POSADAS DE PUERTO RICO ASSOCIATES, INCORPORATED
STOCKHOLDERS' AGREEMENT
AGREEMENT made this 23rd day of September, 1983, by and among
WILLIAMS HOTEL CORPORATION ("Williams"), a Delaware corporation having its
principal offices at 767 Fifth Avenue, New York, New York 10153, BURTON I.
KOFFMAN, as nominee (the "Koffman Nominee"), having a business address at 300
Plaza Drive, Binghamton, New York 13903; HUGH A. ANDREWS ("Andrews") residing at
the Condado Holiday Inn, 999 Ashford Avenue, San Juan, Puerto Rico 00909.
(Williams, the Koffman Nominee and Andrews are hereinafter collectively referred
to as the "Stockholders"); and POSADAS DE PUERTO RICO ASSOCIATES, INCORPORATED
("Posadas"), a Delaware corporation having its principal offices at 999 Ashford
Avenue, San Juan, Puerto Rico 00909.
W I T N E S S E T H:
WHEREAS, Williams owns 800 shares of Common Stock, without par
value, of Posadas (the "Common Stock"), the Koffman Nominee owns 150 shares of
Common Stock and Andrews owns 50 shares of Common Stock;
WHEREAS, Williams owns 600 shares of Class A Preferred Stock,
without par value, of Posadas (the "Class A Preferred Stock");
WHEREAS, Williams owns 200 shares of Class B Series I Preferred
Stock, without par value, of Posadas and the Koffman Nominee owns 200 shares of
Class B Series II
Preferred Stock, without par value, of Posadas (the Class B Series I and II
Preferred Stock are hereinafter collectively referred to as the "Class B
Preferred Stock");
WHEREAS, Posadas has acquired all of the assets of Posadas de Puerto
Rico Associates, a Texas general partnership ("Associates"), pursuant to a
purchase agreement (the "Purchase Agreement"), dated the date hereof among
Posadas, Associates, Burton I. Koffman and Richard E. Koffman and Cenkoff Corp.,
a Delaware corporation;
WHEREAS, the assets acquired by Posadas pursuant to the Purchase
Agreement consist primarily of the Condado Holiday Inn and Casino (the "Hotel")
located in the Condado Beach area of San Juan, Puerto Rico;
WHEREAS, on the date hereof, Williams has loaned to Posadas
$3,000,000 evidenced by a promissory note dated the date hereof;
WHEREAS, on the date hereof, Williams has loaned Posadas an
additional $350,000 evidenced by a promissory note dated the date hereof and the
Koffman Nominee has loaned Posadas $350,000 evidenced by a promissory note dated
the date hereof on the same terms as such Williams loan;
WHEREAS, Williams, the Koffman Nominee and Andrews are certain of
the stockholders of Posadas de America Central, Inc., a Delaware corporation
("PAC"), and on the date hereof PAC entered into an Operating and Management
Agreement with Posadas for the supervision, direction and control of the
management and operation of the Hotel; and
WHEREAS, the parties hereto desire to promote the continuity and
stability of Posadas and the mutual interests of the parties hereto by providing
for the rights, obligations and restrictions set forth herein;
2
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the parties hereto agree as follows:
1. Definitions.
1.1 The following definitions shall be used in this Agreement:
1.1.1 An "affiliate" of, or a person "affiliated" with,
a specified person, is a person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the person specified.
1.1.2 A "person" shall mean an individual, corporation,
partnership or other legal entity.
1.1.3 The "Hotel" means the property commonly known as
the Condado Holiday Inn and casino in the Condado Beach area of San Juan, Puerto
Rico.
1.1.4 "Posadas Stock" means and includes the Common
stock, the Class A Preferred Stock and the Class B Preferred Stock.
1.1.5 "Puerto Rico Gaming Authorities" means and
includes the Treasury of the Commonwealth of Puerto Rico and any other
governmental body or agency having authority over licensing of gaming in the
Commonwealth of Puerto Rico.
2. Corporate Governance.
The full board of directors of Posadas shall consist of five
persons, or such other number as shall be fixed pursuant to Article II, Section
2 of the By-Laws of Posadas, one of whom shall be a director designated by the
Koffman Nominee as long as the Koffman Nominee is a holder of Posadas Stock, and
one of whom shall be Andrews so long as he is a holder of Posadas Stock and the
Chief Operating Officer of the Hotel and is able to serve. If
3
Andrews resigns as a director, is not a holder of Posadas Stock, is not the
Chief Operating Officer of the Hotel or is unable to serve as a director of
Posadas, such vacancy shall be filled by the Koffman Nominee and after such
date, so long as the Koffman Nominee is a holder of Posadas Stock, the Koffman
Nominee shall be entitled to designate two directors to the Board of Directors
of Posadas. The Koffman Nominee designees shall be either Burton I. Koffman or
Richard E. Koffman, or both of them, so long as they are able to serve. Any
other Koffman Nominee designee must be approved by Williams, such approval not
to be unreasonably withheld.
