Exhibit 10.7
AMENDMENT TO AGREEMENTS
THIS AMENDMENT TO AGREEMENTS (this "Amendment") is made and
entered into as of this 14th day of August, 1998 by and among Patriot
American Hospitality, Inc. (the "REIT"), Wyndham International, Inc. (the
"OPCO") (the REIT and the OPCO, each a "Company" and collectively, the
"Companies"), and NationsBanc Mortgage Capital Corporation (the "Purchaser").
RECITALS:
A . As of February 26, 1998 the Companies and NMS Services,
Inc., a subsidiary of NationsBank Corporation (the "Original Purchaser"),
through its agent NationsBanc Xxxxxxxxxx Securities LLC, entered into (i) a
Purchase Agreement (the "Purchase Agreement") pursuant to which, among other
things, the Companies sold to Original Purchaser 4,900,000 paired shares of
stock (referred to herein and in the Purchase Agreement as the "Purchase
Shares") of the companies on February 27, 1998, and (ii) a Purchase Price
Adjustment Mechanism, including an ISDA Master Agreement and the Schedules
thereto (the "Purchase Price Adjustment Mechanism") which provides for, among
other things, adjustments to the purchase price paid for the Purchase Shares
as more particularly described therein. Capitalized terms used in this
Amendment and not otherwise defined herein shall have the meanings given such
terms in the Purchase Price Adjustment Mechanism, or, if not defined in the
Purchase Price Adjustment Mechanism, in the Purchase Agreement.
B. As of July 31, 1998 Original Purchaser and the Purchaser
entered into a certain Transfer and Assignment Agreement pursuant to the
terms of which, among other things, Original Purchaser transferred and
assigned to the Purchaser all of the Purchase Shares and all of Original
Purchaser's rights and obligations under the Purchase Agreement and the
Purchase Price Adjustment Mechanism and Purchaser assumed all of such rights
and obligations.
C. The Companies have requested that the Purchaser amend the
Purchase Price Adjustment Mechanism in certain respects and the Purchaser has
agreed to do so on the terms and subject to the conditions set forth in this
Amendment.
NOW THEREFORE, in consideration of the premises, the sum of
Ten Dollars ($10.00) in hand paid by the Companies and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged and
confessed by the Purchaser, the Companies and the Purchaser do hereby agree as
follows:
1. Rights to Unwind. In consideration of the agreements
made by the Companies in this Amendment, the Purchaser hereby agrees that it
will not require a settlement pursuant to Section III of the Purchase Price
Adjustment Mechanism as a consequence of any Mandatory Unwind Event described
in paragraph (i) or subparagraph (ii)(4) of the provisions entitled
"Mandatory Unwind Event" of Section VI of the Purchase Price Adjustment
Agreement (any Mandatory Unwind Events described in such paragraph (i) and
subparagraph (ii)(4) are collectively referred to herein as "Price Decline
Unwind Event") that occurs on or before October 15, 1998. Any Price Decline
Unwind Event that occurs on or after the October 15, 1998 shall be governed
by the Purchase Price Adjustment Mechanism, as amended by this Amendment.
The agreements in this Section 1 do not apply to any Mandatory Unwind Event
other than a Price Decline Unwind Event.
2. Additional Mandatory Unwind Event. In addition to the
events described in subparagraphs (1), (2), and (3) of paragraph (ii) of the
provisions entitled "Mandatory Unwind Event" in Section VI of the Purchase
Price Adjustment Mechanism, the following event occurring after the date of
this Amendment shall also constitute a Mandatory Unwind Event under the
Purchase Price Adjustment Mechanism:
(5) The sale, lease, conveyance or transfer of any one or more
the hotels listed on Exhibit A attached hereto and made a part
hereof for all purposes (the "Listed Hotels") or the granting of
a deed of trust, mortgage or other similar encumbrance securing
any indebtedness covering any of the Listed Hotels, except (i) in
connection with the consummation of a transaction in which the
net proceeds of such transaction are being applied in whole or
in part to effect a complete and final Physical Settlement in
accordance with Section III.B of the Purchase Price Adjustment
Mechanism, or (ii) a transaction between or among the Companies
and their affiliates that does not have a material adverse effect
on the assets of the Companies determined on a consolidated basis.
The foregoing additional Mandatory Unwind Event is not a Price Decline Unwind
Event.
