.
. We must pay the investors a cash indemnity of $1.25 million per three
month period, pro-rated for any partial three month period, in the event
the owners of the Wyndham Anatole hotel terminate Wyndham"s management
agreement for the Wyndham Anatole hotel prior to May 10, 2004 because
either James Carreker ceases to be an executive officer of us or Paul
Nussbaum continues on our Board of Directors following our annual
meeting of stockholders in 2000. Mr. Nussbaum has notified us in writing
that if his standing for reelection in 2000 would give the owners of the
Wyndham Anatole hotel the right to terminate the hotel's management
agreement, he will not stand for reelection at that time. This
obligation is not subject to any threshold, but any payments made under
this obligation would apply toward the $2.27 per share maximum reduction
amount described below.
. Our representations and warranties and covenants, including Patriot's
representations, warranties and covenants, in the purchase agreement
survive the closing as follows:
. most representations and warranties survive until the 90th day
following the filing by us of a Form 10-K for the fiscal year ending
December 31, 1999;
. some of the representations and warranties, like those addressing
the organization of Patriot and us and Patriot's and our authority
to complete the $1 billion equity investment, survive indefinitely;
. our representations and warranties regarding tax matters survive
until 90 days after the expiration of the applicable statute of
limitations; and
. the covenants and agreements, other than those applicable during the
period between the effectiveness of the purchase agreement and the
completion of the $1 billion equity investment, survive
indefinitely.
Once it has been determined that we have an obligation to compensate the
investors under the indemnification provisions of the purchase agreement, the
amount of the conversion price reduction must be determined. The mechanism for
determining the amount of a conversion price reduction is designed to keep the
investors' economic value in us constant despite the relevant loss to us. This
is generally achieved by reducing the conversion price upon a loss by the
amount of the loss divided by 167,025,942, the number of paired shares
outstanding at the time the purchase agreement was signed. For example, a $100
million loss in excess of any applicable threshold would result in a conversion
price reduction of approximately $0.60.
With respect to indemnification for breaches by us of general
representations and warranties and for special costs, there is a maximum
reduction amount on the conversion price of approximately $2.27 per share. In
order for the total conversion price reductions relating to indemnification
obligations to equal $2.27 per share, we would generally have to incur
approximately $380 million in losses in excess of any applicable thresholds.
After reductions to the conversion price totaling $2.27 per share, the
conversion price would be approximately $6.32 per share. There is no maximum
amount on conversion price reductions relating to breaches of covenants or to
sales of paired shares by the counterparties to the forward equity contracts of
paired shares.
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Optional Redemption
At any time after June 30, 2005, we will have the right to redeem all or any
portion of the outstanding series A preferred stock at a redemption price of
$101.00 per share (101% of the stated amount of $100.00) plus all accrued
dividends. We may redeem only a portion of the outstanding series A preferred
stock provided that at least one million shares of series A preferred stock
remain outstanding following the partial redemption. The holders of series A
preferred stock will have the right, however, to convert their shares into our
class A common stock rather than having them redeemed.
Voting Rights
Except for voting rights provided by law, the holders of series A preferred
stock will have no voting rights, except that if cash dividends on the series A
preferred stock are in arrears and unpaid for six quarterly periods (which need
not be consecutive) and the holders of series B preferred stock no longer have
the right under our restated certificate of incorporation to elect any members
of our Board of Directors, then the number of members of our Board of Directors
shall be increased to permit the holders of series A and series B preferred
stock, voting as a single class, to elect a minimum of two directors.
Consolidation or Merger
In the event of any capital reorganization or reclassification that does not
cause an adjustment of the conversion price, any consolidation or merger of us
with or into another corporation, or any sale or conveyance to another
corporation of all or substantially all of our property, before the
consummation of such transaction, each share of series A preferred stock will
be convertible into, instead of our class A common stock issuable upon the
conversion, the kind and amount of shares of stock and other securities and
property receivable in such transaction by a holder of that number of shares of
our class A common stock into which one share of series A preferred stock was
convertible immediately before such transaction.
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Ability to receive preferential cash payment or convert upon change of control
or liquidation
Upon the occurrence of the events described below, the holders of the series
A preferred stock will be entitled to receive preferential payments in exchange
for their shares of series A preferred stock. If any of these events occur
before June 30, 2005, each holder of the series A preferred stock will be
entitled to either convert its shares of series A preferred stock into shares
of our class A common stock or receive in cash the preferential payment due
with respect to the series A preferred stock. The payment or conversion would
be made both in respect of the shares of series A preferred stock the holder
then holds, including any shares issuable as accrued dividends through the date
of the event, and, on an accelerated basis, in respect of the shares of series
A preferred stock the holder would have received as dividends from the date of
the event through June 30, 2005. All accelerated dividends would be treated as
if they were paid solely in the form of additional shares of series A preferred
stock rather than cash. The table below outlines the preferential payments on
the series A preferred stock to be received by holders of series A preferred
stock in the specified events:
<TABLE>
<CAPTION>
Event Series A Preferential Payment
- ------------------------------------------------------------------------------------------
<S> <C>
Change in control before The greatest of:
June 30, 2005
. the aggregate stated amount (i.e., $100.00 per share) of
the shares held and the accelerated dividend shares, plus
accrued but unpaid cash dividends; and
. the amount the holders of series A preferred stock would
have received had they converted all of the shares held and
the accelerated dividend shares into class A common stock
and sold the shares for the effective price being paid by
the Acquiring Person (as defined below) in the change in
control, plus accrued but unpaid cash dividends; and
. the fair market value of the cash, securities and other
property the holders of series A preferred stock would have
received had they converted all of the shares held and the
accelerated dividend shares into class A common stock and
received the consideration paid per share of class A common
stock by the Acquiring Person in the change in control,
plus accrued but unpaid cash dividends.
- ------------------------------------------------------------------------------------------
Change in control after The greatest of:
June 30, 2005
. the aggregate stated amount of the shares held, plus
accrued but unpaid cash dividends; and
. the amount the holders of series A preferred stock would
have received had they converted all of the shares held
into class A common stock and sold the shares for the
effective price being paid by the Acquiring Person in the
change in control, plus accrued but unpaid cash dividends;
and
. the fair market value of the cash, securities and other
property the holders of series A preferred stock would have
received had they converted all of the shares held into
class A common stock and received the consideration paid
per share of class A common stock by the Acquiring Person
in the change in control, plus accrued but unpaid cash
dividends.
</TABLE>
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<TABLE>
<CAPTION>
Event Series A Preferential Payment
- ------------------------------------------------------------------------------------------
<S> <C>
Liquidation or winding The greater of:
up before June 30, 2005
. the aggregate stated amount of the shares held and the
accelerated dividend shares, plus accrued but unpaid cash
dividends; and
. the fair market value of the cash, securities and other
property the holders of series A preferred stock would have
received had they converted all of the shares held and the
accelerated dividend shares into class A common stock
immediately before the liquidation or winding up, plus
accrued but unpaid cash dividends.
- ------------------------------------------------------------------------------------------
Liquidation or winding The greater of:
up after June 30, 2005
. the aggregate stated amount of the shares held, plus
accrued but unpaid cash dividends; and
. the fair market value of the cash, securities and other
property the holders of series A preferred stock would have
received had they converted all of the shares held into
class A common stock immediately before the liquidation or
winding up, plus accrued but unpaid cash dividends.
</TABLE>
Please note that the definition of "change in control" is quite detailed and
complex. You should read its definition in the series A certificate of
designation which is attached as Annex A. Generally a "change in control" means
any of the following have occurred:
. the acquisition by any individual, entity or group (an "Acquiring
Person"), other than us or any of our subsidiaries or any Investor or
Excluded Group (each as defined in the series A certificate of
designation), of beneficial ownership of 35% or more of the combined
voting power or economic interests of our then outstanding voting
securities. However, any transfer from any Investor or Excluded Group
will not result in a change in control if the transfer was part of a
series of related transactions the effect of which, absent the transfer
to the Acquiring Person by the Investor or Excluded Group, would not
have resulted in the acquisition of 35% or more of the combined voting
power or economic interests of the then outstanding voting securities;
. during any period of 12 consecutive months after June 30, 1999, the
individuals who at the beginning of the 12-month period constituted a
majority of the class A directors and class C directors, and any
successors nominated or elected by them, cease for any reason to
constitute at least a majority of the class A directors and class C
directors;
. the approval by our stockholders of a reorganization, merger or
consolidation following which all or substantially all of the beneficial
owners of our voting securities immediately before the reorganization,
merger or consolidation do not 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 our
directors resulting from the reorganization, merger or consolidation; or
. the sale or other disposition of assets representing 50% or more of our
assets in one transaction or series of related transactions.
However, a change in control will not be deemed to have occurred if a
majority of the class B directors otherwise determines.
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No Preemptive Rights
Unless approved by our Board of Directors in an agreement, holders of our
series A preferred stock do not have preemptive rights to purchase (1)
additional shares of our capital stock, (2) warrants, rights or options to
purchase additional shares of our capital stock, or (3) any obligations
convertible into such stock, warrants, rights or options.
DESCRIPTION OF CLASS A COMMON STOCK
Our Board of Directors has the authority to issue up to 750,000,000 shares
of our class A common stock, par value $0.01 per share. As of September 30,
1999, 167,661,671 shares of our class A common stock were outstanding. The
following discussion summarizes the important terms of our class A common
stock.