3. Certificate Legends.
So long as this Agreement shall be in effect, all certificates
representing shares of Common Stock, Class A Preferred Stock or Class B
preferred Stock now or hereafter issued by Posadas shall be marked with the
following legend:
"The shares of Stock evidenced by this Certificate are and will be
subject to, and cannot be transferred except in accordance with, an
agreement dated September 23, 1983 among the Corporation and its
stockholders (the "Stockholders' Agreement"), a copy of which is on
file and may be obtained at the principal office of the Corporation,
which Stockholders' Agreement provides, among other things, for
restrictions on the transfer of shares of Stock of the Corporation."
4. Restrictions on Transfers of Stock.
4.1 No Stockholder may sell, assign, transfer, pledge,
encumber, hypothecate, mortgage or in any manner dispose of all of any portion
of his or its Posadas Stock except as provided in this Agreement, and any such
attempted sale, assignment, transfer, pledge, encumbrance, hypothecation,
mortgage or other disposition (any or all of the foregoing being
4
hereinafter encompassed within the words "Dispose" or "Disposition") by a
Stockholder of his or its Posadas Stock except as hereinafter provided shall be
null and void.
4.2 Posadas shall issue no shares of Posadas Stock except as
otherwise provided in this Agreement.
4.3 No Disposition of Posadas Stock shall be made to any
person if (a) the Puerto Rico Gaming Authorities require such person to be
qualified or approved and such person has not been so qualified or approved
prior to becoming a stockholder or (b) such transfer would adversely affect any
tax exemptions granted to Posadas or PAC by the Commonwealth of Puerto Rico.
4.4 In the event of any Disposition by reason of death of an
individual or liquidation of a corporation, the transferee of the Posadas Stock
shall hold the Posadas Stock transferred subject to all of the obligations and
restrictions to which the transferor was subject and have all of the rights of
the transferor hereunder.
4.5 Williams may Dispose of any or all of its Posadas Stock to
any affiliate of Williams (the "Williams Stockholder") notwithstanding any
provision of Article 4 of this Agreement except for Section 4.3. In addition,
any Williams Stockholder may Dispose of Posadas Stock to any other affiliate of
Williams. Prior to any Disposition pursuant to this Section 4.5, such Williams
Stockholder shall become a party to this Agreement and be bound by the terms
hereof in the same manner and to the same extent as Williams and thereafter any
Disposition of all of the Posadas Stock owned by Williams to a person other than
a Williams Stockholder shall include a Disposition of all of the Posadas Stock
owned by Williams Stockholders. All such transferees shall be deemed included
within the definition of Stockholder
5
for purposes of this Agreement, and shall have all of the rights and obligations
which Williams would have had under this Agreement as an owner of Posadas Stock.
4.6 The beneficial owners of all of the shares of Posadas
Stock held of record by the Koffman Nominee must be either Burton I. Koffman,
Richard E. Koffman (collectively "the Koffmans") or any of their affiliates. All
such beneficial owners have agreed to be bound by the terms of this Agreement
and any such beneficial owner may Dispose of any or all of their beneficial
ownership of Posadas Stock to any affiliate of the Koffmans, any spouse of the
Koffmans, any children of the Koffmans or any trust or trusts for the benefit of
such children, notwithstanding any provision of Article 4 of this Agreement
except Section 4.3. All of the foregoing are hereinafter referred to as "Koffman
Stockholders." In addition, Koffman Stockholders may Dispose of Posadas Stock to
other Koffman Stockholders. Prior to any Disposition pursuant to this Section
4.6, such Koffman Stockholder shall agree in writing to be bound by the terms
hereof in the same manner and to the same extent as the Koffman Nominee and
thereafter any Disposition of all of the Posadas Stock owned by the Koffman
Nominee to a person other than a Koffman Stockholder shall include a Disposition
of all of the beneficial ownership of all of the Posadas Stock held by all of
the Koffman Stockholders. All Koffman Stockholders and their transferees shall
be deemed included within the definition of Stockholder for purposes of this
Agreement, and shall have all of the rights and obligations which the Koffman
Nominee would have had under this Agreement as owners of Posadas Stock.