3. Agreement to File Registration Statements. In
consideration for the Purchaser's agreement to enter into this Amendment, the
Companies hereby covenant and agree to (i) immediately commence the
preparation of Registration Statements (as defined in the Purchase Agreement)
that meet the requirements of Section 7 of the Purchase Agreement and Section
III.A.4 of the Purchase Price Adjustment Mechanism (except that, if required
by the Securities and Exchange Commission (the "SEC") such Registration
Statements shall register the sale of Shares by the Companies through the
Purchaser or its affiliates, as agent, rather than the resale of Shares by
the Purchaser or its affiliates) and to complete such preparation and
thereafter file such Registration Statements with the SEC and take all other
action that is necessary or prudent to assure that the Purchaser (or any
affiliate of the Purchaser designated by the Purchaser) will be able to sell
all of the Shares in its possession without further registration under the
Securities Act of 1933 at any time on or after the October 15, 1998 (any such
registration is referred to as a "Valid Registration"), (ii) fully comply
with all of their respective obligations under the Purchase Agreement and the
Purchase Price Adjustment Mechanism in respect of the Registration Statements
so as to permit Purchaser (or its designated affiliate) to sell the Shares
any time after the October 15, 1998, and (iii) waive all requirements in the
Purchase Agreement and the Purchase Price Adjustment Mechanism that the
Purchaser make a written request or demand as a condition to the Companies'
obligation to prepare or file a registration statement regarding the Shares
and agreements that the Companies are entitled to 60 days (or any other time
period) advance notice before the Companies are required to prepare or file a
registration statement regarding the Shares.
4. Pending Transactions. The Companies have advised the
Purchaser that the Companies and a third party (the "Third Party") are
currently engaged in negotiations regarding certain transactions related to
the Listed Hotels (such transactions are referred to herein collectively as
the "Pending Transactions"), pursuant to which the Third Party would provide
certain financing to the Companies secured by mortgages encumbering the
Listed Hotels and the Companies would subsequently transfer ownership of the
Listed Hotels to a business association between the Third Party and
the Companies or entities affiliated with the Companies. The Companies
hereby covenant and agree that contemporaneously with the consummation of any
aspect of the Pending Transactions in which the Companies or either of them
receives cash (in connection with any financing, transfer or otherwise),
settlement of the Transaction shall occur and that the Companies shall apply
proceeds from the Pending Transactions (after the payment of normal and
customary closing costs and any indebtedness encumbering the Listed Hotels on
the date hereof) to the extent necessary to accomplish a full and final
Physical Settlement of the Transaction. The Companies shall use commercially
reasonable efforts to consummate the Pending Transactions on or before
October 15, 1998.
5. Pledge of Additional Shares. A. Contemporaneously with
the execution and delivery of this Amendment, the Companies hereby
irrevocably and unconditionally pledge, grant, assign, hypothecate and
transfer to the Purchaser, a first and prior pledge and security interest in
2,375,000 Paired Shares and all proceeds thereof, and any increase and
profits received therefrom and, to the extent provided Section 5D below,
Dividends (as defined below), and all security entitlements in respect of the
foregoing (such Paired Shares are in addition to the Purchase Shares and are
hereinafter referred to as the "Collateral Shares"). This Section 5 creates a
security interest in the Collateral Shares to secure the payment and
performance of any and all obligations now or hereafter existing of the
Companies under the Purchase Agreement, the Purchase Price Adjustment
Mechanism and this Amendment (collectively, the "Obligations"). Upon the
occurrence of a Default (as defined below), in addition to any and all other
rights and remedies which the Purchaser may then have hereunder, under
applicable laws or otherwise, the Purchaser at its option may, subject to any
limitation or restriction imposed by any applicable laws, (i) foreclose or
otherwise enforce its security interest in all or any part of the Collateral
Shares by any available judicial procedure; (ii) sell or otherwise dispose
of, at the office of the Purchaser, all or any part of the Collateral Shares,
and any such sale or other disposition shall be in accordance with applicable
laws, and may be as a unit or in parcels, by public or private proceedings,
and by way of one or more contracts (it being agreed that the sale of any
part of the Collateral Shares shall not exhaust the Purchaser's power of
sale, but sales may be made from time to time until all of the Collateral
Shares have been sold or until the Obligations have been performed and paid
in full), and at
any such sale it shall not be necessary to exhibit the Collateral Shares;
(iii) at its discretion, retain the Collateral Shares in satisfaction of the
Obligations whenever the circumstances are such that the Purchaser is
entitled to do so under applicable laws; (iv) apply by appropriate judicial
proceedings for appointment of a receiver for the Collateral Shares, or any
part thereof, and the Companies hereby consent to any appointment; (v) buy
the Collateral Shares at any public sale; and (vi) buy the Collateral Shares
at any private sale, subject to any restrictions imposed by applicable laws.