Except as described below regarding the election of directors, each share of
class A common stock will be entitled to one vote on each matter submitted to a
vote at any meeting of stockholders and the holders of shares of class A common
stock will vote together as one class on all matters submitted to a vote of
stockholders or, if any holders of shares of preferred stock are entitled to
vote together with the holders of class A common stock on any matter, as a
single class with the holders of preferred stock on the matter.
The right of the holders of the class A common stock to elect members of our
Board of Directors depends on the class of directors being elected.
. Class A Directors: Before the date the investors may voluntarily convert
their class B common stock to class A common stock, holders of the class
A common stock will elect the class A directors by plurality vote. From
and after the date the investors may voluntarily convert their class B
common stock to class A common stock, holders of the class A common
stock, voting together as a single class with the holders of the class B
common stock and series B preferred stock, will elect the class A
directors by plurality vote.
. Class B Directors: Holders of class A common stock have no right to
participate in the election of the class B directors.
. Class C Directors: Holders of the class A common stock, voting together
as a single class with the holders of the class B common stock and
series B preferred stock, generally will elect the Class C directors by
plurality vote.
Subject to the rights of holders of preferred stock, holders of class A
common stock will be entitled to receive dividends and other distributions in
cash, stock or property as determined by our 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, and generally to share equally and ratably, such
dividends. However, if dividends are payable in shares of class A common stock
or class B common stock, the 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.
Upon our voluntary or involuntary liquidation, dissolution, distribution of
assets or other winding up, after distribution in full of preferential amounts
to be distributed to the holders of preferred stock or any other class or
series of stock having a preference as to liquidating distributions over the
class A common stock, the holders of the class A common stock and the class B
common stock will be entitled to share equally and ratably in all of our
remaining assets available for distribution to stockholders.
Unless approved by our Board of Directors in an agreement, holders of our
class A common stock do not have preemptive rights to purchase (1) additional
shares of our capital stock, (2) warrants, rights or options to purchase
additional shares of our capital stock, or (3) any obligations convertible into
such stock, warrants, rights or options.
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LEGAL MATTERS
Certain legal matters in connection with this offering will be passed upon
for us by Akin, Gump, Strauss, Hauer & Feld, L.L.P.
EXPERTS
Ernst & Young LLP, independent auditors, have audited the: 1. (a) Combined
Financial Statements of Patriot American Hospitality, Inc. and Wyndham
International, Inc. as of December 31, 1998 and 1997 and for each of the three
years in the period ended December 31, 1998, (b) the Consolidated Financial
Statements of Patriot American Hospitality, Inc. as of December 31, 1998 and
1997 and for each of the three years in the period ended December 31, 1998 and
the related financial statement schedules, and (c) the Consolidated Financial
Statements of Wyndham International, Inc. as of December 31, 1998 and 1997 and
for the year ended December 31, 1998 and six months ended December 31, 1997
included in the Joint Annual Report on Form 10-K, as amended, of Patriot
American Hospitality, Inc. and Wyndham International, Inc. for fiscal year
ended December 31, 1998, as set forth in their report which is incorporated by
reference in this prospectus; 2. (a) Consolidated Financial Statements of WHG
Resorts & Casinos, Inc. as of June 30, 1997 and 1996 and for each of the three
years in the period ended June 30, 1997 and the related financial statement
schedule, (b) the Financial Statements of Posadas de San Juan Associates as of
June 30, 1997 and 1996 and for each of the three years in the period ended June
30, 1997 and the related financial statement schedule, (c) the Financial
Statements of WKA El Con Associates as of June 30, 1997 and 1996, and for each
of the three years in the period ended June 30, 1997, and (d) the Financial
Statements of El Conquistador Partnership, L.P. as of March 31, 1997 and 1996
and for each of the three years in the period ended March 31, 1997, included in
the Joint Current Report on Form 8-K of Patriot American Hospitality, Inc. and
Wyndham International, Inc. dated April 20, 1998 (filed April 22, 1998) as set
forth in their reports which are incorporated by reference in this prospectus;
3. (a) Consolidated Financial Statements of SF Hotel Company, L.P. as of
January 2, 1998 and January 3, 1997 and for the years then ended, and (b)
Combined Financial Statements of SC Suites Summerfield Partnerships of January
2, 1998 and January 3, 1997 and for each of the three years in the period ended
January 2, 1998, included in the Joint Current Report on Form 8-K of Patriot
American Hospitality, Inc. and Wyndham International, Inc. dated June 2, 1998,
as amended (filed June 17, 1998 and August 6, 1998), as set forth in their
reports which are incorporated by reference in this prospectus. Each of the
above referenced financial statements and schedules are incorporated herein by
reference in reliance on Ernst & Young LLP's reports, given on their authority
as experts in accounting and auditing.
The Financial Statements of Sheraton City Centre as of December 31, 1996 and
for the year then ended and the Statement of Direct Revenues and Direct
Operating Expenses for the Wyndham Emerald Plaza for the year ended December
31, 1996, included in the Joint Current Report on Form 8-K of Patriot American
Hospitality, Inc. and Wyndham International, Inc. dated January 5, 1998, which
is incorporated by reference herein, have been audited by
PricewaterhouseCoopers LLP as set forth in their report thereon included
therein and incorporated herein by reference. The (a) Consolidated Financial
Statements of Wyndham Hotel Corporation as of December 31, 1996 and 1997 and
for each of the three years in the period ended December 31, 1997, and (b) the
Consolidated Financial Statements of Interstate Hotels Company as of December
31, 1996 and 1997 and for the three years in the period ended December 31, 1997
included in Interstate's 1997 Annual Report on Form 10-K dated March 31, 1998,
and the CHC International Inc. Hospitality Division Financial Statements as of
November 30, 1996 and 1997 and for each of the years ended November 30, 1995,
1996 and 1997 included in the Joint Current Report on Form 8-K of Patriot
American Hospitality, Inc. and Wyndham International, Inc. dated April 20, 1998
(filed April 22, 1998), (c) financial statements of Royal Palace Hotel
Associates as of December 31, 1996 and 1997 and for each of the two years in
the period ended December 31, 1997 included in the Current Report on Form 8-K
of Patriot American Hospitality, Inc. and Wyndham International, Inc., dated
June 2, 1998 which is incorporated by reference herein have been audited by
PricewaterhouseCoopers LLP, independent accountants, as set forth in their
report thereon. Each of the
38
<PAGE>
above referenced financial statements have been incorporated by reference
herein in reliance upon the authority of said firm as experts in accounting and
auditing.
The financial statements of Arcadian International Limited (formerly
Arcadian International Plc) and subsidiary undertakings, and Malmaison Limited
and subsidiary undertakings, incorporated in this Registration
Statement/Prospectus by reference to the Joint Current Report on Form 8-K/A No.
2 of Patriot American Hospitality, Inc. and Wyndham International, Inc. dated
June 2, 1998, have been audited by Arthur Andersen, chartered accountants, as
indicated in their reports with respect thereto, are incorporated by reference
herein in reliance upon the authority of said firm as experts in accounting and
auditing in giving such reports.
39
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ANNEX A
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.
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 A Preferred Stock, (A) cumulative
dividends
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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 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 Date 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 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
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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 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, 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
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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.
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
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<PAGE>
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 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
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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 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 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 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
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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 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 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
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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 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 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 and
other similar incentives which have the effect of reducing the
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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, 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 Corporation 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
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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.
(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
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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.
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.
"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., 1.024375DPP), 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
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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 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
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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.
"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.
A-13
<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 party 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.
"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 distributions 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.
A-14
<PAGE>
"Series B Certificate of Designation" means the Certificate of Designation
of the Series B Preferred Stock 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.
"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]
A-15
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation of Series A Convertible Preferred Stock to be duly executed by its
Chief Executive Officer and attested to by its Secretary and has caused its
corporate seal to be affixed hereto, this 29th day of June, 1999.
WYNDHAM INTERNATIONAL, INC.
/s/ James D. Carreker
By: _________________________________
James D. Carreker
Chief Executive Officer
ATTEST:
/s/ Carla S. Moreland
By: _________________________________
Carla S. Moreland
Secretary
A-16
<PAGE>
Rights Offering of 3,000,000 Shares
WYNDHAM INTERNATIONAL, INC.
Series A Convertible Preferred Stock
-------------------------------------
PROSPECTUS
-------------------------------------
, 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth expenses in connection with the issuance and
distribution of the securities being registered. All amounts shown are
estimated, except the SEC registration fee.
<TABLE>
<S> <C>
SEC registration fee............................................... $ 83,400
Subscription Agent fees and expenses............................... 50,000
Information Agent fees and expenses................................ 15,000
Legal fees and expenses (including blue sky fees and expenses)..... 200,000
Accounting fees.................................................... 40,000
Printing and mailing expenses...................................... 90,000
Nasdaq National Market listing fees................................ 50,000
Miscellaneous...................................................... 1,600
--------
Total............................................................ $530,000
========
</TABLE>
Item 15. Indemnification of Directors and Officers.
Pursuant to Section 102(b)(7) of the Delaware General Corporation Law (the
"DGCL"), our Certificate of Incorporation contains provisions which eliminate
the personal liability of our directors for monetary damages resulting from
breaches of their fiduciary duty other than liability for breaches of the duty
of loyalty, acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, violations under Section 174 of the
DGCL or any transaction from which the director derived an improper personal
benefit.
Section 145 of the DGCL permits, and under certain circumstances requires,
us to indemnify our directors, officers, employees, and agents subject to
certain conditions and limitations. Our Bylaws contain provisions to indemnify
our directors and officers to the fullest extent permitted by Section 145 of
the DGCL, including circumstances in which indemnification is otherwise
discretionary. In addition, we maintain officers' and directors' liability
insurance which insures against liabilities that our officers and directors may
incur in their respective capacities.
