EXHIBIT 99.1
February 28, 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:
Reference is made to (i) that certain letter agreement (the "Standstill
Agreement") dated December 14, 1998 between Patriot American Hospitality, Inc.
and Wyndham International, Inc. (collectively, the "Companies") and UBS AG,
London Branch (acting through its agent Warburg Dillon Read LLC, "UBS-LB"), (ii)
that certain letter agreement dated December 22, 1998 between the Companies and
UBS-LB (the "Initial Standstill Period Implementation Letter"), (iii) that
certain letter agreement dated January 4, 1999 delivered to the Companies by
UBS-LB (the "Standstill Period Acknowledgment Letter"), (iv) that certain
letter agreement dated December January 29, 1999 between the Companies and
UBS-LB (the "Standstill Period Extension Letter") and (v) the Forward Agreement
and the Purchase Agreement (each as defined in the Standstill Agreement).
Capitalized terms not otherwise defined herein shall have the respective
meanings ascribed to them under the Forward Agreement or the Standstill
Agreement, as the context shall require.
In consideration of the mutual covenants contained herein and in the agreements
referred to above and other good and valuable consideration, the parties hereto
agree as follows:
1. Subject to the satisfaction of the Standstill Extension Conditions as set
forth and defined in paragraph 2 below, Section 7 of the Standstill Agreement is
amended such that the term "February 15, 1999" is replaced by the term "June 30,
1999" (the "Second Standstill Period Extension").
2. The Second Standstill Period Extension contemplated herein shall not be
effective unless on or before March 1, 1999, all of the following conditions are
satisfied (the "Standstill Extension Conditions"):
a) An Acceptable Definitive Agreement shall have been entered into and shall
be in full force and effect as of February 28, 1999. The Companies represent
and covenant on a continuing basis that none of the transactions contemplated by
(i) the Securities Purchase Agreement dated February 18, 1999 by and among the
Investors named therein (the "Definitive Agreement"), (ii) the $1,800,000,000
Senior Credit Facilities Commitment Letter dated February 19, 1999 between the
Companies and Chase Securities Inc. or (iii) the $650,000,000 Increasing Rate
Loan Facility Commitment Letter by and among the Companies and Chase Securities
Inc. and Bear, Xxxxxxx & Co. Inc., or any transactions similar to any of such
transactions (including without limitation any transactions identified on a
schedule or exhibit to the Definitive Agreement), will be consummated, and that
the Companies do not intend to consummate any of such transactions, without
completing, on or before June 30, 1999, Item #14 of Exhibit A to the SPA (which
provides that a final settlement of the Forward Agreement will be immediately
effected with the proceeds from the sale of Shares on the Closing Date upon the
receipt of such proceeds, all as contemplated therein). In addition to all of
the provisions relating to the termination of the Standstill Period, including
without limitation the provisions contained in paragraph (4) herein, the
amendment contemplated by paragraph (1) herein shall be void and without effect
if at any time such representation and covenant is or becomes untrue or is
otherwise breached. In reliance thereon, UBS-LB hereby acknowledges on the date
hereof that the Securities Purchase Agreement, dated as of February 18, 1999
(the "Definitive Agreement"), is an Acceptable Definitive Agreement.
b) The Lenders shall have acknowledged that the Subsequent Maturity Extension
Conditions have been satisfied, all within the meaning and for the purposes of
the Amendment and Restatement as such was set forth in the 8-K issued by the
Companies dated January 29, 1999 (the "Amendment and Restatement") and a waiver
of the failure of the Companies to have met such Subsequent Maturity Extension
Conditions on or prior to February 15, 1999 shall be in full force and effect on
the date hereof.
c) Both NationsBank and PaineWebber, in their respective capacities as
counterparties to the Companies with respect to the Companies' other forward
equity transactions, shall have executed standstill agreements (or amendments
thereto) in form and substance reasonably satisfactory to UBS covering the
period beginning February 15, 1999, and ending on June 30, 1999 (both dates
inclusive), and such agreements shall be in full force and effect on the date
hereof.
"Acceptable Definitive Agreement" means a definitive agreement subject only to
customary closing conditions, reasonably satisfactory to UBS-LB, between the
Companies and one or more parties (the "Other Parties") to consummate a
transaction that specifically provides for a Timely Forward Take-Out. A Timely
Forward Take-Out means a complete Physical Settlement of all of the Underlying
Shares (i.e., cash in an amount equal to the Settlement Amount plus any other
amounts that may be owed under the Forward Agreement) with the proceeds of such
transaction in a manner reasonably satisfactory to UBS-LB, not later than the
earlier of (a) June 30, 1999 or (b) the closing of such transaction.
3. For the avoidance of doubt, the Standstill Period will continue to be
subject to immediate termination under the terms and conditions of the
Standstill Agreement, including without
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limitation the termination provisions contained in Section 8 therein. Such
termination provisions include Defaults under the Credit Agreement, so that any
termination of the Waiver Period under Section 9 of the Amendment and
Restatement shall immediately cause a termination of the Standstill Period.
