Citibank,
N.A.
390 Greenwich Street
New York, NY 10013
Attention: Equity Derivatives
Facsimile: (212) 723-8328
Telephone: (212) 723-7357
To: Wyndham
Worldwide Corporation
22 Sylvan Way
Parsippany, NY 07054
Attention: Vice President, Treasury
Telephone No.: (973) 753-7703
Facsimile No.: (973) 753-6730
Re: Call Option
Transaction
The purpose of
this letter agreement (this “ Confirmation ”) is
to confirm the terms and conditions of the call option transaction
entered into between Citibank, N.A. (“ Dealer ”)
and Wyndham Worldwide Corporation (“ Counterparty
”) as of the Trade Date specified below (the “
Transaction ”). This letter agreement constitutes a
“Confirmation” as referred to in the Agreement
specified below. This Confirmation shall replace any previous
agreements and serve as the final documentation for this
Transaction.
The definitions
and provisions contained in the 2002 ISDA Equity Derivatives
Definitions (the “ Equity Definitions ”), as
published by the International Swaps and Derivatives Association,
Inc. (“ ISDA ”) are incorporated into this
Confirmation. In the event of any inconsistency between the Equity
Definitions and this Confirmation, this Confirmation shall govern.
Certain defined terms used herein have the meanings assigned to
them in the Indenture dated as of November 20, 2008 (the
“ Base Indenture ”), as supplemented by a Second
Supplemental Indenture thereto (the “ Supplemental
Indenture ”) to be dated May 19, 2009, between
Counterparty and U.S. Bank National Association, as trustee (as so
supplemented, the “ Indenture ”) relating to the
USD 200,000,000 principal amount of Convertible Senior Notes due
2012, (the “ Convertible Notes ” and each USD
1,000 principal amount of Convertible Notes, a “
Convertible Note ”) issued by Counterparty. In the
event of any inconsistency between the terms defined in the
Indenture and this Confirmation, this Confirmation shall govern.
The parties acknowledge that this Confirmation is entered into on
the date hereof with the understanding that (i) definitions
set forth in the Indenture that are also defined herein by
reference to the Indenture and (ii) sections of the Indenture
that are referred to herein will conform to the descriptions
thereof in the Prospectus dated November 25, 2008, as
supplemented by the Prospectus Supplement dated May 13, 2009
(as so supplemented, the “ Prospectus ”)
relating to the Convertible Notes. If any such definitions in the
Indenture or any such sections of the Indenture differ from the
descriptions thereof in the Prospectus, the descriptions thereof in
the Prospectus will govern for purposes of this Confirmation. The
parties further acknowledge that the Supplemental Indenture section
numbers used herein are based on the draft of the Supplemental
Indenture last reviewed by Dealer as of the date of this
Confirmation, and if any such section numbers are changed in the
Supplemental Indenture as executed, the parties will amend this
Confirmation in good faith to preserve the intent of the parties.
For the avoidance of doubt, references to the Indenture herein are
references to the Indenture as in effect on the date of its
execution and if the Indenture is amended following its execution,
any such amendment will be disregarded for purposes of this
Confirmation unless the parties agree otherwise in
writing.
Each party is
hereby advised, and each such party acknowledges, that the other
party has engaged in, or refrained from engaging in, substantial
financial transactions and has taken other material actions in
reliance upon the parties’ entry into the Transaction to
which this Confirmation relates on the terms and conditions set
forth below.
1. This
Confirmation evidences a complete and binding agreement between
Dealer and Counterparty as to the terms of the Transaction to which
this Confirmation relates. This Confirmation shall supplement, form
a part of, and be subject to an agreement in the form of the 2002
ISDA Master Agreement (the “ Agreement
”)
as if Dealer
and Counterparty had executed an agreement in such form (but
without any Schedule except for the election of the laws of the
State of New York as the governing law) on the Trade Date. In the
event of any inconsistency between provisions of that Agreement and
this Confirmation, this Confirmation will prevail for the purpose
of the Transaction to which this Confirmation relates. The parties
hereby agree that no Transaction other than the Transaction to
which this Confirmation relates shall be governed by the
Agreement.