Item 16. Exhibits.
A list of the exhibits included as part of this Registration Statement is
set forth in the Exhibit Index that immediately precedes such exhibits and is
incorporated herein by this reference.
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission have been omitted because
they are inapplicable or the required information has otherwise been omitted.
Item 17. Undertakings.
We hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10 (a) (3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
II-1
<PAGE>
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
Provided, however, that paragraphs (1) (i) and (ii) do not apply if the
registration statement is on Form S-3 or Form S-8 and the information required
to be included in a post-effective amendment by those paragraphs is contained
in periodic reports filed with or furnished to the Commission by the registrant
pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424 (b) (1) or (4) or 497
(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(4) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(5) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant to section 13
(a) or 15 (d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to our directors, officers and controlling persons pursuant to
the provisions described under Item 15 above, or otherwise, we have been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by us of expenses incurred or
paid by a director, officer or controlling person of us in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Dallas, State of Texas, on November
8, 1999.
Wyndham International, Inc.
/s/ James D. Carreker
By: _________________________________
James D. Carreker
Chairman of the Board and Chief
Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated below.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/ James D. Carreker Chairman of the Board, November 8, 1999
______________________________________ Chief Executive Officer
James D. Carreker (Principal Executive
Officer) and Director
/s/ Richard L. Mahoney Executive Vice President November 8, 1999
______________________________________ and Chief Financial
Richard L. Mahoney Officer (Principal
Financial Officer and
Principal Accounting
Officer)
/s/ Karim A. Alibhai* Director November 8, 1999
______________________________________
Karim A. Alibhai
/s/ Leon Black* Director November 8, 1999
______________________________________
Leon Black
/s/ Leonard Boxer* Director November 8, 1999
______________________________________
Leonard Boxer
/s/ Norman Brownstein* Director November 8, 1999
______________________________________
Norman Brownstein
/s/ Stephen Clark* Director November 8, 1999
______________________________________
Stephen Clark
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/ Milton Fine* Director November 8, 1999
______________________________________
Milton Fine
/s/ Paul Fribourg* Director November 8, 1999
______________________________________
Paul Fribourg
/s/ Susan Groenteman* Director November 8, 1999
______________________________________
Susan Groenteman
/s/ Thomas H. Lee* Director November 8, 1999
______________________________________
Thomas H. Lee
/s/ Alan Leventhal* Director November 8, 1999
______________________________________
Alan Leventhal
/s/ William Mack* Director November 8, 1999
______________________________________
William Mack
/s/ Lee Neibart* Director November 8, 1999
______________________________________
Lee Neibart
/s/ Paul A. Nussbaum* Director November 8, 1999
______________________________________
Paul A. Nussbaum
/s/ Marc Rowan* Director November 8, 1999
______________________________________
Marc Rowan
/s/ Rolf E. Ruhfus* Director November 8, 1999
______________________________________
Rolf E. Ruhfus
/s/ Scott Schoen* Director November 8, 1999
______________________________________
Scott Schoen
/s/ Scott Sperling* Director November 8, 1999
______________________________________
Scott Sperling
/s/ Sherwood M. Weiser* Director November 8, 1999
______________________________________
Sherwood M. Weiser
/s/ James D. Carreker
*By: _________________________________
James D. Carreker
Attorney-in-fact
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- ----------------------------------------------------------------------------------
<S> <C>
4.1* Form of Subscription Warrant
5.1* Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
23.1* Consent of Ernst & Young LLP (Dallas, Texas)
23.2* Consent of PricewaterhouseCoopers LLP (Pittsburgh, Pennsylvania)
23.3* Consent of PricewaterhouseCoopers LLP (Tampa, Florida)
23.4* Consent of PricewaterhouseCoopers LLP (Miami, Florida)
23.5* Consent of PricewaterhouseCoopers LLP (Dallas, Texas)
23.6* Consent of Arthur Andersen (London, United Kingdom)
23.7* Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P. (included in Exhibit 5.1)
99.1* Form of Instructions as to Use of Subscription Warrant
99.2* Form of Notice of Guaranteed Delivery
99.3* Form of Letter to Stockholders or Limited Partners of Record
99.4* Form of Letter from Brokers or other Nominees to Beneficial Owners of Common Stock
99.5* Form of Instructions by Beneficial Owners to Brokers or Other Nominees
99.6* Form of Letter to Dealers and Other Nominees
</TABLE>
- --------
* Filed herewith.
<PAGE>
EXHIBIT 4.1 - FORM OF SUBSCRIPTION WARRANT
WYNDHAM INTERNATIONAL, INC.
SUBSCRIPTION WARRANT FOR RIGHTS OFFERING
FOR HOLDERS OF RECORD OF ITS CLASS A COMMON STOCK OR
LIMITED PARTNERSHIP UNITS OF PATRIOT AMERICAN HOSPITALITY PARTNERSHIP, L.P. OR
WYNDHAM INTERNATIONAL OPERATING PARTNERSHIP, L.P. ON SEPTEMBER 30, 1999
983101 11 4
- ------------------------------- ----------------------------------------
SUBSCRIPTION WARRANT NUMBER CUSIP NUMBER
- ------------------------------- ------ ----------------------------------------
SHARES OF SERIES A PREFERRED RIGHTS SHARES OF COMMON STOCK OWNED AS OF
STOCK ELIGIBLE TO SUBSCRIBE RECORD DATE
----------------------------------------
PARTNERSHIP UNITS OF PATRIOT
PARTNERSHIP OWNED AS OF RECORD DATE
----------------------------------------
PARTNERSHIP UNITS OF WYNDHAM
PARTNERSHIP OWNED AS OF RECORD DATE
Wyndham International, Inc. (the "Company") is conducting a rights offering
(the "Rights Offering") which entitles the holders of shares of the Company's
Class A common stock (the "Common Stock") and holders of limited partnership
units (the "Partnership Units") of Patriot American Hospitality Partnership,
L.P. (the "Patriot Partnership") or Wyndham International Operating Partnership,
L.P. (the "Wyndham Partnership"), as of the close of business on September 30,
1999 (the "Record Date"), to receive one transferable right (each, a "Right")
for each share of Common Stock, 0.95 Rights for each Partnership Unit of the
Patriot Partnership and 0.05 Rights for each Partnership Unit of the Wyndham
Partnership held of record as of the close of business on the Record Date.
Holders of Rights are entitled to subscribe for and purchase one share of Series
A Convertible Preferred Stock, par value $.01 per share (the "Series A Preferred
Stock"), for every 56.2772 Rights (the "Subscription Privilege") at a
subscription price of $100.00 per share. No fractional shares or cash in lieu
thereof will be issued or paid. Set forth above is the number of shares of
Common Stock and Partnership Units held by the registered holder whose name
appears hereon, and the number of whole shares of Series A Preferred Stock to
which such holder is entitled to subscribe pursuant to the Subscription
Privilege (rounded down, if applicable, to the nearest whole share).
For a more complete description of the terms and conditions of the Rights
Offering, please refer to the Prospectus dated November 8, 1999 (the
"Prospectus"), which is incorporated herein by reference. Copies of the
Prospectus are available upon request from ChaseMellon Consulting Services,
L.L.C. (toll free (888) 224-2745).
This Subscription Warrant (or a Notice of Guaranteed Delivery) must be
received by ChaseMellon Shareholder Services, L.L.C. (the "Subscription Agent")
together with payment in full of the subscription price by 5:00 p.m. New York
City time, on December 8, 1999 (unless extended in the sole discretion of the
Company) (as it may be extended, the "Expiration Date"). Any Rights not
exercised prior to the Expiration Date will be null and void. Any subscription
for shares of Series A Preferred Stock in the Rights Offering made hereby is
irrevocable.
The Rights represented by this Subscription Warrant may be exercised by
duly completing Form 1; may be transferred or assigned, or exercised or sold
through a bank or broker, by duly completing Form 2; and may be sold through
ChaseMellon Shareholder Services, L.L.C. by duly completing Form 3. Rights
holders are advised to review the Prospectus and instructions, copies of which
are available from ChaseMellon Shareholder Services, L.L.C., before exercising
or selling their Rights.
SUBSCRIPTION PRICE: $100.00 PER SHARE
The registered owner whose name appears hereon, or its assigns, is entitled
to subscribe for shares of Series A Preferred Stock of the Company upon the
terms and subject to the conditions set forth in the Prospectus and the
instructions relating to the use hereof.
1
<PAGE>
This Subscription Warrant is transferable, and may be combined or divided
at the office of ChaseMellon Shareholder Services, L.L.C. If the number of
transferred Rights would otherwise allow the purchase of a fractional share, the
number of shares which may be purchased must be rounded down to the nearest
whole share (or any lesser number of whole shares) that may be purchased with
that number of Rights.
Rights holders should be aware that if they choose to exercise or transfer
only part of their Rights, they may not receive a new Subscription Warrant in
sufficient time to exercise the remaining Rights evidenced thereby.
2
<PAGE>
FORM 1 (on reverse of Subscription Warrant)
EXERCISE AND SUBSCRIPTION: The undersigned hereby irrevocably exercises one or
more Rights to subscribe for shares of Series A Preferred Stock as indicated
below, on the terms and subject to the conditions specified in the Prospectus,
receipt of which is hereby acknowledged.