4.7 Andrews may Dispose of any or all of his Posadas Stock to
any affiliate of Andrews, his spouse, any children of Andrews or any trust or
trusts for the benefit of such children, notwithstanding any provision of
Article 4 of this Agreement except Section
6
4.3. All of the foregoing are hereinafter referred to as "Andrews Stockholders."
In addition, Andrews Stockholders may Dispose of Posadas Stock to other Andrews
Stockholders. Prior to any Disposition pursuant to this Section 4.7, such
Andrews Stockholder shall become a party to this Agreement and be bound by the
terms hereof in the same manner and to the same extent as Andrews and thereafter
any Disposition of all of the Posadas Stock owned by Andrews to a person other
than an Andrews Stockholder shall include Disposition of all of the Posadas
Stock transferred to the Andrews Stockholders. All Andrews Stockholder and their
tranferees shall be deemed included within the definition of Stockholder for
purposes of this agreement, and shall have all of the rights and obligations
which Andrews would have had under this Agreement as an owner of Posadas Stock.
4.8 This Section 4.8 is intentionally left blank.
4.9 If any of the Stockholders or any of the Koffman
Stockholders, (the "Seller") shall receive a bona fide offer from an
unaffiliated third party to purchase any or all of its or his Posadas Stock
which such Stockholder is willing to accept, the Seller shall give notice (the
"Notice") to Posadas and the Non-Selling Stockholders (as hereinafter defined)
stating its or his desire to Dispose of such stock (the "Offered Stock"), the
number of shares to be Disposed of, the name and address of the proposed
transferee (the "Designated Transferee"), the price to be paid for such stock
and the terms of payment thereof (the "Offered Price and Terms") and all the
other terms and conditions of such proposed Disposition and such other
information as Posadas or the Non-Selling Stockholders shall request. For
purposes of this Agreement, "Non-Selling Stockholders" shall mean the
Stockholders who have not given notice of its or his desire to Dispose of its or
his Posadas Stock pursuant to this Section 4.9.
7
4.9.1 Except as provided in sections 4.6 and 4.7 of this
Agreement, the Disposition of Posadas Stock by the Koffman Nominee and Andrews
shall be restricted as follows:
4.9.1.1 If the Seller shall be Andrews, the
Koffman Nominee shall thereupon have the option, but not the obligation,
exercisable by written notice to Andrews, given within 30 days of the Notice, to
purchase all or any part of the Offered Stock at a price and on terms equal to
the Offered Price and Terms.
4.9.1.2 If the Koffman Nominee does not elect to
exercise its option to purchase all of the Offered Stock from Andrews or if the
Seller shall be either the Koffman Nominee or a Koffman Stockholder, Posadas
shall thereupon have the option, but not the obligation, excisable by written
notice to the Seller, given within 60 days of the Notice if Andrews is the
Seller and within 30 days of the Notice if the Koffman Nominee or a Koffman
Stockholder is the Seller, to purchase all or any part of the Offered Stock at
the Offered Price. For purposes of Posadas determining whether to exercise its
option, the Stockholders shall vote their shares of Posadas Stock as directed by
Williams. If Posadas elects to exercise its option, and if Posadas shall
thereupon have insufficient surplus to permit it legally to purchase the Offered
Stock at the time of purchase, the Stockholders shall cause a special meeting of
the stockholders of Posadas to be called prior to such purchase. At any such
meeting, all of the Stockholders shall vote their shares Posadas Stock so as to
create, to the extent permitted by law, a surplus large enough to permit Posadas
to make such purchase payment without requiring any additional capital
investments by any of the Stockholders.
8
4.9.1.3 If Posadas does not elect to exercise its
option to purchase all of the Offered Stock, Williams shall thereupon have the
option, but not the obligation, exercisable by written notice to the Sellers
within 90 days of the Notice if Andrews is the Seller and within 60 days of the
Notice if the Koffman Nominee or a Koffman Stockholder is the Seller, to
purchase the Offered Stock not purchased by Posadas at the Offered Price and
Terms.
4.9.1.4 If the Notice shall be duly given, and if
the Koffman Nominee, Posadas and Williams together shall fail to exercise their
options to purchase all of the Offered Stock, then the Seller shall be free to
Dispose of all or such portion of the Offered Stock purchased by the Koffman
Nominee, Posadas or Williams to the Designated Transferee at the Offered Price
and Terms free of any restrictions or rights under this Agreement, and only if
(a) such transferee agrees to be bound by the provisions of this Agreement, (b)
such Disposition and such transferee shall be approved by the Puerto Rico Gaming
Authorities, (c) such transfer does not adversely affect any tax exemptions
granted to Posadas or PAC by the Commonwealth of Puerto Rico and (d) such
disposition shall be bona fide and shall be consummated within 150 days after
the giving of the Notice if Andrews is the Seller and within 120 days of the
Notice if the Koffman Nominee or a Koffman Stockholder is the Seller. If all of
the Offered Stock shall not be so Disposed of by the Seller during such period,
the portion thereof not Disposed of shall again become subject to the terms of
this Agreement in the same manner as if no Notice had been given.
