EXHIBIT 99.1
December 15, 1998
Patriot American Hospitality, Inc.
0000 Xxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxx X. Xxxxxxxx
Wyndham International, Inc.
0000 Xxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxxxx
Gentlemen:
This letter summarizes our discussions and reflects our mutual intent to
continue to pursue negotiations concerning a proposed permanent investment (the
"Permanent Investment" or the "Investment"), by Apollo Real Estate Advisors III,
L.P. ("Apollo"), Apollo Management IV, L.P. ("Apollo Management"), Xxxxxx X. Xxx
Company ("THL"), Beacon Capital Partners, Inc. ("Beacon") and Xxxxx Consulting
Group ("Xxxxx", and with Apollo, Apollo Management, THL and Beacon, the
"Investors") on behalf of one or more of their affiliates, funds under
management or assignees (such assignees to be approved by the Companies) in
Patriot American Hospitality, Inc. ("Patriot") and Wyndham International, Inc.
("Wyndham", and with Patriot and their respective operating partnerships and
other affiliates, the "Companies") on the terms and subject to the conditions
set forth herein. The Companies represent that their respective Boards of
Directors or appropriate committees thereof have approved the Permanent
Investment in principle and the Companies further represent that there have been
no material adverse developments in their operations, financial condition or
business other than those (i) reflected in their filings with the Securities
and Exchange Commission or (ii) disclosed to the public or the Investors prior
to the execution of this letter agreement.
1. DEFINITIVE AGREEMENTS. The Investors and the Companies
shall actively negotiate in good faith regarding definitive
agreements relating to the Permanent Investment (the "Definitive
Agreements"), to be drafted promptly following the execution of
this letter, and which will contain covenants, representations,
warranties, indemnities, terms and conditions as are usual and
customary for a transaction of this type and as are generally
consistent with the terms and conditions set forth in Appendix A
hereto; provided, that nothing contained herein shall obligate
either party
to execute or consummate any agreements relating to the Permanent
Investment, or prevent either party from terminating this letter
agreement as provided in paragraph 7.
2. EXCLUSIVITY. Recognizing that the Investors' review of the
Companies and their business and the negotiation and drafting of
the Definitive Agreements have to date required and will continue
to require the Investors to expend significant time, effort and
money, and to induce the Investors to continue such review,
negotiation and drafting, the Companies agree that between the
date of their acceptance of this letter agreement and the
Termination Date (as defined in paragraph 7) (such period, the
"Exclusivity Period") they will negotiate in good faith with the
Investors regarding Definitive Agreements relating to the
Permanent Investment, and they will not, and will cause their
respective officers and directors and any advisors which they
have retained for the purpose of evaluating any proposed
transaction to not, encourage any offers from, solicit,
encourage, initiate, respond to (other than by a bare statement
without further detail or explanation that they are not permitted
to respond) or continue any discussions with, engage in or
continue to engage in negotiations with, or provide any
information to, or enter into any agreements or understandings
with, any corporation, partnership, person, entity or group,
other than the Investors and their respective officers,
directors, employees and agents, concerning any merger,
consolidation, transfer of substantial assets (except for
"Project D" and the spin-off of "Newco"), sale or exchange of
shares, or similar transaction involving the Companies or any
sale or exchange of any capital stock of the Companies, without
the prior written consent of the Investors. The foregoing will
not restrict the Companies and their representatives from
discussions, negotiations and agreements with (i) the company
previously identified to the Investors by the Companies or (ii)
another party that makes a written proposal pursuant to which
such other party would acquire or make a significant equity
investment in the Companies, on terms and conditions the Boards
of Directors of the Companies determine in good faith to be
superior to the Permanent Investment and which the Boards are
required by their fiduciary duties as advised by their outside
legal counsel to pursue.
3. FEES AND EXPENSES. Regardless of whether the Permanent
Investment is ever consummated, as and when requested by the
Investors, the Companies will promptly reimburse the Investors
for up to $7 million (in the aggregate) of their respective
out-of-pocket expenses incurred in connection with the Investment
(including those incurred prior to the execution of this letter
agreement), including fees and expenses of advisors, accountants,
attorneys, consultants, and other parties whom the Investors have
engaged to assist them in connection with the Investment
(collectively, "Out-of-Pocket Expenses").
2
If, without the consent of the Investors, the Companies and
any third party, during the Exclusivity Period or 180 days
thereafter, enter into any other agreement or agreements providing
for equity or other securities convertible into or exchangeable or
exercisable for equity with aggregate net proceeds of at least $50
million or providing for or contemplating any merger,
consolidation, transfer of substantial assets, any tender or
exchange offer to acquire securities of the Companies or similar
transaction involving the Companies, and the Companies shall not
have entered into the Definitive Agreements other than solely by
reason of the Investors being unwilling to proceed with the
Permanent Investment on the terms and conditions set forth herein,
the Companies agree to pay, in addition to the Investors'
respective Out-of-Pocket Expenses as provided in this paragraph 3
and, as liquidated damages, an amount in cash equal to $30 million.
The Companies agree that (i) the actual damages to the Investors
are impossible to determine with certainty and (ii) such sum is a
reasonable estimate of the Investors' damages arising from lost
opportunities, executive time and other causes.
The fees and expenses described above are not intended to be
in lieu of any other fees and expenses agreed to by the parties as
set forth in Appendix A.
4. CONFIDENTIALITY. Subject to the requirements of applicable
law, to Section 8 of the confidentiality agreement between the
Companies and the Investors and to agreements to which the
Companies are parties, the terms and conditions of this letter
and the Investment, including the identities of all parties
referred to in this letter, will be held by the parties in strict
confidence and will not be disclosed to anyone, other than legal
counsel, agents and representatives who need to know such
information in connection with the Investment contemplated
hereby, or otherwise as advisable, after approval by the
Investors. Subject to the requirements of applicable law,
neither the Companies nor the Investors, their respective agents
or representatives, shall make any news releases or other public
disclosure with respect to the Investment without the prior
consent of the other party, which consent shall not be
unreasonably withheld or delayed. Notwithstanding anything
contained herein, the Investors and the Companies agree that upon
execution of this letter agreement, the Companies and the
Investors will issue a press release mutually acceptable to both
parties. In addition, each of the parties hereto will be
furnishing to each other certain information, which is either
non-public, confidential or proprietary in nature. Each of the
parties agrees that all such information furnished or otherwise
obtained, directly or indirectly, by such party, its directors,
officers, partners, employees, agents or representatives
including, without limitation, attorneys, accountants, partners,
experts and consultants (collectively, "Representatives") and all
reports, analysis, compilations, data, studies or other documents
prepared by such party or its Representatives containing or
based, in whole or in part, on any such furnished information
(collectively, the "Information") will be kept strictly
3
confidential and will not, without the prior written consent of
the other party, be disclosed to any other individual,
corporation, partnership, joint venture, trust or association in
any manner whatsoever, in whole or in part and will not be used
for any purpose other than evaluating the Investment described
herein; provided that if either party receives an opinion of
counsel that it is legally obligated to release the Information,
such party may do so after notice to and consultation with the
other party.
5. COOPERATION. The execution of Definitive Agreements is
conditioned upon the Investors' satisfactory completion of their
due diligence review (including, but not limited to, with respect
to business, legal, accounting, and environmental matters) of the
Companies. The Investors are prepared to continue their due
diligence review of the Companies immediately, and will complete
such investigation as expeditiously as possible. The Companies
will, and will cause their advisors, officers and other agents
to, cooperate to the fullest extent in expediting the Investors'
due diligence investigation of the Companies. Unless otherwise
agreed to by the Companies in writing, all (a) communications
regarding any possible transaction, (b) requests for additional
information, (c) requests for facility tours or management
meetings and (d) discussions or questions regarding procedures,
timing and terms, will be submitted or directed to Xxxxxxx
X.Xxxxxxx, Xxxxxx Xxxxxxx & Co. Incorporated, at (000) 000-0000
or Xxxxx Xxxxxxx, Xxxxx Securities Inc., at (000) 000-0000. The
Investors agree that, within 30 days following the date hereof,
they will advise the Companies in writing as to the results of
their due diligence investigation and as to whether they wish to
proceed to complete negotiation of the Definitive Agreements and
the execution thereof on the terms and conditions set forth
herein. Furthermore, the Investors agree to promptly advise the
Companies in writing as to any material adverse due diligence
finding.
6. BINDING EFFECT. The covenants and agreements set forth in
this letter agreement are intended to be, and shall be, binding
upon the parties and, to the extent provided in paragraph 7,
shall survive termination of this letter agreement. This letter
agreement may be executed and delivered manually or by fax and
may be signed in two or more counterparts, any one of which need
not contain the signature of more than one party, but all such
counterparts taken together will constitute one and the same
agreement. This letter agreement shall be binding upon each of
the parties hereto immediately upon the execution of this letter
agreement by all parties and may be assigned by the Investors to
their respective affiliates, which may include an investment
entity to be formed by them.