2. The terms of
the particular Transaction to which this Confirmation relates are
as follows:
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May 13,
2009
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The third
Exchange Business Day immediately prior to the Premium Payment
Date.
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“Modified
American”, as described under “Procedures for
Exercise” below
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Call
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Counterparty
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Dealer
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The common
stock of Counterparty, par value USD 0.01 per Share (Exchange
symbol “WYN”)
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200,000;
provided that the Number of Options shall be automatically
increased as of the date of exercise by Credit Suisse Securities
(USA) LLC, J.P. Morgan Securities Inc., Citigroup Global
Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated (the “ Representatives ”), as
representatives of the Underwriters (as defined in the Underwriting
Agreement), of their option pursuant to Section 2(b) of the
Underwriting Agreement (the “ Underwriting Agreement
”) dated as of May 13, 2009 between Counterparty and the
Representatives, by a number of Options (the “ Additional
Options ”) equal to the aggregate principal amount of
Convertible Notes issued pursuant to such exercise (such
Convertible Notes, the “ Additional Convertible Notes
”) divided by USD 1,000. For the avoidance of doubt,
the Number of Options outstanding shall be reduced by each exercise
of Options hereunder. In no event will the Number of Options be
less than zero.
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40%
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As of any date,
a number equal to the Applicable Percentage multiplied by
the Conversion Rate as of such date (as defined in the Supplemental
Indenture, but without regard to any adjustments to the Conversion
Rate pursuant to Section 4.05(g) or (h) or to
Section 4.07 of the Supplemental Indenture), for each
Convertible Note.
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2
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USD
12.7320
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USD 14,480,000
(Premium per Option USD 181.0000); provided that if the
Number of Options is increased pursuant to the proviso to the
definition of “Number of Options” above, an additional
Premium equal to the product of the number of Additional Options
and the Premium per Option shall be paid on the Additional Premium
Payment Date.
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May 19,
2009
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Additional Premium Payment Date:
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The closing
date for the purchase and sale of the Additional Convertible
Notes.
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The New York
Stock Exchange
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All
Exchanges
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Notwithstanding
anything to the contrary in the Equity Definitions, an Exercise
Period shall occur with respect to an Option hereunder only if such
Option is an Exercisable Option (as defined below) and the Exercise
Period shall be, in respect of any Exercisable Option, the period
commencing on, and including, the relevant Conversion Date and
ending on, and including, the Scheduled Valid Day immediately
preceding the first day of the relevant Settlement Averaging Period
in respect of such Conversion Date; provided that in respect
of Exercisable Options relating to Convertible Notes for which the
relevant Conversion Date occurs on or after February 1, 2012,
the final day of the Exercise Period shall be the Scheduled Valid
Day immediately preceding the Expiration Date.
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With respect to
any conversion of Convertible Notes, the date on which the Holder
(as such term is defined in the Supplemental Indenture) of such
Convertible Notes satisfies all of the requirements for conversion
thereof as set forth in Section 4.02(b) of the Supplemental
Indenture; provided that in no event shall a Conversion Date
be deemed to occur hereunder (and no Option shall be deemed to be
an Exercisable Option) with respect to any Convertible Note
surrendered for conversion in respect of which Counterparty elects
to designate a financial institution for exchange in lieu of
conversion pursuant to Section 4.04 of the Supplemental
Indenture, and such financial accepts such Convertible Note
(regardless of whether such financial institution delivers any
amounts due in respect of such Convertible Note, or whether such
Convertible Note is resubmitted to Counterparty for conversion
following a failure by such financial institution to deliver any
such amounts or otherwise).
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In respect of
any Exercise Period, the number of Convertible Notes surrendered to
Counterparty for conversion on the first day of such Exercise
Period (the “ Related Convertible Notes ” for
such Exercisable Options). Notwithstanding the foregoing, in no
event shall the number of Exercisable Options exceed the Number of
Options.
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The Valuation
Time
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May 1,
2012, subject to earlier exercise.
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Applicable, as
described under Exercisable Options above.
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Applicable; and
means that in respect of an Exercise Period, a number of Options
not previously exercised hereunder equal to the number of
Exercisable Options shall be deemed to be exercised on the final
day of such Exercise Period for such Exercisable Options;
provided that such Options shall be deemed exercised only to
the extent that Counterparty has provided a Notice of Exercise to
Dealer.
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Notwithstanding
anything to the contrary in the Equity Definitions, in order to
exercise any Exercisable Options, Counterparty must notify Dealer
in writing before 5:00 p.m. (New York City time) on the Scheduled
Valid Day prior to the scheduled first day of the Settlement
Averaging Period for the Exercisable Options being exercised of
(i) the number of such Options, and (ii) the scheduled
first day of the Settlement Averaging Period and the scheduled
Settlement Date; provided that in respect of Exercisable
Options with Related Convertible Notes with a Conversion Date
occurring on or after February 1, 2012, such notice may be
given on or prior to the Scheduled Valid Day immediately preceding
the Expiration Date and need only specify the number of such
Exercisable Options.
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At the close of
trading of the regular trading session on the Exchange;
provided that if the principal trading session is extended,
the Calculation Agent shall determine the Valuation Time in its
reasonable discretion.
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Section 6.3(a) of the Equity Definitions is
hereby replaced in its entirety by the following:
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“‘Market Disruption Event’
means in respect of a Share, (i) a failure by the primary
United States national or regional securities exchange or market on
which Shares are listed or admitted to trading to open for trading
during its regular trading session or (ii) the occurrence or
existence prior to 1:00 p.m. (New York City time) on any Scheduled
Valid Day for the Shares for more than one half-hour period in the
aggregate during regular
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trading hours
of any suspension or limitation imposed on trading (by reason of
movements in price exceeding limits permitted by the relevant stock
exchange or otherwise) in the Shares or in any options, contracts
or future contracts relating to the Shares.”
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Cash
Settlement
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In respect of
any Exercisable Option exercised or deemed exercised hereunder, in
lieu of Section 8.1 of the Equity Definitions, Dealer will pay
to Counterparty, on the relevant Settlement Date, the Option Cash
Settlement Amount in respect of such Exercisable Option. In no
event will the Option Cash Settlement Amount be less than
zero.
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Option Cash Settlement Amount:
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In respect of
any Exercisable Option exercised or deemed exercised, an amount in
cash equal to the sum of the quotients, for each Valid Day during
the Settlement Averaging Period for such Exercisable Option, of (A)
(x) the Option Entitlement on such Valid Day multiplied
by (y) the Relevant Price on such Valid Day less
the Strike Price, divided by (B) the number of Valid
Days in the Settlement Averaging Period; provided that if
the calculation contained in clause (y) above results in a
negative number, such number shall be replaced with the number
“zero”.
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A day on which
(i) trading in the Shares generally occurs on the Exchange or,
if the Shares are not then listed on the Exchange, on the principal
other United States national or regional securities exchange on
which the Shares are then listed or, if the Shares are not then
listed on a United States national or regional securities exchange,
on the principal other market on which the Shares are then traded
and (ii) there is no Market Disruption Event. If the Shares are not
so listed or traded, “Valid Day” means a Business
Day.
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A day on which
trading in the Shares is scheduled to occur on the principal United
States national or regional securities exchange or market on which
the Shares are listed or admitted for trading. If the Shares are
not so listed or admitted for trading, “Scheduled Valid
Day” means a Business Day.
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Any day other
than a Saturday, a Sunday or a day on which the Federal Reserve
Bank of New York is authorized or required by law or executive
order to close or be closed.
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On any Valid
Day, the per Share volume-weighted average price as displayed under
the heading “Bloomberg VWAP” on Bloomberg page WYN.N
<equity> AQR (or any successor thereto) in respect
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the period from
the scheduled opening time of the Exchange to the Scheduled Closing
Time of the Exchange on such Valid Day (or if such volume-weighted
average price is unavailable, the market value of one Share on such
Valid Day, as determined by the Calculation Agent using a
volume-weighted method).