4. In addition to the termination events referred to in paragraph 3 above, the
Standstill Period shall immediately terminate:
(i) upon the termination of the Definitive Agreement described in
Section 2(a) hereof or if the Companies or any Other Parties shall have publicly
announced an intention not to proceed with the transaction contemplated therein
or have publicly announced an intention to pursue a substitute transaction that
does not provide for a Timely Forward Take-Out, unless the Companies shall at
the time of such termination or announcement have already entered into a new
agreement meeting the requirements of an Acceptable Definitive Agreement (a
"Replacement Definitive Agreement").
(ii) if at any time the Definitive Agreement or any Replacement
Definitive Agreement no longer meets, whether by amendment, waiver or otherwise,
the requirements of an Acceptable Definitive Agreement (including without
limitation any amendments or waivers that make it less than certain that the
Forward Agreement will be completely cash settled with the proceeds of the
transaction concurrently with the closing of the transaction or are otherwise
materially adverse to UBS-LB),
(iii) if the Companies fail to obtain shareholder approval for the
Definitive Agreement or any Replacement Definitive Agreement at a meeting called
for that purpose or
(iv) either (a) when it has become reasonably certain and, in addition, 2
Business Days have elapsed since UBS-LB has provided written notice to the
Companies that it believes that it has become reasonably certain or (b) upon
written notice from the Companies to UBS-LB of any event that makes it
reasonably certain (which notice the Companies shall be obligated to provide),
in both cases that one or more of the conditions precedent to the closing of the
Definitive Agreement (or the Replacement Definitive Agreement, as the case may
be) will not be satisfied on or prior to June 30, 1999 (unless such condition
precedent or condition precedents have already been waived).
5. For the avoidance of doubt, the Companies acknowledge that they are
obligated to reimburse UBS-LB for all reasonable fees and expenses of legal
counsel arising from the transaction contemplated by the Forward Agreement
(including without limitation the preparation and negotiation of all of the
letters and agreements referred to in the first paragraph of this letter
agreement and all of the letters and agreements referred to in such letters and
agreements), whenever incurred, other than the preparation, negotiation and
closing of the Purchase Agreement and the Forward Agreement.
6. For the avoidance of doubt, the Companies acknowledge that (i) they will
continue to deliver Paired Shares to UBS-LB as required under the Forward
Agreement so that the value of all of the Paired Shares held as collateral on
any Interim Settlement Date (as measured by the
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closing price on such date) shall be no less than 125% of the Settlement Amount
on such date, (ii) every Wednesday shall be an Interim Settlement Date and that
the Companies shall deliver the requisite number of Paired Shares on the Friday
immediately following such Wednesday, (iii) the Companies shall cure any
discrepancy no later than the Business Day immediately following receipt of
written notification of such discrepancy by UBS-LB and (iv) failure to meet any
of the requirements of this paragraph shall result in an immediate termination
of the Standstill Period.
7. For the avoidance of doubt, at any time that the Standstill Period or a
successor standstill period is not in effect (whether by termination or by
expiration or otherwise), the Companies will pay a penalty for each Exchange
Trading Day that UBS-LB is prevented from selling Paired Shares either because a
black-out has been imposed by the Companies or because such Paired Shares are
not the subject of an effective registration statement (such penalty, a "Daily
Black-Out Penalty" and any such Exchange Trading Day, a "Penalty Day"). The
amount of such Daily Black-Out Penalty shall vary, depending the number of
consecutive Exchange Trading Days that such Daily Black-Out Penalty has been
applicable. The amount of the Daily Black-Out Penalty shall be (i) zero for
each of the first three consecutive Penalty Days, (ii) $15,000 for each of the
next 10 consecutive Penalty Days and (iii) $25,000 for each consecutive Penalty
Day thereafter. The amount of any Daily Black-Out Penalty shall be due within 2
Business Days after written notification by UBS-LB of any amounts that are due
(the timing of such notification to be any time at UBS-LB's sole discretion on
or after the Penalty Day or Penalty Days to which such amount or amounts
relate).
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This letter agreement shall be governed by and construed in accordance
with laws of the State of New York without reference to choice of law doctrine.
Sincerely,
UBS AG, London Branch
By: /s/ Xxxxxx Xxxxxx By: /s/ Xxxxx Xxxxx
------------------------------ ------------------------------
Name: Xxxxxx Xxxxxx Name: Xxxxx Xxxxx
Title: Managing Director Equities Title: Associate Director
Date: Date: Feb. 26, 99
AGREED TO AND ACCEPTED
Patriot American Hospitality, Inc.
By: /s/ Xxxxxxx X. Xxxxx III
------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President, Chief
Operating Officer
Date:
Wyndham International, Inc.
By: /s/ Xxxxxxx X. Xxxxx III
------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President, Chief
Operating Officer
Date:
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