Total Subscription:
Number of whole shares subscribed for pursuant to the Subscription
Privilege _____ X $100.00 per share (56.2772 Rights needed to subscribe for
one share) = $_______ payment.*
METHOD OF PAYMENT (CHECK AND COMPLETE APPROPRIATE BOX(ES)):
[_] Check, bank draft, or U.S. postal money order payable to "ChaseMellon
Shareholder Services, L.L.C., as Subscription Agent" or
[_] Wire transfer directed to: The Chase Manhattan Bank; New York, NY
10001; ABA#021 000 021; Credit Acct. #323-133703; ChaseMellon
Shareholder Services, L.L.C. (Wyndham).
(a) If the Rights being exercised pursuant to the Subscription Privilege do not
constitute all of the Rights represented by the Subscription Warrant (check
only one):
[_] Deliver to the undersigned a new Subscription Warrant evidencing the
remaining Rights to which the undersigned is entitled.
[_] Deliver a new Subscription Warrant in accordance with the
undersigned's Form 2 instructions (which include any required
signature guarantees).
[_] Sell the remaining unexercised Rights in accordance with the
undersigned's Form 3 instructions.
[_] Do not deliver a new Subscription Warrant to me.
(b) [_] Check here if Rights are being exercised pursuant to the Notice of
Guaranteed Delivery delivered to the Subscription Agent prior to the
date hereof and complete the following:
Name(s) of Registered Holder(s)
Window Ticket Number (if any)
Date of Execution of Notice of Guaranteed Delivery
Name of Institution Which Guaranteed Delivery
* If the aggregate Subscription Price enclosed or transmitted is insufficient
to purchase the total number of shares set forth above, or if the number of
shares being subscribed for is not specified, the Rights holder exercising this
Subscription Warrant shall be deemed to have subscribed for the maximum amount
of shares that could be subscribed for upon payment of such amount. To the
extent any portion of the aggregate Subscription Price enclosed or transmitted
remains after the foregoing procedure, such funds shall be mailed to the
subscriber without interest or deduction as soon as practicable.
Subscriber's Signature Telephone No. ( )
------------------ ----------------------
3
<PAGE>
FORM 2 (on reverse of Subscription Warrant)
TO TRANSFER YOUR SUBSCRIPTION WARRANT OR SOME OR ALL OF YOUR RIGHTS, OR TO
EXERCISE OR SELL RIGHTS THROUGH YOUR BANK OR BROKER:
For value received, _________ Rights represented by this Subscription Warrant
are hereby assigned to (please print full name and address and Taxpayer
Identification Number or Social Security Number of transferee):
Name:
---------------------------------------------------------
Address:
------------------------------------------------------
- --------------------------------------------------------------
Signature(s) of Transferor(s)
Signature(s) Guaranteed by:
-----------------------------------
Proceeds from the sale of Rights may be subject to withholding of U.S. taxes
unless the seller's certified U.S. taxpayer identification number (or
certificate regarding foreign status) is on file with the Subscription Agent and
the seller is not otherwise subject to U.S. backup withholding.
4
<PAGE>
FORM 3 (on reverse of Subscription Warrant)
TO SELL SOME OR ALL OF YOUR UNEXERCISED RIGHTS THROUGH THE SUBSCRIPTION AGENT:
The undersigned hereby authorizes the Subscription Agent to sell _______ Rights
represented by this Subscription Warrant but not exercised hereby and to deliver
to the undersigned a check for the proceeds, if any, from the sale thereof, less
any applicable brokerage commissions, taxes or other direct expenses of sale.
The Subscription Agent's obligation to execute orders is subject to its ability
to find buyers for the Rights.
- -----------------------------------------------------------
Subscriber's Signature
In order to sell Rights through the Subscription Agent, you must complete and
sign the substitute Form W-9 as provided in Section 8 of the instructions.
5
<PAGE>
FORM 4 (on reverse of Subscription Warrant)
DELIVERY INSTRUCTIONS: Address for mailing of Series A Preferred Stock or new
Subscription Warrant or any cash payment in accordance with the Prospectus, if
different from the address shown on the face of this Subscription Warrant:
Name:
-----------------------------------------------------------
Address:
--------------------------------------------------------
6
<PAGE>
EXHIBIT 5.1
[AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P. LETTERHEAD]
[LOGO OF AKIN LETTERHEAD]
November 5, 1999
Wyndham International, Inc
1950 Stemmons Freeway
Suite 6001
Dallas, Texas 75207
Ladies and Gentlemen:
We have acted as counsel to Wyndham International, Inc., a Delaware
corporation (the "Company"), in connection with the filing of a Registration
Statement on Form S-3, Registration No. 333-85029 (as amended, the
"Registration Statement") with the Securities and Exchange Commission pursuant
to the Securities Act of 1933, as amended (the "Securities Act"), and the rules
and regulations promulgated thereunder, for the registration of (i) up to
3,000,000 shares of the Company's Series A Convertible Preferred Stock, par
value $0.01 per share (the "Series A Preferred Stock"), and (ii) an
indeterminable number of shares of the Company's Class A Common Stock, par
value $0.01 per share (the "Common Stock"). In connection with the registration
and offering thereby of the Series A Preferred Stock, the Company will issue
transferable rights to purchase up to an aggregate of 3,000,000 shares of
Series A Preferred Stock (the "Rights" and, together with the Series A
Preferred Stock and the Common Stock, the "Securities").
We have, as counsel, examined originals or copies, certified or otherwise
identified to our satisfaction, of such corporate records, agreements,
documents and other instruments, and such certificates or comparable documents
of public officials and of officers and representatives of the Company, and
have made such inquiries of such officers and representatives as we have deemed
relevant and necessary as a basis for the opinion hereinafter set forth.
In such examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such latter documents. In
addition, we have assumed that the Securities shall be issued for consideration
that has a value of at least the par value thereof in the case of the Series A
Preferred Stock and Common Stock. As to all questions of fact material to this
opinion that have not been independently established, we have relied upon
certificates or comparable documents of officers and representatives of the
Company.
Based upon such examination and representations, we advise you that, in our
opinion, the Securities have been duly authorized, and (i) upon issuance of the
Rights in conformity with and pursuant to the Registration Statement, (ii) upon
issuance of the shares of Series A Preferred Stock upon the exercise of Rights
in
<PAGE>
accordance with the terms described in the Registration Statement, and (iii)
upon conversion of Series A Preferred Stock into Common Stock at the current
Conversion Price, as such term is defined in the Certificate of Designation of
Series A Convertible Preferred Stock of Wyndham International, Inc., dated June
29, 1999 (the "Certificate of Designation"), of $8.59 per share and otherwise
in accordance with the terms of the Certificate of Designation, such Securities
will be validly issued, fully paid and non-assessable.
The foregoing opinion is limited to the corporate laws of the State of
Delaware and we express no opinion as to the effect on the matters covered by
this letter of any other law.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In addition, we consent to the reference to us under
the caption "Legal Matters" in the prospectus forming a part of the
Registration Statement.
This opinion is rendered solely to you in connection with the above matter.
This opinion may not be relied upon by you for any other purpose or relied upon
by or furnished to any other person without our prior written consent.
Very truly yours,
/s/ Akin, Gump, Strauss, Hauer & Feld,
L.L.P.
__________________________________________
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 1 to the Registration Statement on Form S-3 (No. 333-85029) and
the related Prospectus of Wyndham International, Inc. and to the incorporation
by reference therein of our reports (1) dated March 1, 1999 with respect to the
Consolidated Financial Statements and financial statement schedules of Patriot
American Hospitality, Inc., the Consolidated Financial Statements of Wyndham
International, Inc. and the Combined Financial Statements of Patriot American
Hospitality, Inc. and Wyndham International, Inc. included in the 1998 Joint
Annual Report on Form 10-K/A of Patriot American Hospitality, Inc. and Wyndham
International, Inc.; (2) (a) dated August 7, 1997 (except for Note 18, as to
which the date is September 17, 1997) with respect to the Consolidated
Financial Statements of WHG Resorts & Casinos Inc. and related financial
statement schedule, (b) dated August 7, 1997 with respect to the Financial
Statements of Posadas de San Juan Associates and related financial statement
schedule, (c) dated August 11, 1997 with respect to the Financial Statements of
WKA El Con Associates, and (d) dated May 2, 1997 with respect to the Financial
Statements of El Conquistador Partnership L.P., all of which are included in
the Joint Current Report on Form 8-K of Patriot American Hospitality, Inc. and
Wyndham International, Inc. dated April 20, 1998; (3) (a) dated March 4, 1998
with respect to the Consolidated Financial Statements of SF Hotel Company,
L.P., and (b) dated February 3, 1998 with respect to the Combined Financial
Statements of SC Suites Summerfield Partnerships, both of which are included in
the Joint Current Report on Form 8-K/A No. 1 of Patriot American Hospitality,
Inc. and Wyndham International, Inc. dated June 2, 1998, filed with the
Securities and Exchange Commission.
/S/ ERNST & YOUNG LLP
Dallas, Texas
November 5, 1999
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and to
the incorporation by reference in Amendment No. 1 to the Registration Statement
on Form S-3 of Wyndham International, Inc., (No. 333-85029) of our report dated
February 11, 1998, except for Note 21, as to which the date is March 1, 1998,
and Note 3, as to which the date is March 30, 1998, on our audit of the
consolidated financial statements of Interstate Hotels Company, as of December
31, 1996 and 1997 and for each of the three years in the period ended December
31, 1997 included in the Joint Current Report on Form 8-K of Patriot American
Hospitality, Inc. and Wyndham International, Inc. dated April 20, 1998.
/s/ PriceWaterhouseCoopers LLP
Pittsburgh, Pennsylvania
November 5, 1999
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and to
the incorporation by reference in Amendment No. 1 to the Registration Statement
on Form S-3 of Wyndham International, Inc., (No. 333-85029) of our report dated
January 23, 1998, on our audit of the financial statements of Royal Palace
Hotel Associates, as of December 31, 1996 and 1997 and for each of the two
years in the period ended December 31, 1997 included in the Current Report on
Form 8-K of Patriot American Hospitality, Inc. and Wyndham International, Inc.
dated June 2, 1998.
/S/ PRICEWATERHOUSECOOPERS LLP
Tampa, Florida
November 5, 1999
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and to
the incorporation by reference in Amendment No. 1 to the Registration Statement
on Form S-3 of Wyndham International, Inc., (No. 333-85029) of our report dated
February 27, 1998, relating to the financial statements of CHC International
Inc. Hospitality Division, as of November 30, 1996 and 1997 and for each of the
years ended November 30, 1995, 1996 and 1997 included in the Joint Current
Report on Form 8-K of Patriot American Hospitality, Inc. and Wyndham
International, Inc. dated April 20, 1998.
/S/ PRICEWATERHOUSECOOPERS LLP
Miami, Florida
November 5, 1999
<PAGE>
EXHIBIT 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and to
the incorporation by reference in Amendment No. 1 to the Registration Statement
on Form S-3 of Wyndham International, Inc., (No. 333-85029) of our reports (i)
dated December 12, 1997, on our audit of financial statements of Sheraton City
Centre as of and for the year ended December 31, 1996, included in the Joint
Current Report on Form 8-K of Patriot American Hospitality, Inc. and Wyndham
International, Inc. dated January 5, 1998; (ii) dated December 12, 1997 on our
audit of the Statement of Direct Revenue and Direct Operating Expenses of
Wyndham Emerald Plaza for the year ended December 31, 1996, included in the
Current Report on Form 8-K of Patriot American Hospitality, Inc. and Wyndham
International, Inc. dated January 5, 1998 and (iii) dated February 12, 1998, on
our audit of the consolidated financial statements of Wyndham Hotel Corporation
as of December 31, 1996 and 1997, and for each of the three years in the period
ended December 31, 1997 included in the Current Report on Form 8-K of Patriot
American Hospitality, Inc. and Wyndham International, Inc. dated April 20,
1998.
/S/ PRICEWATERHOUSECOOPERS LLP
Dallas, Texas
November 5, 1999
<PAGE>
EXHIBIT 23.6
CONSENT OF CHARTERED ACCOUNTANTS
As Chartered Accountants, we hereby consent to the incorporation by
reference in Amendment No. 1 to the Registration Statement on Form S-3 and the
related prospectus of Wyndham International, Inc. for the rights offering of
3,000,000 shares of series A convertible preferred stock to be filed with the
Securities and Exchange Commission on or about 8 November 1999 of our reports
on the financial statements of Arcadian International Limited (formerly
Arcadian International Plc) and subsidiary undertakings and Malmaison Limited
and subsidiary undertakings dated 22 July 1998 and 17 July 1998 respectively,
except with respect to Note 1 of those financial statements as to which the
date of our report is 24 March 1999, which are included in the Joint Current
Report on Form 8-K/A No. 2 of Patriot American Hospitality, Inc. and Wyndham
International, Inc., dated 2 June 1998.
/S/ ARTHUR ANDERSEN
1 Surrey Street
London
WC2R 2PS
8 November, 1999
<PAGE>
EXHIBIT 99.1--FORM OF INSTRUCTIONS AS TO USE OF SUBSCRIPTION WARRANTS
INSTRUCTIONS AS TO USE OF WYNDHAM INTERNATIONAL, INC.
SUBSCRIPTION WARRANTS
CONSULT CHASEMELLON CONSULTING SERVICES, L.L.C., YOUR BANK OR YOUR BROKER WITH
ANY QUESTIONS
The following instructions relate to a rights offering (the "Rights
Offering") by Wyndham International, Inc., a Delaware corporation (the
"Company"), to the holders of its Class A Common Stock (the "Common Stock")
and to the holders of limited partnership units (the "Partnership Units") in
Patriot American Hospitality Partnership, L.P. (the "Patriot Partnership") or
Wyndham International Operating Partnership, L.P. (the "Wyndham Partnership"),
as described in the Company's Prospectus dated November 8, 1999 (the
"Prospectus"). Holders of record of shares of the Common Stock as of the close
of business on September 30, 1999 (the "Record Date") are receiving one (1)
transferable subscription right (collectively, the "Rights") for each share of
Common Stock held as of the close of business on the Record Date. Holders of
record of Partnership Units of the Patriot Partnership as of the close of
business on the Record Date are receiving 0.95 Rights for each Partnership
Unit held as of the close of business on the Record Date. Holders of record of
Partnership Units of the Wyndham Partnership as of the close of business on
the Record Date are receiving 0.05 Rights for each Partnership Unit held as of
the close of business on the Record Date.
Holders of Rights are entitled to purchase one (1) share of the Company's
Series A Convertible Preferred Stock (the "Series A Preferred Stock") for
every 56.2772 Rights granted (the "Subscription Privilege") upon payment of
$100.00 in cash per share of Series A Preferred Stock purchased (the
"Subscription Price"). In this Rights Offering, the Company is distributing an
aggregate of 168,831,637 Rights exercisable to purchase an aggregate of
3,000,000 shares of Series A Preferred Stock.
No fractional shares or cash in lieu thereof will be issued or paid. The
number of shares which may be purchased by the exercise of Rights must be
rounded down to the nearest whole number in order to avoid issuing fractional
shares.
The Rights will expire at 5:00 p.m., New York City time, on December 8,
1999, unless extended (the "Expiration Date"). The Company does not intend to
list the Rights on any exchange.
The number of Rights to which you are entitled is printed on the face of
your Subscription Warrant. You should indicate your wishes with regard to the
exercise or sale of your Rights by completing the appropriate form or forms on
your Subscription Warrant and returning it to ChaseMellon Shareholder
Services, L.L.C. (the "Subscription Agent") in the envelope provided.
In order to exercise Rights, the Subscription Agent must have received from
you (1) your Subscription Warrant, or you must have timely complied with the
guaranteed delivery requirements for your Subscription Warrant, and (2)
payment of the full Subscription Price, including final clearance of any
checks, on or before 5:00 p.m., New York City time, on the Expiration Date.
You may not revoke any exercise of a Right.
1. Subscription Privilege.
To exercise Rights, complete Form 1 and send your properly completed and
executed Subscription Warrant, together with payment in full of the
Subscription Price for each share of Series A Preferred Stock subscribed for
pursuant to the Subscription Privilege, to the Subscription Agent. Payment of
the Subscription Price must be made in U.S. dollars for the full number of
shares of Series A Preferred Stock being subscribed for by (a) certified or
cashier's check or bank draft drawn upon a U.S. bank, U.S. postal money order,
or personal check payable to "ChaseMellon Shareholder Services, L.L.C., as
Subscription Agent", or (b) wire transfer of same day funds to the account
maintained by the Subscription Agent for such purpose at: The Chase Manhattan
Bank, New York, NY 10001; ABA#021000021; Credit Account #323-133703;
ChaseMellon Shareholder Services, L.L.C. (Wyndham).
1
<PAGE>
The Subscription Price will be deemed to have been received by the
Subscription Agent only upon (i) the clearance of any personal check, (ii) the
receipt by the Subscription Agent of any certified check or bank draft drawn
upon a U.S. bank or any U.S. postal money order, or (iii) the receipt of good
funds in the Subscription Agent's account designated above. If you are paying
by personal check, please note that the funds paid thereby may take at least
five business days to clear. Accordingly, holders of the Rights who wish to
pay the Subscription Price by means of personal check are urged to make
payment sufficiently in advance of the Expiration Date to ensure that their
payment is received and clears by the Expiration Date and are urged to
consider payment by means of certified or cashier's check, U.S. postal money
order or wire transfer of funds.
Alternatively, you may cause a written guarantee substantially in the form
of the Notice of Guaranteed Delivery included along with these instructions
(the "Notice of Guaranteed Delivery") to be received by the Subscription Agent
at or prior to the Expiration Date together with payment in full of the
applicable Subscription Price. A Notice of Guaranteed Delivery must be
properly signed and completed by both (i) the holder of a Subscription
Warrant, and (ii) a member firm of a registered national securities exchange,
an NASD member, a commercial bank or trust company having an office or
correspondent in the United States or other eligible guarantor institution
which is a member of or a participant in a signature guarantee program
acceptable to the Subscription Agent (each of the foregoing being an "Eligible
Institution"). The Notice of Guaranteed Delivery (1) must state your name, the
number of Rights represented by your Subscription Warrant, and the number of
Rights being exercised pursuant to the Subscription Privilege and (2) must
guarantee the delivery to the Subscription Agent of your properly completed
and executed Subscription Warrant within three New York Stock Exchange trading
days following the date of the Notice of Guaranteed Delivery. If this
procedure is followed, your Subscription Warrant must be received by the
Subscription Agent within three New York Stock Exchange trading days of the
Notice of Guaranteed Delivery. Additional copies of the Notice of Guaranteed
Delivery may be obtained upon request from the Subscription Agent at the
address, or by calling the telephone number, indicated below.
You may also sell or transfer your Subscription Warrant, or request your
broker or bank to exercise your Subscription Warrant on your behalf, in
accordance with the procedures specified in instruction 3.
Banks, brokers or other nominee holders of the Rights who exercise the
Rights on behalf of beneficial owners of the Rights will be required to
certify to the Subscription Agent as to the aggregate number of Rights that
have been exercised by each beneficial owner of Rights on whose behalf such
nominee holder is acting.
The address and facsimile numbers of the Subscription Agent are as follows:
By Mail: Facsimile Transmission
ChaseMellon Shareholder Services, (eligible institutions only):
L.L.C.
P.O. Box 3301 (201) 296-4293
South Hackensack, NJ 07606
Attn.: Reorganization Department To confirm receipt of facsimile only
(201) 296-4860
By Hand: If by Overnight Courier:
ChaseMellon Shareholder Services, ChaseMellon Shareholder Services,
L.L.C. L.L.C.
120 Broadway, 13th Floor 85 Challenger Road
New York, NY 10271 Mail Stop-Reorg
Attn.: Reorganization Department Ridgefield Park, NJ 07660
Attn.: Reorganization Department
2
<PAGE>
The address and telephone number of ChaseMellon Consulting Services, L.L.C.,
the information agent, for inquiries, information or requests for additional
documentation is as follows:
450 W. 33rd Street
Fourteenth Floor
New York, NY 10001
(212) 273-8080
(banks and brokers call collect)
CALL TOLL-FREE
(888) 224-2745
If you exercise less than all of the Rights evidenced by your Subscription
Warrant by so indicating in Form 1 of your Subscription Warrant, the
Subscription Agent will issue to you a new Subscription Warrant evidencing the
unexercised Rights. However, if you choose to have a new Subscription Warrant
sent to you, you may not receive the new Subscription Warrant in sufficient
time to permit you to sell or exercise the Rights evidenced thereby. If you
have not indicated the number of Rights being exercised, or if you have not
forwarded full payment of the Subscription Price for the number of shares of
Series A Preferred Stock to be purchased according to the number of Rights
that you have indicated are being exercised, you will be deemed to have
exercised your Subscription Privilege with respect to the maximum number of
Rights which may be exercised for the Subscription Price payment delivered by
you.
2. Delivery of Series A Preferred Stock.
The following deliveries and payments will be made to the address shown on
the face of your Subscription Warrant unless you provide instructions to the
contrary on Form 4.
(a) Series A Preferred Stock Certificates. As soon as practicable after the
Expiration Date, the Subscription Agent will mail to each Rights holder who
validly exercises his or her Subscription Privilege certificates representing
the number of shares of Series A Preferred Stock purchased pursuant to the
Subscription Privilege.
(b) Cash Payments. As soon as practicable after the Expiration Date, the
Subscription Agent will mail to each Rights holder who purports to exercise
the Subscription Privilege with respect to any fractional shares, any excess
funds, without interest, received in payment of the Subscription Price.
3. To Sell or Transfer Rights.
(a) Sale or Exercise of Rights through a Bank or Broker. To sell or exercise
all the Rights evidenced by a Subscription Warrant through your bank or
broker, you should transfer the Rights to your bank or broker as indicated on
Form 2 and deliver your properly completed and executed Subscription Warrant
to your bank or broker. Your Subscription Warrant should be delivered to your
bank or broker in ample time for it to be exercised. If Form 2 is completed
without designating a transferee, the Subscription Agent may thereafter treat
the bearer of the Subscription Warrant as the absolute owner of all of the
Rights evidenced by such Subscription Warrant for all purposes, and the
Subscription Agent shall not be affected by any notice to the contrary.
Because your bank or broker cannot issue Subscription Warrants, if you wish to
sell or exercise less than all of the Rights evidenced by a Subscription
Warrant, either you or your bank or broker must instruct the Subscription
Agent as to the action to be taken with respect to the Rights not sold, or you
or your bank or broker must first have your Subscription Warrant divided into
Subscription Warrants of appropriate denominations by following the
instructions in instruction 4 herein. The Subscription Warrants evidencing the
number of Rights you intend to sell can then be transferred by your bank or
broker in accordance with the instructions in this instruction 3(a).
(b) Transfer of Rights to a Designated Transferee. To transfer all of your
Rights to a transferee other than a bank or broker, you must complete Form 2
in its entirety, execute the Subscription Warrant and have your
3
<PAGE>
signature guaranteed by an Eligible Institution. A Subscription Warrant that
has been properly transferred in its entirety may be exercised by a new holder
without having a new Subscription Warrant issued. Because only the
Subscription Agent can issue Subscription Warrants, if you wish to transfer
less than all of the Rights evidenced by your Subscription Warrant to a
designated transferee, you must instruct the Subscription Agent as to the
action to be taken with respect to the Rights not sold or transferred, or you
must divide your Subscription Warrant into Subscription Warrants of
appropriate smaller denominations by following the instructions in instruction
4 herein. The Subscription Warrant evidencing the number of Rights you intend
to transfer can then be transferred by following the instructions in this
instruction 3(b).
(c) Sale of Rights Through the Subscription Agent. To sell all Rights
evidenced by a Subscription Warrant through the Subscription Agent, so
indicate on Form 3 and deliver your properly completed and exercised
Subscription Warrant to the Subscription Agent. If you wish to sell less than
all of the Rights evidenced by a Subscription Warrant, you must instruct the
Subscription Agent as to the action to be taken with respect to the Rights not
sold, or you may have your Subscription Warrant divided into Subscription
Warrants of appropriate denominations by following the instructions in
instruction 4 herein. The Subscription Warrant evidencing the number of Rights
you intend to transfer can then be transferred by following the instructions
in this instruction 3(c). Promptly following the Expiration Date, the
Subscription Agent will send the holder a check for the net proceeds from the
sale of any Rights sold. Orders to sell Rights must be received by the
Subscription Agent on or before 11:00 a.m., New York City time on December 3,
1999. No assurance can be given that a market will develop for the Rights or
that the Subscription Agent will be able to sell any Rights.
4. To Have a Subscription Warrant Divided into Smaller Denominations.
Send your Subscription Warrant, together with complete separate instructions
(including specification of the denominations into which you wish your Rights
to be divided) signed by you, to the Subscription Agent, allowing a sufficient
amount of time for new Subscription Warrants to be issued and returned so that
they can be used prior to the Expiration Date. Alternatively, you may ask a
bank or broker to effect such actions on your behalf. Your signature must be
guaranteed by an Eligible Institution if any of the new Subscription Warrants
are to be issued in a name other than that in which the old Subscription
Warrant was issued.
Subscription Warrants may not be exercised in a manner that would result in
the purchase of a fractional share of Series A Preferred Stock, and any
instruction to do so will be rejected and rounded down to the nearest whole
share to the extent of payment actually received (with a refund to you of any
excess payment actually received for any fractional share by the Subscription
Agent). As a result of delays in the mail, the time of the transmittal, the
necessary processing time and other factors, you or your transferee may not
receive such new Subscription Warrants in time to enable you to complete a
sale or exercise the associated Rights by the Expiration Date. Neither the
Company nor the Subscription Agent will be liable to either a transferor or
transferee for any such delays.
5. Execution.
(a) Execution by Registered Holder. The signature on the Subscription
Warrant must correspond with the name of the registered holder exactly as it
appears on the face of the Subscription Warrant without any alteration or
change whatsoever. Persons who sign the Subscription Warrant in a
representative or other fiduciary capacity must indicate their capacity when
signing and, unless waived by the Subscription Agent in its sole and absolute
discretion, must present to the Subscription Agent satisfactory evidence of
their authority to so act.
(b) Execution by Person Other than Registered Holder. If the Subscription
Warrant is executed by a person other than the holder named on the face of the
Subscription Warrant, proper evidence of authority of the person executing the
Subscription Warrant must accompany the same unless, for good cause, the
Subscription Agent dispenses with proof of authority.
(c) Signature Guarantees. Your signature must be guaranteed by an Eligible
Institution if you wish to transfer your Rights, as specified in instruction
3(b) above, to a transferee other than a bank or broker or the Subscription
Agent, or if you specify special payment or delivery instructions pursuant to
Form 4.
4
<PAGE>
6. Method of Delivery.
The method of delivery of Subscription Warrants and payment of the Exercise
Price to the Subscription Agent will be at the election and risk of the Rights
holder, but, if sent by mail, it is recommended that they be sent by
registered mail, properly insured, with return receipt requested, and that a
sufficient number of days be allowed to ensure delivery to the Subscription
Agent and the clearance of any checks sent in payment of the Subscription
Price prior to 5:00 p.m., New York City time, on the Expiration Date.
7. Special Provisions Relating to the Delivery of Rights Through the
Depository Trust Company.
In the case of holders of Rights that are held of record through The
Depository Trust Company ("DTC"), exercises of the subscription privilege may
be effected by instructing your bank or broker to transfer Rights from the DTC
account of such holder to the DTC account of the Subscription Agent, together
with payment of the Subscription Price for each share of Series A Preferred
Stock subscribed for pursuant to the Subscription Privilege.
8. Substitute Form W-9.
Each Rights holder who elects to exercise the Rights and those foreign
holders of Common Stock or Partnership Units who allow the Subscription Agent
to sell such foreign holder's Rights should provide the Subscription Agent
with a correct Taxpayer Identification Number ("TIN") on Substitute Form W-9,
which is included along with these instructions. Additional copies of the
Substitute Form W-9 may be obtained upon request from the Subscription Agent
at the address, or by calling the telephone number, indicated above. Failure
to provide the information on the form may subject such holder to 31% federal
income tax withholding with respect to (i) dividends that may be paid by the
Company on shares of Series A Preferred Stock purchased upon the exercise of
Rights (for those holders exercising Rights), or (ii) funds to be remitted to
Rights holders in respect of Rights sold by the Subscription Agent (for those
holders electing to have the Subscription Agent sell their Rights).
5
<PAGE>
EXHIBIT 99.2--FORM OF NOTICE OF GUARANTEED DELIVERY
NOTICE OF GUARANTEED DELIVERY
FOR
SUBSCRIPTION WARRANTS
ISSUED BY
WYNDHAM INTERNATIONAL, INC.
This form, or one substantially similar hereto, must be used to exercise the
Rights pursuant to the Rights Offering described in the Prospectus dated
November 8, 1999 (the "Prospectus") of Wyndham International, Inc., a Delaware
corporation (the "Company"), if a holder of the Rights cannot deliver the
Subscription Warrant(s) evidencing the Rights to ChaseMellon Shareholder
Services, L.L.C. at or prior to 5:00 p.m. New York City time on December 8,
1999, unless extended (the "Expiration Date"). Such form must be delivered by
hand or sent by facsimile transmission or mail to ChaseMellon Shareholder
Services, L.L.C., and must be received by ChaseMellon Shareholder Services,
L.L.C. on or prior to 5:00 p.m., New York City time, on the Expiration Date.
See the discussion set forth under "THE RIGHTS OFFERING--Special Procedure
under "Notice of Guaranteed Delivery' Form" in the Prospectus.
Regardless of the manner of delivery of the Subscription Warrants, payment
of the Subscription Price of $100.00 per share for each share of Series A
Convertible Preferred Stock subscribed for upon exercise of such Rights must
be received by ChaseMellon Shareholder Services, L.L.C. in the manner
specified in the Prospectus at or prior to 5:00 p.m., New York City time, on
the Expiration Date.
The Subscription Agent is:
ChaseMellon Shareholder Services, L.L.C.
By Mail: Facsimile Transmission
(eligible institutions only):
ChaseMellon Shareholder Services,
L.L.C. (201) 296-4293
P.O. Box 3301
South Hackensack, NJ 07606 To confirm receipt of facsimile only
Attn: Reorganization Department (201) 296-4860
By Hand: If by Overnight Courier:
ChaseMellon Shareholder Services, ChaseMellon Shareholder Services,
L.L.C. L.L.C.
120 Broadway, 13th Floor 85 Challenger Road
New York NY 10271 Mail Stop--Reorg
Attn: Reorganization Department Ridgefield Park, NJ 07660
Attn: Reorganization Department
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
1
<PAGE>
Gentlemen:
The undersigned hereby represents that he or she is the holder of
Subscription Warrant(s) representing ______ Rights and that such Subscription
Warrant(s) cannot be delivered to the Subscription Agent at or before 5:00
p.m., New York City time, on the Expiration Date. Upon the terms and subject
to the conditions set forth in the Prospectus, receipt of which is hereby
acknowledged, the undersigned hereby elects to exercise the Subscription
Privilege to subscribe for one share of Series A Preferred Stock per 56.2772
Rights represented by such Subscription Warrant. The undersigned understands
that payment of the Subscription Price of $100.00 per share for each share of
Series A Preferred Stock subscribed for pursuant to the Subscription Privilege
must be received by the Subscription Agent at or before 5:00 p.m., New York
City time, on the Expiration Date. The undersigned represents that such
payment, in the aggregate amount of $___, either (check appropriate box):
[_] is being delivered to ChaseMellon Shareholder Services, L.L.C. herewith or
[_] has been delivered separately to ChaseMellon Shareholder Services, L.L.C.;
and is or was delivered in the manner set forth below (check appropriate box
and complete information relating thereto):
[_] wire transfer of funds
-- name of transferor institution
--------------------------------------------
-- date of transfer
----------------------------------------------------------
-- confirmation number (if available)
----------------------------------------
[_] uncertified check (Payment by uncertified check will not be deemed to have
been received by the Subscription Agent until such check has cleared.
Holders paying by such means are urged to make payment sufficiently in
advance of the Expiration Date to ensure that such payment clears by such
date.)
[_] certified check
[_] bank draft (cashier's check)
[_] U.S. postal money order
--name of maker
--------------------------------------------------------------
--date of check, draft or money order number
---------------------------------
--bank on which check is drawn or issuer of money order
----------------------
Signature(s)
---------------------------------------------------------------
Name(s)
---------------------------------------------------------------------
(Please Type or Print)
Address(es)
----------------------------------------------------------------
(Zip Code)
Area Code and Tel. No(s).
-----------------------------------------------------
Subscription Warrant No(s). (if available)
-------------------------------------
2
<PAGE>
GUARANTY OF DELIVERY
(NOT TO BE USED FOR SUBSCRIPTION WARRANT SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities exchange
or member of the National Association of Securities Dealers, Inc., commercial
bank or trust company having an office or correspondent in the United States,
or other eligible guarantor institution which is a member of or a participant
in a signature guarantee program acceptable to ChaseMellon Shareholder
Services, L.L.C., guarantees that the undersigned will deliver to ChaseMellon
Shareholder Services, L.L.C. the certificates representing the Rights being
exercised hereby, with any required signature guarantees and any other
required documents, all within three New York Stock Exchange trading days
after the date hereof.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Address)
- -------------------------------------------------------------------------------
(Area Code and Telephone Number)
Dated: , 1999
--------------
(Name of Firm)
-----------------------------------------------------------------
(Authorized Signature)
---------------------------------------------------------
The institution which completes this form must communicate the guarantee to
ChaseMellon Shareholder Services, L.L.C. and must deliver the Subscription
Warrant(s) to ChaseMellon Shareholder Services, L.L.C. within the time period
shown herein. Failure to do so could result in a financial loss to such
institution.
3
<PAGE>
EXHIBIT 99.3--FORM OF LETTER TO STOCKHOLDERS AND LIMITED PARTNERS OF RECORD
WYNDHAM INTERNATIONAL, INC.
3,000,000 SHARES OF SERIES A CONVERTIBLE PREFERRED STOCK
INITIALLY OFFERED PURSUANT TO RIGHTS
DISTRIBUTED TO STOCKHOLDERS OF
WYNDHAM INTERNATIONAL, INC. AND
LIMITED PARTNERS OF
PATRIOT AMERICAN HOSPITALITY PARTNERSHIP L.P. OR
WYNDHAM INTERNATIONAL OPERATING PARTNERSHIP, L.P.
Dear Stockholders and Limited Partners:
This letter is being distributed to all holders of Class A Common Stock (the
"Common Stock") of Wyndham International, Inc. (the "Company") and holders of
limited partnership units (the "Partnership Units") of Patriot American
Hospitality Partnership, L.P. (the "Patriot Partnership") or Wyndham
International Operating Partnership, L.P. (the "Wyndham Partnership") of
record as of the close of business on September 30, 1999 (the "Record Date")
in connection with a distribution of transferable rights ("Rights") to acquire
shares of Series A Convertible Preferred Stock (the "Series A Preferred
Stock") of the Company at a subscription price of $100.00 per share as
described in the Prospectus dated November 8, 1999.
Each holder of shares of Common Stock is entitled to receive one Right for
each share of Common Stock owned as of the close of business on the Record
Date; each holder of Partnership Units of the Patriot Partnership is entitled
to receive 0.95 Rights for each Partnership Unit owned as of the close of
business on the Record Date; and each holder of Partnership Units of the
Wyndham Partnership is entitled to receive 0.05 Rights for each Partnership
Unit owned as of the close of business on the Record Date. Holders of Rights
are entitled to purchase one (1) share of Series A Preferred Stock for every
56.2772 Rights held. No fractional shares or cash in lieu thereof will be
issued or paid. The number of shares which may be purchased pursuant to the
exercise of Rights must be rounded down to the nearest whole number (or any
lesser number of whole shares) in order to avoid issuing fractional shares.
Enclosed are copies of the following documents:
1. The Prospectus;
2. The Subscription Warrant;
3. The "Instructions as to Use of Wyndham International, Inc.
Subscription Warrant" (including Guidelines For Certification of Taxpayer
Identification Number on Substitute Form W-9);
4. A Notice of Guaranteed Delivery for Subscription Warrants issued by
Wyndham International, Inc.; and
5. A return envelope addressed to ChaseMellon Shareholder Services,
L.L.C., the subscription agent.
Your prompt action is requested. The Rights will expire at 5:00 P.M., New
York City time, on December 8, 1999, unless extended by the Company (the
"Expiration Date").
To exercise the Rights, a properly completed and executed Subscription
Warrant (or Notice of Guaranteed Delivery) and payment in full for all of the
Rights exercised must be delivered to ChaseMellon Shareholder Services, L.L.C.
as indicated in the Prospectus prior to 5:00 P.M., New York City time, on the
Expiration Date.
Additional copies of the enclosed materials may be obtained from ChaseMellon
Consulting Services, L.L.C., the information agent. Its toll-free telephone
number is (888) 224-2745.
Very truly yours,
WYNDHAM INTERNATIONAL, INC.