4.9.1.5 The closing for the sale of Posadas Stock
to Posadas or any of the Stockholders pursuant to this Section 4.9.1 shall be at
a time and place
9
selected by the purchaser and reasonably convenient to the seller not more than
30 days after the giving of the notice of the decision to so purchase.
4.9.2 Except as provided in Section 4.5 of this
Agreement, the Disposition of Posadas Stock by Williams shall be restricted as
follows:
4.9.2.1 Posadas shall have the option, but not the
obligation, exercisable by written notice to Williams, given within 30 days of
the Notice to purchase all or any part of the Offered Stock at the Offered Price
and Terms. For purposes of Posadas determining whether to exercise its option,
the Stockholders shall vote their shares of Posadas Stock as directed by the
Koffman Nominee and the directors appointed by the Koffman Nominee shall
constitute a quorum of the Board of Directors of Posadas and a majority thereof
shall be entitled to determine whether the option shall be exercised. If Posadas
elects to exercise its option, and if Posadas shall thereupon have insufficient
surplus to permit it legally to purchase the Offered Stock at the time of
purchase, the Stockholders shall cause a special meeting of the Stockholders of
Posadas to be called prior to such purchase. At any such meeting, all of the
Stockholders shall vote their shares of Posadas Stock so as to create, to the
extent permitted by law, a surplus large enough to permit it to make such
purchase without requiring any additional capital investments by any of the
Stockholders.
4.9.2.2 If Posadas does not elect to exercise its
option to purchase all of the Offered Stock, the Koffman Nominee shall thereupon
have the option, but not the obligation, exercisable by written notice to
Williams within 60 days of the giving of the Notice, to purchase the Offered
Stock at a price and on terms equal to the Offered Price and Terms.
10
4.9.2.3 If the Notice shall duly given, and if
Posadas and the Koffman Nominee together fail to exercise their options to
purchase all of the Offered Stock, then Williams shall be free to dispose of all
or such portion of the Offered Stock not purchased by Posadas or the Koffman
Nominee to the Designated Transferee at the Offered Price and Terms but only if
(a) such transferee agrees to be bound by the provisions of this Agreement, (b)
such Disposition and such transferee shall be approved by the Puerto Rico Gaming
Authorities, (c) such transfer does not adversely affect the tax exemptions
granted to Posadas or PAC by the Commonwealth of Puerto Rico and (d) such
Disposition shall be bona fide and shall be consummated within 120 days after
the giving of the Notice If all of the Offered Stock shall not be Disposed of by
Williams during such period, the portion thereof not Disposed of shall again
become subject to the terms of this Agreement in the same manner as if no Notice
had been given.
4.9.2.4 The closing for the sale of Posadas Stock
to Posadas or the Koffman Nominee pursuant to this Section 4.9.2 shall be at a
time and place selected by the purchaser and reasonably convenient to the seller
not more than 30 days after the giving of the notice of the decision to so
purchase.
4.10 If (a) the Seller or Sellers shall beneficially own 80%
or more of the Common Stock, (b) the offer described in the Notice is to
purchase all of the issued and outstanding shares of Common Stock and (c) the
Non-Selling Stockholders or Posadas do not exercise his or its right of first
refusal pursuant to section 4.9 of this Agreement, then the Non-Selling
Stockholders shall sell all of their shares of Common Stock to the Designated
Transferee at a price and on terms equal to the Offered Price and Terms and if
such offer does not provide
11
for the purchase or redemption of all of the outstanding shares of Class A and
Class B Preferred Stock, Posadas shall redeem all such shares prior to the
closing of such sale.
5. Representations and Warranties.
5.1 Williams represents and warrants to each of the Koffman
Nominee and Andrews that:
5.1.1 Williams is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
5.1.2 The execution, delivery and performance by
Williams of this Agreement have been duly authorized by all necessary corporate
action of the part of Williams, and no further action or approval is required in
order to constitute this Agreement as the valid and binding obligation of
Williams enforceable in accordance with its terms.
5.1.3 This Agreement constitutes the legal, valid and
binding obligation of Williams enforceable against Williams in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency and
other similar laws affecting the enforcement of creditors' rights generally.