4
7. TERMINATION. If the Definitive Agreements for any reason
have not been signed by 45 days following the date of execution
by the parties of this letter agreement, then this letter
agreement shall be terminated at the expiration of such date
without any further action of any party hereto. The date of any
such termination is referred to as the "Termination Date". After
the termination of this letter agreement as provided herein, the
obligations of the parties arising under this letter agreement
(except for any obligations under paragraphs 3, 4 and 8, which
shall survive any such termination) shall be of no further force
or effect.
8. APPLICABLE LAW; JURISDICTION AND VENUE. This letter shall
be governed by the laws of the United States of America and the
State of New York. Each party hereto irrevocably submits to the
exclusive jurisdiction of any court of the State of New York and
the Federal courts of the United States located in the State of
New York in respect of the transactions contemplated by this
letter agreement.
5
If the foregoing accurately summarizes our understanding, we request that
you approve this letter and evidence such approval by causing the enclosed copy
of this letter to be promptly signed, dated and returned to the undersigned.
Very truly yours,
APOLLO REAL ESTATE ADVISORS III, L.P.
By: /s/ Xxxxxxx Xxxxxxxxxxxxx
-------------------------
Name: Xxxxxxx Xxxxxxxxxxxxx
Title: Vice President
APOLLO MANAGEMENT IV, L.P.
By: /s/ Xxxx Xxxxx
--------------
Name: Xxxx Xxxxx
Title: Vice President, Apollo Capital Mgmt., Inc.
XXXXXX X. XXX COMPANY
By: /s/ Xxxxx X. Xxxxxx
-------------------
Name: Xxxxx X. Xxxxxx
Title: Managing Director
BEACON CAPITAL PARTNERS, INC.
By: /s/ Xxxx X. Xxxxxxx
-------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Investment Officer
XXXXX CONSULTING GROUP
By: /s/ Xxxxxxx X. Xxxx, Attorney-in-Fact
-------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Attorney-in-Fact
6
Agreed and accepted:
Date: December 15, 1998
PATRIOT AMERICAN HOSPITALITY, INC.
By: /s/ Xxxxxxx X. Xxxxx XXX
------------------------
Name: Xxxxxxx X. Xxxxx III
Title: President and Chief Executive Officer
PATRIOT AMERICAN HOSPITALITY PARTNERSHIP, L.P.
By: PAH GP, INC., Its General Partner
By: /s/ Xxxxxxx X. Xxxxx XXX
------------------------
Name: Xxxxxxx X. Xxxxx XXX
Title: Vice Chairman
WYNDHAM INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------
Name: Xxxxx X. Xxxxxxxx
Title: Chairman and CEO
7
APPENDIX A
SERIES A PERPETUAL CONVERTIBLE PREFERRED STOCK
SERIES B PERPETUAL CONVERTIBLE PREFERRED STOCK
TERM SHEET
TYPE OF SECURITIES Series A Perpetual Convertible Preferred Stock
(the "Series A Preferred Stock") of Patriot
American Hospitality, Inc. ("Patriot")
Series B Perpetual Convertible Preferred Stock
(the "Series B Preferred Stock", and with the
Series A Preferred Stock, the "Preferred Stock")
of Patriot
The Preferred Stock would be issued as senior
preferred units of Patriot's operating partnership
and would be convertible into common units of the
operating partnership to the extent necessary to
assure compliance with the "paired share" rules
CONSIDERATION Cash equal to the Stated Amount of the Preferred
Stock.
STATED AMOUNT Series A Preferred Stock-70% of initial Investment
Series B Preferred Stock-30% of initial Investment
INVESTORS Apollo Real Estate Advisors III, L.P., Apollo
Management IV, L.P., Xxxxxx X. Xxx Company, Beacon
Capital Partners, Inc. and Xxxxx Consulting Group
(collectively, the "Investors") on behalf of one
or more of their affiliates, funds under
management or assignees (such assignees to be
approved by the Companies). The holdings by the
Investors will be structured to maintain REIT
flexibility
INITIAL CONVERSION PRICE The lesser of: (i) $10.00 or (ii) 122.5% of the 20
day trailing average closing price of the paired
common stock (the "Common Stock") of Patriot and
Wyndham International, Inc. (together with
Patriot, the "Companies") prior to 10 days before
the date on which the Companies' shareholders
approve the Investment; PROVIDED, that the
conversion price as so determined shall be not
less than the closing bid price of the Common
Stock on December 15, 1998; and PROVIDED FURTHER
that the closing bid price of the Common Stock on
December 15, 1998 will be equitably adjusted for
dividends of Common Stock and issuances of Common
Stock.
DIVIDENDS PER SHARE SERIES A PREFERRED STOCK: Through the fifth
anniversary of the issuance of the Series A
Preferred Stock to the Investors, dividends will
be cumulative and payable quarterly in additional
shares of Series A Preferred Stock valued at the
Stated Amount thereof at the annual rate of 9.75%,
compounded on a quarterly basis. From the fifth
anniversary of the issuance of the Series A
Preferred Stock to the Investors through the tenth
anniversary, at the election of the directors of
the Companies who are not affiliated with the
Investors (the "Non-Investor Directors"),
dividends will either be (i) cumulative and
payable quarterly in additional shares of
Series A Preferred Stock valued at the Stated
Amount thereof at the annual rate of 9.75%,
compounded on a quarterly basis or (ii) payable in
cash quarterly at the annual rate of 9.75%.
Following the tenth anniversary of the issuance of
the Series A Preferred Stock to the Investors,
dividends will be payable in cash quarterly at the
annual rate of 9.75%. In addition, the Series A
Preferred Stock shall be entitled to receive all
dividends or other distributions paid with respect
to the Common Stock, based on the number of shares
of Common Stock issuable upon conversion of the
Series A Preferred Stock at the time of payment of
the dividend after giving effect to the
contemporaneous issuance of any additional shares
of Series A Preferred Stock as described above.
SERIES B PREFERRED STOCK: Dividends will be
cumulative and payable quarterly in cash at the
annual rate of 9.75%. In addition, the Series B
Preferred Stock shall be entitled to receive all
dividends or other distributions paid with respect
to the Common Stock on an as converted basis
calculated as described for the Series A Preferred
Stock; PROVIDED, that Patriot may elect to pay any
portion of such additional dividends in additional
shares of Series B Preferred Stock valued at the
Stated Amount thereof.
DIVIDEND POLICY Unless agreed to by a majority of the Non-Investor
Directors and a majority of the directors
affiliated with the Investors, the Common Stock
dividend will be limited to the minimum necessary
to maintain REIT status, if applicable.
VOLUNTARY CONVERSION SERIES A PREFERRED STOCK: Holders of the Series A
Preferred Stock have the right to convert their
shares of Series A Preferred Stock and accrued
dividends into shares of Common Stock at any time
at a price per share equal to the Initial
Conversion Price, as it may be adjusted as
described below under "Anti-Dilution Rights."
SERIES B PREFERRED STOCK: Holders of the Series B
Preferred Stock have the right to convert their
shares of Series B Preferred Stock and accrued
dividends into shares of Common Stock at any time
at a price per share equal to the Initial
Conversion Price, as it may be adjusted as
described below under "Anti-Dilution Rights."
The Boards of Directors of the Companies shall
agree to waive all restrictions on the conversion
of such shares to the extent such conversion would
not impair Patriot's ability to qualify as a REIT
for tax purposes.
LIQUIDATION PREFERENCE PER SHARE SERIES A PREFERRED STOCK: In the event of
any liquidation or winding up of the
Companies, the holders shall be entitled to
receive, in preference to the holders of the
Common Stock, an amount equal to the greater
of: (i) the amount the holders would have
received had they converted their Series A
Preferred Stock into Common Stock immediately
prior to such liquidation or winding up,
including for such purposes, if such
liquidation or winding up occurs at any time
prior to the fifth anniversary of date of
issuance, such additional shares of Series A
Preferred Stock as would have been issued in
lieu of dividends as from the date of
liquidation or winding up through and
including such fifth anniversary; and (ii)
the Stated Amount of their Series A Preferred
Stock plus any accrued but unpaid dividends
including for such purposes, if such
liquidation or winding up occurs at
any time prior to the fifth anniversary of
the date of issuance, the Stated Amount of,
plus any accrued but unpaid dividends on,
such additional shares of Series A Preferred
Stock as would have been issued in lieu of
dividends from the date of liquidation or
winding up through and including such fifth
anniversary.
