EXHIBIT 10.6
October 22, 1998
Patriot American Hospitality, Inc.
0000 Xxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn.: Xxxxxxx X. Xxxxx III
Wyndham International, Inc.
0000 Xxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn.: Xxxxxx Xx
Ladies and Gentlemen:
This letter agreement among Patriot American Hospitality, Inc. (the
"REIT"), Wyndham International, Inc. (the "OPCO") (each a "Company" and
collectively, the "Companies") and PaineWebber Financial Products Inc.
("PaineWebber") confirms, modifies and amends, in part, certain of the terms
and conditions of that certain Purchase Price Adjustment Mechanism Agreement,
dated April 6, 1998 (the "Agreement") between the Companies and PaineWebber,
as amended by letter agreements dated August 14, 1998, and September 30,
1998. Defined terms not otherwise defined herein shall have the meanings
ascribed to them under the Agreement.
Notwithstanding the terms and conditions of the Agreement, the
Companies and PaineWebber agree as follows:
1. REPRESENTATIONS AND WARRANTIES. The representations, warranties and
covenants of the Companies in Section 4 of the Purchase Agreement,
dated as of April 6, 1998 (the "Purchase Agreement"), among the
Companies and PaineWebber are hereby incorporated by reference herein,
and the Companies hereby so represent, warrant and covenant to
PaineWebber. The provisions of Section 6 of the Purchase Agreement
shall also be applicable to any Paired Shares delivered to PaineWebber
under the Agreement.
Patriot American Hospitality, Inc.
Wyndham International, Inc.
October 22, 1998
Page 2
2. CONFIRMATION OF COLLATERAL SHARES. A. The Companies hereby confirm
that there has heretofore been irrevocably and unconditionally
pledged, granted, assigned, hypothecated and transferred to
PaineWebber a first and prior pledge and security interest in the
12,574,780 Paired Shares previously delivered to PaineWebber as
collateral and all shares hereafter delivered as collateral, and all
proceeds thereof, and any increase in profits received therefrom and,
to the extent provided in Section 2C below, Distributions (as defined
in the Agreement), and all security entitlements in respect of the
foregoing (such Paired Shares are in addition to the Adjustment Shares
and are hereinafter referred to as the "Collateral Shares"). Blank
stock powers for all collateral shares held by PaineWebber, duly
endorsed with signatures guaranteed, are being delivered herewith.
This Section 2 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 and
the Agreement, as the same has been and may be amended from time to
time (collectively "Obligations"). Upon the occurrence of a Default
(as defined below), in addition to any and all other rights and
remedies which PaineWebber may have hereunder, under applicable laws
or otherwise, PaineWebber 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 PaineWebber, 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 PaineWebber'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 PaineWebber is entitled to do so under applicable laws;
(iv) apply any appropriate judicial proceedings for consent to any
appointment; (v) buy the Collateral Shares at any public sale; and
(iv) 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. PaineWebber 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
Patriot American Hospitality, Inc.
Wyndham International, Inc.
October 22, 1998
Page 3
expenses of PaineWebber and the reasonable fees and expenses of its
agents and counsel;
NEXT, to the satisfaction and 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 them 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 such deficiency.
B. The Companies recognize that if a Default occurs prior to a
registration statement covering all shares to be sold by PaineWebber
under the Agreement (a "Valid Registration") becoming effective,
PaineWebber 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 PaineWebber 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. PaineWebber 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
PaineWebber shall, upon any Default, sell the Collateral Shares or any
portion thereof, at a private sale or sales, PaineWebber shall have
the right to rely upon the advice and opinion of a member of a
nationally recognized investment banking firm acceptable to
PaineWebber (which may be an affiliate of PaineWebber), as to the best
price reasonably obtainable upon such a private sale thereof, and (ii)
in the absence of fraud, willful misconduct and gross negligence, that
such reliance shall be conclusive evidence that PaineWebber handled
such matter in a commercially reasonable manner under the Uniform
Commercial Code.
C. All Distributions in respect of the Collateral Shares shall
be deposited in the collateral account at PaineWebber or a custodian
or depositary designated by PaineWebber and treated in accordance with
the letter agreement between the parties dated August 14, 1998.
D. For purposes of the Agreement and this letter agreement, a
"Default" shall mean failure by the Company to deliver sufficient
Additional Shares (as defined in the
Patriot American Hospitality, Inc.
Wyndham International, Inc.
October 22, 1998
Page 4
Agreement) pursuant to Section 3.2(b) of the Agreement.
3. EFFECT. Notwithstanding this letter agreement, all other provisions
of the Agreement as amended remain in full force and effect. Nothing
in this letter agreement diminishes any rights of either party under
the Purchase Agreement and the Agreement.
Sincerely,
PaineWebber Financial Products, Inc.
By:/s/
--------------------------------
Name:
Title:
AGREED TO AND ACCEPTED
Patriot American Hospitality, Inc. Wyndham International, Inc.
By:/s/ By:/s/
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Name: Name:
Title: Title: