Exhibit 99.2
February 1, 1999
Patriot American Hospitality, Inc.
0000 Xxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn.: Xxxxxxx X. Xxxxx III
Wyndham International, Inc.
0000 Xxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn.: Xxxxxx Xx
Ladies and Gentlemen:
This letter agreement (the "Amendment") among Patriot American
Hospitality, Inc. (the "REIT"), Wyndham International, Inc. (the "OPCO") (each a
"Company" and collectively, the Companies") and PaineWebber Financial Products
Inc. ("PaineWebber") confirms, modifies and amends, in part, certain of the
terms and conditions of that certain Purchase Price Adjustment Mechanism
Agreement, dated April 6, 1998 between the Companies and PaineWebber, as amended
by letter agreements dated August 14, 1998, September 30, 1998 and October 22,
1998 (as so amended, the "Agreement").
Notwithstanding the terms and conditions of the Agreement, the
Companies and PaineWebber agree as follows:
1. CASH SETTLEMENT PROVISIONS.
(a) The following sentence shall be added at the end of
Section 3.1 of the Agreement: "Notwithstanding the foregoing, the Companies may
elect on any date to settle all or a portion of the Adjustment Shares through a
cash payment to PaineWebber equal to the product of the number of Adjustment
Shares to be settled times the Reference Price on such date."
(b) The following sentence shall be added at the end of
Section 3.2(b) of the Agreement: "Notwithstanding the foregoing, in the event
that Adjustment Shares have been completely settled in cash pursuant to the last
sentence of Section 3.1, PaineWebber shall, concurrently with such complete cash
settlement, deliver to the Companies all of the Adjustment Shares and all of the
Collateral Shares.
2. INITIAL STANDSTILL. PaineWebber agrees that, subject to Section 4
hereof, during the period from the date hereof to and including February 15,
1999 (the "Initial Standstill Period"), it will not require a settlement
pursuant to the Agreement and will not sell, assign or otherwise transfer any
interest in any of the Adjustment Shares or any Collateral Shares or sell,
assign or otherwise transfer any interest in any of its rights under the
Agreement (as amended by this letter agreement).
3. EXTENDED STANDSTILL. (a) If, on or prior to February 15, 1999, the
Companies have entered into an Acceptable Transaction Agreement (as defined
below), and on such date there is no Cross-Default (without giving effect to any
5 or 15-day cure period provided in Section 4.2(a) of the Agreement),
PaineWebber agrees that during the period from the date hereof to and including
the earlier of (A) June 30, 1999 and (B) the date of consummation of the
transactions contemplated by an Acceptable Transaction Agreement (the "Extended
Standstill Period"), it will not require a settlement pursuant to the Agreement
and will not sell, assign or otherwise transfer any interest in any of the
Adjustment Shares or any Collateral Shares or sell, assign or otherwise transfer
any interest in any of its rights under the Agreement (as amended by this letter
agreement).
(b) "Acceptable Transaction Agreement" means a definitive agreement,
subject only to customary closing conditions reasonably satisfactory to
PaineWebber, with one or more parties (the "Other Parties") for a transaction
that contains provisions reasonably acceptable to PaineWebber for a complete
cash settlement of all of the Adjustment Shares on or prior to June 30, 1999,
including without limitation the transaction contemplated by the letter of
intent attached as Exhibit 99.1 to the Companies' Current Report on Form 10-K
filed with the Securities and Exchange Commission on December 16, 1998.
4. STANDSTILL TERMINATION. (a) The agreements of PaineWebber set forth
in Sections 2 and 3 of this Amendment shall terminate and have no further force
or effect, and the Initial Standstill Period or the Extended Standstill Period,
as the case may be, shall terminate, upon the occurrence of any of the
following: (i) the Closing Price on the Relevant Exchange of the Paired Shares
for any Exchange Trading Day during the Initial Standstill Period or the
Extended Standstill Period, as the case may be, is equal to or less than $4.50,
or (ii) the counterparty to any other "forward equity" transaction similar to
the transaction governed by the Agreement to which the Companies are party (any
such counterparty, a "FET Counterparty" including without limitation affiliates
of NationsBank and UBS) shall settle, sell, transfer or otherwise dispose of any
economic interest in any Paired Shares held by such FET Counterparty in
connection with such transaction or sell, transfer or assign any interest in any
agreement relating to any such "forward equity" transaction to any entity that
is not an affiliate of such FET counterparty, or (iii) a Cross-Default or a
material default under the Agreement (as amended by this Amendment) which
remains uncured five days after notice thereof, or (iv) an Acceptable
Transaction Agreement entered into by the Companies shall be
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terminated or the Companies or any Other Parties shall have publicly announced
an intention not to proceed with the transactions contemplated by an Acceptable
Transaction Agreement unless, at or prior to the time of such termination or
announcement, the Companies shall have entered into another Acceptable
Transaction Agreement, or (v) PaineWebber terminates the Asset Purchase
Agreement (the "Bay Xxxxxxx Agreement") relating to Bay Xxxxxxx Racecourse (A)
prior to the end of the Due Diligence Period in accordance with subsection
9.1(a)(i) of the Bay Xxxxxxx Agreement, (B) as a result of the Companies'
failure to perform any of their material obligations under the Bay Xxxxxxx
Agreement or a material breach or inaccuracy of the Companies' representations
and warranties contained in the Bay Xxxxxxx Agreement in accordance with Section
9.1(b) of the Bay Xxxxxxx Agreement, except in the case of a material breach or
inaccuracy of the Companies' representations and warranties that results from
facts or circumstances occurring after the Bay Xxxxxxx Agreement is signed and
unknown to the Companies at the time the Bay Xxxxxxx Agreement is signed, or (C)
as a result of litigation that prohibits the Companies from consummating the
transactions contemplated by the Bay Xxxxxxx Agreement.
5. SPREAD. (a) Notwithstanding the Agreement, during the Initial
Standstill Period and, if there is an Extended Standstill Period, the Extended
Standstill Period, the Spread shall be 5.00% per annum.
(b) Notwithstanding the Agreement or Section 5(a) of this letter
agreement, the Spread shall increase by 0.25% (up to a maximum increase of
2.00%) on the 16th calendar day, and on every 7th calendar day thereafter, on
which (i) any Registration Statement contemplated by the Agreements is not
effective or is the subject of a stop order by the SEC, or (ii) PaineWebber has
been advised by the Companies, their counsel or their independent accountants
that any such Registration Statement or Prospectus is not usable for its
intended purpose or that any such Registration Statement or Prospectus contains
an untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading, or (iii) the
Registration Statement or the Prospectus for any other reason is not available
for sales or resales of Paired Shares by PaineWebber (or any affiliate of
PaineWebber designated by PaineWebber), or (iv) the spread payable to any other
FET Counterparty is required to be increased pursuant to any agreement with any
FET Counterparty similar in effect to the provisions of this Section 5. Such
calendar days shall be counted in the aggregate and need not be consecutive.
(c) Notwithstanding this paragraph 5, for purposes of the definition of
"Distribution Amount" in the Agreement, the Spread shall be deemed to be 1.4%.
6. UNWIND FEE. (a) In the event of a cash settlement of Adjustment
Shares pursuant to the last sentence of Section 3.1 of the Agreement (as amended
by this letter agreement), the Companies shall pay on the date of such cash
settlement an unwind fee
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to PaineWebber equal to 2% of the product of the Adjustment Shares so settled
times the Reference Price on such date.
(b) The resale spread referred to in subclauses (iii) and (iv) of the
definition of "Settlement Amount" in the Agreement shall be 200 basis points.
7. MOST FAVORED COUNTERPARTY. The Companies hereby agree that if the
Companies grant to any FET Counterparty rights (other than any rights to fees or
other compensation or remuneration) in connection with the settlement of the
"forward equity" transaction among the Companies and such FET Counterparty that
are, in the opinion of PaineWebber, more favorable to such FET Counterparty than
the rights afforded to PaineWebber by the Agreement (as amended by this letter
agreement) in connection with settlement of the Adjustment Shares, then upon
written notice by PaineWebber to the Companies, PaineWebber shall have the
benefit of corresponding rights. The Companies shall enter into such amendments
to the Agreement as may be reasonably requested by PaineWebber to evidence the
effectiveness of any such rights; provided that it shall not be necessary to
enter into any such amendment for such rights to be effective. Until the
Adjustment Shares have been settled in full, the Companies agree promptly to
provide to PaineWebber copies of any agreements or amendments that the Companies
enter into with any FET Counterparty or its affiliates in connection with the
settlement of any forward equity transaction.
8. LEGAL FEES. The Companies shall reimburse PaineWebber for the
reasonable fees and expenses of outside counsel retained by PaineWebber in
connection with the Agreement (as amended by this Amendment) and the
transactions contemplated thereby (including the reasonable fees and expenses of
Xxxxx Xxxx & Xxxxxxxx and Cravath, Swaine & Xxxxx); provided, that the Companies
shall be entitled to a credit equal to all amounts paid or credited against
purchase price in respect of such fees and expenses pursuant to the Bay Xxxxxxx
Agreement.
9. REGISTRATION STATEMENTS. The Companies shall provide (i) fourteen
(14) days' written notice to PaineWebber before filing any registration
statement (or post-effective amendment thereto) with the Securities and Exchange
Commission (the "Commission"), and (ii) prompt notice to PaineWebber before
filing any pre-effective amendment to a registration statement with the
Commission; provided, that such notice provisions shall not apply with respect
to any registration statement (or amendment thereto) that becomes effective upon
filing with the Commission.
10. DEFINED TERMS. Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Agreement.
11. AGREEMENTS IN FULL FORCE AND EFFECT. The Agreement (as amended by
this letter agreement) is hereby ratified and reaffirmed in its entirety and
hereby
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declared to be in full force and effect.
12. COUNTERPARTS. This letter agreement may be executed in several
counterparts, all of which shall be identical, and all of which counterparts
together shall constitute one and the same instrument.
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Sincerely,
PaineWebber Financial Products, Inc.
By: /s/ Xxxxxxxx X. Xxxxxxx
--------------------------------
Name:
Title:
AGREED TO AND ACCEPTED:
Patriot American Hospitality, Inc. Wyndham International, Inc.
By: /s/ Xxxxxxx X. Xxxxx III By: /s/ Xxxxxxx X. Xxxxx III
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Name: Name:
Title: Title:
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