The Companies agree that, if notice is required to be given by applicable
laws, two days' advance written notice shall constitute reasonable notice.
The Purchaser shall apply the proceeds of any collection, sale, disposition
or other realization upon any Collateral Shares as follows:
First, to the payment of the reasonable costs and expenses of
such collection, sale, disposition, or other realization, including
reasonable out-of-pocket costs and expenses of the Purchaser and the
reasonable fees and expenses of its agents and counsel;
Next, to the payment of the Obligations; and
Finally, to the payment to the Companies, or their respective
successors or assigns, or as a court of competent jurisdiction may
direct, of any surplus then remaining.
If the proceeds of collection, sale, disposition, or other realization are
insufficient to cover the costs and expenses of such realization and the
payment in full of the Obligations, the Companies shall remain liable for any
deficiency.
B. The Companies recognize that if a Default occurs prior to
a Valid Registration becoming effective, the Purchaser may be unable to
effect a public sale of any or all of the Collateral Shares by reason of
certain prohibitions contained in the Securities Act of 1933, as amended (the
"Securities Act") and applicable state securities laws, and may be compelled
to resort to one or more private sales thereof. The Companies acknowledge and
agree that the Purchaser shall have the right to sell the Collateral Shares
at a private sale and any such private sale may result in prices and other
terms less favorable to the seller than if such sale were a public sale. The
Purchaser shall be under no obligation to delay a sale of any of the
Collateral Shares until a
Valid Registration is in effect. The Companies hereby agree (i) that in the
event the Purchaser shall, upon any Default, sell the Collateral Shares or
any portion thereof, at a private sale or sales, the Purchaser shall have the
right to rely upon the advice and opinion of a member of a nationally
recognized investment banking firm acceptable to the Purchaser (which may be
NationsBanc Xxxxxxxxxx Securities LLC, an affiliate of the Purchaser), as to
the best price reasonably obtainable upon such a private sale thereof, and
(ii) in the absence of fraud, wilful misconduct and gross negligence, that
such reliance shall be conclusive evidence that the Purchaser handled such
matter in a commercially reasonable manner under the Uniform Commercial Code.
C. Notwithstanding the provisions of Section IV of the
Purchase Price Adjustment Mechanism entitled "Interim Net Stock Settlement",
there shall be no requirement to deliver Paired Shares or Treasury Notes on
the Interim Settlement Date scheduled to occur on August 26, 1998.
D. All dividends and other distributions in respect of the
Collateral Shares (collectively, "Dividends") that become payable during a
Compliance Period (as defined below) shall belong to the Companies, and all
dividends and other distributions in respect of the Collateral Shares that
become payable during any period other than a Compliance Period shall be
delivered to the Purchaser and held as security for the Obligations. The
term "Compliance Period" means any period of time after the date hereof when
(i) no Default has occurred and is continuing, and (ii) the Daily Average
Price on the Relevant Exchange of all of the Purchase Shares and all of the
Collateral Shares is equal to or greater than 125% of the amount that would
be payable to the Purchaser on the relevant date if a final and complete
Physical Settlement was occurring on such date.
E. The Companies shall not be obligated to pay a placement
fee to the Purchaser or an affiliate of the Purchaser with respect to the
Collateral Shares.
6. Amendment of Maturity Date. The Maturity Date is hereby
amended to be the date that is the first to occur of (i) the date of the
consummation of the Pending Transactions, or (ii) five days after the date
the Purchaser gives written notice to the Companies that a Default (as
defined below) has occurred, or (iii) February
26, 1999.