SERIES B PREFERRED STOCK: In the event of
any liquidation or winding up of the
Companies, the holders shall be entitled to
receive, in preference to the holders of the
Common Stock, an amount equal to the greater
of: (i) the amount the holders would have
received had they converted their Series B
Preferred Stock into Common Stock immediately
prior to such liquidation or winding up
including for such purposes, if such
liquidation or winding up occurs at any time
prior to the fifth anniversary of date of
issuance, such additional shares of Series B
Preferred Stock as would have been issued in
lieu of dividends (assuming that dividends
were paid solely in additional shares of
Series B Preferred Stock rather than in
cash) from the date of liquidation or winding
up through such fifth anniversary; and (ii)
the Stated Amount plus unpaid dividends
including for such purposes, if such
liquidation or winding up occurs at any time
prior to the fifth anniversary of date of
issuance, the Stated Amount of, plus any
accrued but unpaid dividends on, such
additional shares of Series B Preferred Stock
as would have been issued in lieu of
dividends from the date of liquidation or
winding up through and including such fifth
anniversary (assuming that dividends were
paid solely in additional shares of Series B
Preferred Stock rather than in cash).
RANKING The Series A Preferred Stock and the Series B
Preferred Stock will rank pari passu with each
other as to dividends and liquidation and senior
to the Common Stock and any current or future
preferred stock of Patriot or common or preferred
units of Patriot's operating partnership.
OPTIONAL REDEMPTION At any time after the fifth anniversary of the
date of issuance, upon written notice to the
holders 60 days prior to the redemption date,
Patriot shall have the option to redeem the
Preferred Stock at 101% of the outstanding Stated
Amount plus all accrued but unpaid dividends.
Patriot may redeem the Preferred Stock in whole
or, provided that at least $100 million in Stated
Amount of each series of the Preferred Stock
remains outstanding, in part, but any redemption
must redeem the Series A Preferred Stock and the
Series B Preferred Stock PRO RATA. For a period
ending six months following the initial closing
date, Patriot shall also have the option to redeem
any portion of the Preferred Stock in excess of
the Stated Amount of the Investors' minimum
investment of $600 million at 102% of the
outstanding Stated Amount plus all accrued but
unpaid dividends. This redemption shall be
effected by action of the full Boards of Directors
of the Companies, except that it may be effected
solely by action of the Non-Investor Directors of
the Companies from the proceeds of a rights
offering at par of Preferred Stock (composed of
70% of the Series A Preferred Stock and 30% of
Series B Preferred Stock) with an aggregate Stated
Amount of up to $400 million made solely to the
Companies' shareholders at the time of such
offering (the "Rights Offering"). The holders
shall be permitted to convert their Preferred
Stock at any time prior to the redemption date,
but the Investors shall not
convert a Stated Amount of Preferred Stock in
excess of $600 million prior to six months
following the initial closing date.
VOTING RIGHTS The holders of the Preferred Stock will have the
same voting rights as the holders of Common Stock
and will vote on an "as converted" basis, which
shall not include shares subject to but not yet
received as accelerated dividends upon conversion.
CHANGE OF CONTROL In the event of any change of control of the
Companies, the holders shall have the right to
receive, in exchange for their Preferred Stock and
in preference to the holders of the Common Stock,
an amount equal to the greater of: (i) the amount
the holders of the Preferred Stock would have
received had they converted into Common Stock
immediately prior to such change of control,
including for such purposes, if such change of
control occurs at any time prior to the fifth
anniversary of the date of issuance, such
additional shares of Preferred Stock as would have
been issued in lieu of dividends as described
above from the date of the change of control
through such fifth anniversary (assuming that
dividends on the Series B Preferred Stock were to
be paid in additional shares of Series B Preferred
Stock rather than in cash); and (ii) the Stated
Amount plus any accrued but unpaid dividends
including for such purposes, if such change of
control occurs at any time prior to the fifth
anniversary of date of issuance, such additional
shares of Preferred Stock as would have been
issued in lieu of dividends as described above
from the date of the change of control through
such fifth anniversary (assuming that dividends on
the Series B Preferred Stock were to be paid in
additional shares of Series B Preferred Stock
rather than in cash).
PROTECTIVE PROVISIONS For so long as shares of the originally issued
shares of Preferred Stock remain outstanding,
consent of the holders of at least a majority of
the Preferred Stock shall be required for any
action that: (i) alters or changes the rights,
preferences or privileges of the Preferred Stock
or amends or waives any provision of the
Companies' certificate of incorporation or bylaws
relative to the Preferred Stock, (ii) increases or
decreases the authorized or issued number of
shares of Preferred Stock or Common Stock of the
Companies; and (iii) creates (by reclassification
or otherwise) any new class or series of preferred
or common shares of the Companies.