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Settlement Averaging Period:
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For any
Exercisable Option, (x) if Counterparty has delivered, in
accordance with the terms set forth above, a Notice of Exercise to
Dealer with respect to such Exercisable Option with a Conversion
Date occurring prior to February 1, 2012, the thirty
(30) consecutive Valid Day period beginning on, and including,
the second Scheduled Valid Day immediately following such
Conversion Date, or (y) if Counterparty has delivered, in
accordance with the terms set forth above, a Notice of Exercise to
Dealer with respect to such Exercisable Option with a Conversion
Date occurring on or after February 1, 2012, the thirty
(30) consecutive Valid Day period beginning on, and including,
the thirty-second (32 nd )
Scheduled Valid Day immediately prior to the Expiration
Date.
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For any
Exercisable Option, the date cash will be paid under the terms of
the Indenture with respect to the conversion of the Related
Convertible Notes for such Exercisable Option, but in no event
earlier than the third Business Day immediately following the final
Valid Day of the Settlement Averaging Period.
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USD
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3. Additional
Terms applicable to the Transaction:
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Adjustments
applicable to the Transaction:
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Potential Adjustment Events:
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Notwithstanding
Section 11.2(e) of the Equity Definitions, a “Potential
Adjustment Event” means an occurrence of any event or
condition, as set forth in Section 4.05 of the Supplemental
Indenture that would result in an adjustment to the Conversion Rate
of the Convertible Notes; provided that in no event shall
there be any adjustment hereunder as a result of an adjustment to
the Conversion Rate pursuant to Section 4.05(g) or (h) or
Section 4.07 of the Supplemental Indenture.
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Calculation
Agent Adjustment, and means that, notwithstanding Section 11.2(c)
of the Equity Definitions, upon any adjustment to the Conversion
Rate of the Convertible Notes pursuant to the Supplemental
Indenture (other than Section 4.05(g) and (h) and
Section 4.07 of the Supplemental Indenture), the Calculation
Agent will make a corresponding adjustment to any one or more of
the Strike Price, Number of Options, Option Entitlement and any
other variable relevant to the exercise, settlement or payment for
the Transaction.
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Extraordinary
Events applicable to the Transaction:
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Applicable;
provided that notwithstanding Section 12.1(b) of the
Equity Definitions, a “Merger Event” means the
occurrence of any event or condition set forth in the definition of
“Merger Event” in Section 4.08 of the Supplemental
Indenture.
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Applicable;
provided that notwithstanding Section 12.1(d) of the
Equity Definitions, a “Tender Offer” means the
occurrence of any event or condition set forth in
Section 4.05(e) of the Supplemental Indenture.
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Consequence of Merger Events/
Tender Offers:
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Notwithstanding Section 12.2 and Section 12.3 of the
Equity Definitions, upon the occurrence of a Merger Event or a
Tender Offer, the Calculation Agent shall make a corresponding
adjustment in respect of any adjustment under the Supplemental
Indenture to any one or more of the nature of the Shares, Strike
Price, Number of Options, Option Entitlement and any other variable
relevant to the exercise, settlement or payment for the
Transaction; provided , however , that such
adjustment shall be made without regard to any adjustment to the
Conversion Rate as set forth in Section 4.07 of the
Supplemental Indenture; provided further that if, with
respect to a Merger Event or a Tender Offer, (i) the
consideration for the Shares includes (or, at the option of a
holder of Shares, may include) shares of an entity or person not
organized under the laws of the United States, any State thereof or
the District of Columbia or (ii) the Counterparty to the
Transaction following such Merger Event or Tender Offer, will not
be the Issuer following such Merger Event or Tender Offer, then
Cancellation and Payment (Calculation Agent Determination) shall
apply.