<PAGE>
EXHIBIT 99.4--FORM OF LETTER FROM BROKERS OR OTHER NOMINEES TO BENEFICIAL
OWNERS
3,000,000 SHARES OF SERIES A CONVERTIBLE PREFERRED STOCK INITIALLY OFFERED
PURSUANT TO RIGHTS DISTRIBUTED TO STOCKHOLDERS OF
WYNDHAM INTERNATIONAL, INC. AND
LIMITED PARTNERS OF PATRIOT AMERICAN HOSPITALITY PARTNERSHIP, L.P. OR
WYNDHAM INTERNATIONAL OPERATING PARTNERSHIP, L.P.
To Our Clients:
Enclosed for your consideration are a Prospectus, dated November 8, 1999,
and the "Instructions as to Use of Wyndham International, Inc. Subscription
Warrants" relating to the offer by Wyndham International, Inc. (the "Company")
of shares of Series A Convertible Preferred Stock (the "Series A Preferred
Stock") of the Company, at a subscription price of $100.00 per share, in cash,
pursuant to transferable subscription rights (the "Rights") initially
distributed to holders of record ("Record Owners") of shares of the Company's
Class A Common Stock (the "Common Stock") and Record Owners of limited
partnership units of Patriot American Hospitality Partnership, L.P. or Wyndham
International Operating Partnership, L.P. as of the close of business on
September 30, 1999 (the "Record Date").
As described in the Prospectus, you will receive one Right for each share of
Common Stock carried by us in your account as of the close of business on the
Record Date. You are entitled to subscribe for one (1) share of the Series A
Preferred Stock for every 56.2772 Rights granted to you at a subscription
price of $100.00 per share (the "Subscription Price"). No fractional shares or
cash in lieu thereof will be issued or paid. The number of shares which may be
purchased pursuant to the exercise of Rights must be rounded down to the
nearest whole number (or any lesser number of whole shares) in order to avoid
issuing fractional shares. Rights are transferable, and holders that wish to
sell their Rights may do so. The Rights are not listed on any exchange. If a
trading market for the Rights develops, the Rights will be eligible for
trading up to the close of business on the Expiration Date.
THE MATERIALS ENCLOSED ARE BEING FORWARDED TO YOU AS THE BENEFICIAL OWNER OF
THE SHARES OF COMMON STOCK AS OF THE CLOSE OF BUSINESS ON THE RECORD DATE
CARRIED BY US IN YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME. EXERCISES AND
SALES OF THE RIGHTS MAY BE MADE BY ONLY US AS THE RECORD OWNER AND PURSUANT TO
YOUR INSTRUCTIONS. Accordingly, we request instructions as to whether you wish
us to elect to subscribe for any shares of Series A Preferred Stock, or sell
any Rights pursuant to the terms and subject to the conditions set forth in
the enclosed Prospectus and "Instructions as to Use of Wyndham International,
Inc. Subscription Warrants." However, we urge you to read these documents
carefully before instructing us to exercise or sell the Rights.
Your instructions to us should be forwarded as promptly as possible in order
to permit us to exercise or sell Rights on your behalf in accordance with the
provisions of the offering described in the Prospectus. The offering will
expire at 5:00 P.M., New York City time, on December 8, 1999, unless the
offering is extended by the Company. Once you have exercised a Right, such
exercise may not be revoked.
If you wish to have us, on your behalf, exercise the Rights for any shares
of Series A Preferred Stock to which you are entitled, or sell such Rights,
please so instruct us by completing, executing and returning to us the
instruction form on the reverse side of this letter.
ANY QUESTIONS OR REQUESTS FOR ASSISTANCE CONCERNING THE OFFERING SHOULD BE
DIRECTED TO CHASEMELLON CONSULTING SERVICES, L.L.C., THE INFORMATION AGENT, at
(888) 224-2745.
<PAGE>
EXHIBIT 99.5--FORM OF INSTRUCTIONS FROM BENEFICIAL OWNERS TO BROKERS OR OTHER
NOMINEES
INSTRUCTIONS FROM BENEFICIAL OWNERS TO BROKERS OR OTHER NOMINEES
(accompanying letter from brokers or other nominees to beneficial owners)
The undersigned acknowledge(s) receipt of your letter and the enclosed
materials referred to therein relating to the offering of shares of Series A
Convertible Preferred Stock (the "Series A Preferred Stock") of Wyndham
International, Inc. (the "Company").
This will instruct you whether to exercise or sell Rights to purchase the
Series A Preferred Stock distributed with respect to the Company's Class A
Common Stock held by you for the account of the undersigned, pursuant to the
terms and subject to the conditions set forth in the Prospectus and the
related "Instructions as to Use of Wyndham International, Inc. Subscription
Warrants."
box 1. [_] Please do not exercise Rights for shares of the Series A
Preferred Stock.
box 2. [_] Please exercise Rights for shares of the Series A Preferred Stock
as set forth below:
<TABLE>
<CAPTION>
Number of Subscription Total
Shares* Price Payment
--------- ------------ -------
<S> <C> <C> <C> <C>
x $100.00 = $
</TABLE>
* YOU MAY PURCHASE ONE (1) SHARE FOR EVERY 56.2772 RIGHTS YOU HOLD; ANY
RESULTING FRACTIONAL SHARE MUST BE ROUNDED DOWN TO THE NEAREST WHOLE SHARE (OR
ANY LESSER NUMBER OF WHOLE SHARES FOR WHICH YOU ENCLOSE PAYMENT).
box 3. [_] Please SELL Rights.
box 4. [_] Payment in the following amount is enclosed: $
box 5. [_] Please deduct payment from the following account maintained by
you as follows:
- ------------------------------------- -------------------------------------
Type of Account Account No.
Amount to be deducted: $
-------------------------------------------------------
Date: , 1999 -------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
Signature(s)
Please type or print name(s) below
-------------------------------------
-------------------------------------
<PAGE>
EXHIBIT 99.6--FORM OF LETTER TO DEALERS AND OTHER NOMINEES
WYNDHAM INTERNATIONAL, INC.
3,000,000 SHARES OF SERIES A CONVERTIBLE PREFERRED STOCK
INITIALLY OFFERED PURSUANT TO
RIGHTS DISTRIBUTED TO STOCKHOLDERS OF
WYNDHAM INTERNATIONAL, INC. AND
LIMITED PARTNERS OF
PATRIOT AMERICAN HOSPITALITY PARTNERSHIP, L.P. OR
WYNDHAM INTERNATIONAL OPERATING PARTNERSHIP, L.P.
To Securities Dealers, Commercial Banks, Trust Companies and Other Nominees:
This letter is being distributed to securities dealers, commercial banks,
trust companies and other nominees in connection with the offering by Wyndham
International, Inc. (the "Company") of 3,000,000 shares of Series A
Convertible Preferred Stock (the "Series A Preferred Stock") of the Company,
at a subscription price of $100.00 per share, pursuant to transferable
subscription rights (the "Rights") initially distributed to holders of record
of the Company's Class A Common Stock (the "Common Stock") and holders of
limited partnership units of Patriot American Hospitality Partnership, L.P. or
Wyndham International Operating Partnership, L.P. as of the close of business
on September 30, 1999 (the "Record Date"). The Rights are described in the
Prospectus and evidenced by a Subscription Warrant registered in your name or
the name of your nominee.
Each beneficial owner of shares of Common Stock registered in your name or
the name of your nominee is entitled to one (1) Right for every one (1) share
of Common Stock owned by such holder. Holders of Rights are entitled to
purchase one (1) share of newly issued Series A Preferred Stock for every
56.2772 Rights. No fractional shares or cash in lieu thereof will be issued or
paid. The number of shares which may be purchased pursuant to the exercise of
Rights must be rounded down to the nearest whole number (or any lesser number
of whole shares) in order to avoid issuing fractional shares.
We are asking you to contact your clients for whom you hold the Common Stock
registered in your name or in the name of your nominee to obtain instructions
with respect to the Rights. Enclosed are copies of the following documents:
1. The Prospectus;
2. The "Instructions as to Use of Wyndham International, Inc.
Subscription Warrant" (including Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9);
3. A form of letter which may be sent to your clients for whose accounts
you hold Common Stock registered in your name or the name of your nominee;
4. A form of Instructions from Beneficial Owners to Brokers or Other
Nominees for obtaining your clients' instructions with regard to the
Rights;
5. A Notice of Guaranteed Delivery for Subscription Warrants issued by
Wyndham International, Inc.; and
6. A return envelope addressed to ChaseMellon Shareholder Services,
L.L.C., the subscription agent.
Your prompt action is requested. The Rights will expire at 5:00 P.M., New
York City time, on December 8, 1999, unless extended by the Company (the
"Expiration Date").
To exercise the Rights, a properly completed and executed Subscription
Warrant (unless the guaranteed delivery procedures are complied with) and
payment in full for all Rights exercised must be delivered to ChaseMellon
Shareholder Services, L.L.C. as indicated in the Prospectus prior to 5:00
P.M., New York City time, on the Expiration Date.
1
<PAGE>
Additional copies of the enclosed materials may be obtained from ChaseMellon
Consulting Services, L.L.C., the information agent. Their toll-free telephone
number is (888) 224-2745 or they may be called collect at (212) 273-8080.
Very truly yours,
WYNDHAM INTERNATIONAL, INC.
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY PERSON
AS AN AGENT OF WYNDHAM INTERNATIONAL, INC., THE SUBSCRIPTION AGENT OR ANY
OTHER PERSON MAKING OR DEEMED TO BE MAKING OFFERS OF THE SERIES A PREFERRED
STOCK ISSUABLE UPON VALID EXERCISE OF THE RIGHTS, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO
THE OFFERING EXCEPT FOR STATEMENTS MADE IN THE PROSPECTUS.
2