REGISTRATION RIGHTS The Preferred Stock and the Common Stock
underlying the Preferred Stock beneficially owned
by the Investors shall be entitled to demand,
piggyback and other customary registration rights.
BOARD OF DIRECTORS The Board of Directors of both of the Companies
will each consist of fifteen members following the
transaction. Six positions will be reserved for
the Companies' respective management and current
directors. The Companies and the Investors will
mutually select three independent directors for
the respective Boards, one or more of whom may be
current directors. The Investors will be entitled
to appoint six additional directors to each Board.
Transactions involving major transactions,
including without limitation the issuance,
retirement or modification of equity or material
debt of the Companies or involving material sales
or purchases of assets, shall require a
supermajority vote of the Boards. To the extent
that the ownership by the Investors in the
Companies declines over time, it is anticipated
that the level of Board membership by the
Investors will be reduced in a manner to be set
forth in the definitive documentation. The
foregoing Board membership rights shall not be
transferable with the Preferred Stock.
ANTI-DILUTION RIGHTS The conversion price of the Preferred Stock will
be subject to adjustments to avoid dilution in the
event that the Companies issue additional equity
(other than issuances pursuant to employee stock
plans or stockholder rights plans) at a price less
than the fair market value at the time of
issuance. The conversion price will also be
subject to proportional adjustment for stock
splits, combinations, stock dividends,
recapitalizations and similar transactions or
events.
PREEMPTIVE RIGHTS Until the fifth anniversary of the issuance of the
Preferred Stock, for so long as the Investors own
shares of Preferred Stock or Common Stock together
representing or convertible into more than 15% of
the fully diluted shares of Common Stock, they
shall have a preemptive right to purchase the same
percentage of securities issued by the Companies
as their percentage of the outstanding Common
Stock assuming that the Preferred Stock is fully
converted. This preemptive right will not apply
during the first six months following the date of
issuance of the Preferred Stock or to the Rights
Offering.
USE OF PROCEEDS The net proceeds from the sale of Preferred Stock
will be used by the Companies to (i) settle
currently outstanding equity forward contracts,
(ii) repay existing debt and (iii) fund general
corporate activities, including fees and expenses
associated with this transaction.
EXCLUSIVITY PERIOD In order to induce the Investors to complete their
due diligence and negotiate final documentation,
the Companies agree to the no shop and exclusivity
provisions for the benefit of the Investors for a
period of 45 days in accordance with the Letter
Agreement to which this Term Sheet is appended.
CLOSING CONDITIONS The closing will be conditioned upon (i)
expiration of the HSR waiting period, (ii)
approval by the shareholders of the Companies, if
required by law or under the New York Stock
Exchange's rules, (iii) no material adverse change
to the Companies, (iv) retirement or restructuring
of existing equity forward contracts and debt and
the issuance of any new debt or equity securities
on terms and conditions satisfactory to the
Investors and (v) other customary closing
conditions.
FEES AND EXPENSES The Investors shall earn a transaction fee of 1.5%
of the first $600 million Stated Amount of their
committed investment and a standby fee of 3.0% of
the Stated Amount of their committed investment
over $600 million, in each case at the time of the
execution of the definitive documentation. The
fees will be paid by the Companies on the earliest
to occur of the date of issuance of the Preferred
Stock, four months following the date of execution
of the definitive documentation or the completion
by the Companies of any financing intended as an
alternative to some or all of the Preferred Stock
(an "Alternative Financing"); PROVIDED, that the
Investors shall have the right in their sole
discretion to approve the terms and conditions of
any Alternative Financing unless the Alternative
Financing shall entirely replace the Preferred
Stock. In all cases other than a breach by them
of their obligation to fund the Investment on the
terms and conditions provided for in the
definitive documentation, and in addition to the
payment of the fees set forth above, the Companies
shall reimburse the Investors promptly following a
request therefor for
all of the Investors' advisory fees and expenses
and other expenses incurred in connection with
their evaluation of, and commitment to make, an
investment in the Companies.
TRANSFERABILITY/STANDSTILL To address the Boards' concerns in these areas,
the Investors will agree, pursuant to the
Definitive Agreements, to the adoption of a
stockholders rights plan with a 20% "flip-in"
threshold, from which the Investors' initial
ownership arising from the transaction would be
grandfathered. The Investors will agree not to
increase their collective percentage interest in
the Companies by more than an amount to be agreed
upon in the Definitive Agreements without approval
of a majority of the Non-Investor Directors or
pursuant to an offer made to all shareholders.