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Nationalization, Insolvency or
Delisting:
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Cancellation and Payment (Calculation Agent Determination);
provided that, in addition to the provisions of
Section 12.6(a)(iii) of the Equity Definitions, it will also
constitute a Delisting if the Exchange is located in the United
States and the Shares are not immediately re-listed, re-traded or
re-quoted on any of the New York Stock Exchange, The NASDAQ Global
Select Market or The NASDAQ Global Market (or their respective
successors); if the Shares are immediately re-listed, re-traded or
re-quoted on any of the New York Stock Exchange, The NASDAQ Global
Select Market or The NASDAQ Global Market (or their respective
successors), such exchange or quotation system shall thereafter be
deemed to be the Exchange.
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Additional Disruption Events:
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Applicable;
provided that Section 12.9(a)(ii)(X) of the Equity
Definitions is hereby amended by replacing the word
“Shares” with the phrase “Hedge
Positions.”
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Applicable
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Dealer for all
applicable Additional Disruption Events
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For all
applicable Extraordinary Events, Dealer
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Applicable
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Agreements and
Acknowledgements Regarding Hedging Activities:
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Applicable
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Additional Acknowledgments:
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Applicable
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Dealer
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(a)
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Account for payments to
Counterparty:
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Bank: JPMorgan
Chase Bank, New York, NY
ABA#: 021000021
Acct Name: WHG
Hospitality, Inc.
Acct No.: 304656429
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(b)
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Account for payments to
Dealer:
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Citibank,
N.A.
ABA #021000089
DDA 00167679
Ref: Equity Derivatives
The Office of
Counterparty for the Transaction is: Inapplicable, Counterparty is
not a Multibranch Party.
The Office of
Dealer for the Transaction is: New York
Citibank,
N.A.
390 Greenwich Street
New York, NY 10013
7. Notices: For
purposes of this Confirmation:
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(a)
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Address for notices or
communications to Counterparty:
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Wyndham
Worldwide Corporation
22 Sylvan Way
Parsippany, NY 07054
Attention: Vice President, Treasury
Telephone No.: (973) 753-7703
Facsimile No.: (973) 753-6730
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(b)
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Address for notices or
communications to Dealer:
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Citibank,
N.A.
390 Greenwich Street
New York, NY 10013
Attention: Equity Derivatives
Facsimile: (212) 723-8328
Telephone: (212) 723-7357
8
Citibank,
N.A.
250 West Street, 10th Floor
New York, NY 10013
Attention: GCIB Legal Group—Derivatives
Facsimile: (212) 816-7772
Telephone: (212) 816-2211
8.
Representations and Warranties of Counterparty
The
representations and warranties made by Counterparty pursuant to the
Underwriting Agreement are true and correct and are hereby deemed
to be repeated to Dealer as if set forth herein. Counterparty
hereby further represents and warrants to Dealer that:
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(a)
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Counterparty has all necessary
corporate power and authority to execute, deliver and perform its
obligations in respect of this Transaction; such execution,
delivery and performance have been duly authorized by all necessary
corporate action on Counterparty’s part; and this
Confirmation has been duly and validly executed and delivered by
Counterparty and constitutes its valid and binding obligation,
enforceable against Counterparty in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting
creditors’ rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity) and except that rights to
indemnification and contribution hereunder may be limited by
federal or state securities laws or public policy relating
thereto.
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(b)
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Neither the execution and delivery
of this Confirmation nor the incurrence or performance of
obligations of Counterparty hereunder will conflict with or result
in a breach of the certificate of incorporation or by-laws (or any
equivalent documents) of Counterparty, or any applicable law or
regulation, or any order, writ, injunction or decree of any court
or governmental authority or agency, or any agreement or instrument
to which Counterparty or any of its subsidiaries is a party or by
which Counterparty or any of its subsidiaries is bound or to which
Counterparty or any of its subsidiaries is subject, or constitute a
default under, or result in the creation of any lien under, any
such agreement or instrument.
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(c)
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No
consent, approval, authorization, or order of, or filing with, any
governmental agency or body or any court is required in connection
with the execution, delivery or performance by Counterparty of this
Confirmation, except such as have been obtained or made and such as
may be required under the Securities Act of 1933, as amended (the
“ Securities Act ”) or state securities
laws.
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