7. Final Settlement. The Companies shall have the right to
elect any settlement method permitted by Section III.B., III.C. or III.D. of
the Purchase Price Adjustment Mechanism with respect to the final settlement
to occur on the Maturity Date; provided, however, the Companies' right to
elect Stock Settlement (III.C. of the Purchase Price Adjustment Mechanism) or
Net Stock Settlement (III.D. of the Purchase Price Adjustment Mechanism) or
to deliver Paired Shares in satisfaction of their obligations under III.E.6.
of the Purchase Price Adjustment Mechanism) is conditioned upon the
satisfaction of the following conditions precedent on the Maturity Date:
(i) No Default shall have occurred and be continuing;
(ii) The Daily Average Price on the Relevant Exchange of the
Paired Shares shall be equal to or greater than the highest
Mandatory Unwind Threshold;
(iii) A Valid Registration shall be in effect; and
(iv) All other requirements set forth in Section III.A.4. of the
Purchase Price Adjustment Mechanism and Section 7 of the Purchase
Agreement shall have been complied with and satisfied.
If the foregoing conditions precedent have not been satisfied or waived in
writing by Purchaser on the Maturity Date, the Companies will be deemed to
have elected Physical Settlement (and the conditions precedent to a Physical
Settlement described in Section VI of the Purchase Price Adjustment Mechanism
is hereby waived as to such Physical Settlement). In the event the foregoing
conditions precedent have been satisfied and the Companies elect a Stock
Settlement or a Net Stock Settlement, the Companies may include some or all
of the Collateral Shares in the number of Paired Shares or Net Stock
Settlement Shares, as the case may be, the Companies are obligated to deliver
to the Purchaser to effect such settlement. Upon a final settlement that is
accomplished through any of the settlement methods described in Section
III.B., III.C. and III.D. of the Purchase Price Adjustment Mechanism, the
Purchaser shall return to the Companies any of the Collateral Shares that are
not delivered to the Purchaser to accomplish the
settlement in accordance with the applicable settlement method.
8. Default. The following events shall constitute a "Default" by
the Companies:
(i) The Companies shall fail to timely complete and file and
cause to be effective with the SEC a Valid Registration on or before the
October 15, 1998;
(ii) The Companies shall fail to settle the Transaction on the
Maturity Date in accordance with the Purchase Price Adjustment Mechanism,
as modified by this Amendment; or
(iii) The occurrence of any event described in clauses
(1)(defaults involving the Companies's Specified Indebtedness),
(2)(acceleration of Specified Indebtedness) or (3)(Bankruptcy or
Insolvency) of the provisions entitled "Mandatory Unwind Event" of
subparagraph (ii) of Section VI of the Purchase Price Adjustment
Mechanism; or
(iv) The occurrence of the Mandatory Unwind Event described in
Section 2 above; or
(v) The Third Party declares that the Companies are in default
of their obligations to the Third Party in respect of the Pending
Transactions and such default is not cured within any applicable notice,
grace or cure periods, if any.
9. Rights of Purchaser Upon Default. If a Default occurs, the
Purchaser shall have the right to pursue all remedies at law and in equity,
including specifically, the right to immediately sell all of the Purchase
Shares in its possession and/or to foreclose the security interest granted in
Section 5 in respect of the Collateral Shares. Without limiting the
generality of the foregoing, if on the date of a Default (a) there is not in
effect a Valid Registration, or (b) the Companies are not in full compliance
with their respective obligations and covenants in Section 7 of the Purchase
Agreement, then, in such event, the Purchaser may sell the Shares in one or
more negotiated private sales to the extent and in the manner permitted by
applicable state and federal securities laws. In the event a Default occurs,
the Companies hereby waive any requirement (and any related covenant) in the
Purchase Agreement or the Purchase Price Adjustment
Mechanism that (i) the Purchaser make a request or demand for the Companies
to prepare, file or make effective a registration statement in respect of
the Shares, (ii) entitles the Companies to any period of time after such
written request or demand to make effective a resale registration statement,
or (iii) requires the Purchaser to defer selling the Shares until a
Registration Statement has been prepared and filed in accordance with the
Securities Act of 1933; provided, however, the foregoing waivers are for the
benefit of the Purchaser and such waiver shall not excuse the Companies from
the obligation to perform each covenant and agreement of the Companies under
the Purchase Agreement, the Purchase Price Adjustment Mechanism and this
Amendment unless the Purchaser agrees otherwise in writing. If a Default
occurs, the Companies shall immediately pay to the Purchaser the difference
between the amount the Purchaser would have been paid upon a Physical
Settlement on the Maturity Date if the Companies had fully performed their
obligations relating to such Physical Settlement pursuant to the Purchase
Price Adjustment Mechanism, as amended by this Amendment (the "Full
Settlement Amount"), and the amount the Purchaser actually received from the
sale of the Shares; provided, however, if the Purchaser is unable to sell the
Shares because of any act or omission of the Companies (including without
limitation, any injunction, automatic stay or other legal impediment) or
because the Purchaser was unable locate a buyer for the Shares after meeting
the requirements of applicable laws regarding a private sale, and the
Companies shall pay to the Purchaser the Full Settlement Amount within five
days after written demand by the Purchaser. If and to the extent the
Purchaser is paid in full for all amounts owed to the Purchaser by the
Companies under the Purchase Agreement, the Purchase Price Adjustment
Mechanism and this Amendment, the Purchaser agrees to release the security
interests in any of the Collateral Shares that have not been foreclosed and
to deliver to the Companies any Purchase Shares not previously sold and any
Dividends delivered to the Purchaser and not applied against the Obligations.
If no Valid Registration is in effect on the date the Purchaser is permitted
to sell the Shares the Purchaser shall have no liability to the Companies
with respect to the amount realized by the Purchaser as a consequence of
selling the Shares at one or more private sales or any diminution in the
value of the Shares as a consequence of such private sales.
10. Reaffirmation of Representations; Indemnifications. The
Companies hereby confirm and reaffirm to the Purchaser all the
representations and warranties made by the Companies, or either of them,
under or pursuant to the Purchase Agreement and the Purchase Price Adjustment
Mechanism are true and correct on the date hereof. The indemnification
obligations of the Companies under Section 7(e)(i) of the Purchase Agreement
is intended to include and apply to any registration statement and related
documents that are described in this Amendment.
11. Further Assurances. The Companies acknowledge that the
Purchaser (i) is entering into this Amendment without the opportunity to
conduct any independent investigation or due diligence with respect to the
Hotels and (ii) to minimize the cost to the Companies associated with the
Purchaser's agreement to take such additional collateral, is relying on the
truth and accuracy of the representations and warranties of the Companies to
the Purchaser regarding the Hotels. In addition, the Companies will, on
request of the Purchaser, (a) execute, acknowledge, deliver, procure and
record and/or file such further instruments (including, without limitation,
further deeds of trust, security agreements, financing statements, and
continuation statements) and do such further acts as, in Purchaser's opinion,
are necessary to carry out more effectively the purposes of this Amendment;
(b) execute, acknowledge, deliver, procure and file and/or record any
document or instrument (including specifically any financing statement)
deemed advisable by the Purchaser to protect the the security interest
herein granted against the rights or interests of third persons; (c) provide
such information, reports, surveys, title commitments, market studies,
franchise agreements, books, ledgers and instruments and any other
information relating to the use, operation or value of the Listed Hotels,
permit the Purchaser and its agents and consultants to conduct such
inspections and investigations as the Purchaser deems necessary or
appropriate, and do such further acts as may be necessary, desirable or
proper in the reasonable determination of the Purchaser to enable the
Purchaser to carry out normal and customary due diligence regarding the
Listed Hotels; (d) keep the Purchaser fully apprised on a regular basis as to
the status of the Pending Transactions and provide to the Purchaser copies of
the purchase and sale agreement and, if applicable, those other documents
which contain the essential terms of the Pending Transactions; and (e) the
Purchaser may notify the Third Party of the covenants and agreements of the
Companies relating to the Pending Transactions contained in this Amendment.
12. Inducement. The Companies acknowledge that the
covenants and undertakings of the Companies in this Amendment are material
inducements to the Purchaser's agreement to enter into this Amendment and
that but for such covenants and undertakings, the Purchaser would not enter
into this Amendment.
13. Counterparts. This Amendment has been executed in
several counterparts, all of which are identical, and all of which
counterparts together shall constitute one and the same instrument.
14. Time of Essence. Time shall be of the essence in this
Amendment with respect to all of the parties' obligations hereunder and under
the Purchase Price Adjustment Mechanism.
15. Amendment. This Amendment amends the Purchase Agreement
and the Purchase Price Adjustment Mechanism, each of which, as amended by
this Amendment, is hereby ratified and reaffirmed and declared to be in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their duly authorized representatives as of the
day and year first above written.
PATRIOT AMERICAN HOSPITALITY, INC.
By: __________________________________
Name: ________________________________
Title: _______________________________
WYNDHAM INTERNATIONAL, INC.
By: __________________________________
Name: ________________________________
Title: _______________________________
NATIONSBANC MORTGAGE CAPITAL CORPORATION
By: __________________________________
Name: ________________________________
Title: _________________________________
DOCSC\660174.1