5.1.4 Williams is acquiring the Common Stock, the Class
A Preferred Stock and the Class B Series I Preferred Stock for its own account
and without a view to distribution other than in accordance with the provisions
of this Agreement and applicable securities laws.
5.2 The Koffman Nominee represents to Williams and Andrews
that:
5.2.1 This Agreement constitutes the legal, valid and
binding obligation of the Koffman Nominee enforceable against the Koffman
Nominee in accordance
12
with its terms, except as enforcement may be limited by bankruptcy, insolvency
and other similar laws affecting the enforcement of creditors rights generally.
5.2.2 The Koffman Nominee is acquiring the Common Stock
and the Class B Series II Preferred Stock for its own account and without a view
to distribution other than in accordance with the provisions of this Agreement,
its nominee agreement with the beneficial owners of the Posadas Stock, a true
copy of which has previously been delivered to Posadas, and applicable
securities law.
5.3 Andrews represents to Williams and the Koffman Nominee
that:
5.3.1 This Agreement constitutes the legal, valid and
binding obligation of Andrews enforceable against Andrews in accordance with its
terms, except as enforcement may limited by bankruptcy, insolvency and other
similar law affecting the enforcement of creditors rights generally.
5.3.2 Andrews is acquiring the Common Stock for his own
account and without a view to distribution other than in accordance with the
provisions of this Agreement and applicable securities laws.
6. Puerto Rico Gaming Authority Approvals; Tax Exemptions.
Each party hereto shall use its or his best efforts to obtain
and thereafter maintain all consents, approvals and authorizations which must be
obtained and maintained by such party in order to consummate the transactions
contemplated hereby, including all consents, approvals and authorization from
the Puerto Rico Gaming Authorities and the tax exemptions granted to Posadas and
PAC by the Commonwealth of Puerto Rico; provided that nothing contained in this
Article 6 shall require any party to consent to modify any provisions of this
13
Agreement or any other document referred to herein in any manner materially
adverse to its or his best interests.
7. Miscellaneous.
7.1 All of the representations, warranties, covenants and
agreements made by the parties to this agreement shall survive for the full
period of any applicable statute of limitations.
7.2 This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof. No change, modification,
amendment, addition or termination of this Agreement or any part thereof shall
be valid unless in writing and signed by or on behalf of the party to be charged
therewith.
7.3 This Agreement may be executed in one or more
counterparts, and shall become effective when one or more counterparts has been
signed by each of the parties.
7.4 Any and all notices or other communications or deliveries
required or permitted to be given pursuant to any of the provisions of this
Agreement shall be deemed to have been duly given for all purposes if sent by
certified or registered mail, return receipt requested and postage prepaid, hand
delivered or sent by telegraph or telex as follows:
If to Williams Hotel, at:
c/o Williams Electronics, Inc.
767 Fifth Avenue
New York, New York 10153
Attention: Mr. Norman J. Menell
with a copy to:
Golenbock and Barell
645 Fifth Avenue
New York, New York 10022
14
Attention: Justin M. Golenbock, Esq.
If to the Koffman Nominee, at:
c/o Koffman
300 Plaza Drive
Binghamton, New York 13903
Attention: Mr. Burton I. Koffman
with a copy to:
Beveridge & Diamond, P.C.
1333 New Hampshire Avenue, N.W.
Washington, D.C. 20036
Attention: Albert J. Beveridge, III, Esq.
If to Andrews, at:
Condado Holiday Inn
999 Ashford Avenue
San Juan, Puerto Rico 00902
with a copy to:
Maria Milagros Soto, Esq.
Banco Central Suite 1115
Hato Rey, Puerto Rico 00917
or at such other address as any party may specify by notice given to other party
in accordance with this Section 7.4. The date of giving of any such notice shall
be the date of hand delivery, the date following the posting of the mail or
delivery to the telegraph company or when sent by telex.
7.5 No waiver of the provisions hereof shall be effective
unless in writing and signed by the party to be charged with such waiver. No
waiver shall be deemed a continuing waiver or waiver in respect of any
subsequent breach or default, either of similar or different nature, unless
expressly so stated in writing.
15
7.6 Should any clause, section or part of this Agreement be
held or declared to be void or illegal for any reason, all other clauses,
sections or parts of this Agreement which can be effected without such illegal
clause, section or part shall nevertheless continue in full force and effect.
7.7 This Agreement shall be governed, interpreted and
construed in accordance with the laws of the State of New York.
7.8 Each of Williams, the Koffman Nominee and Andrews consents
to the jurisdiction of the Courts of the State of New York and the United States
District Court for the Southern District of New York with respect to any matter
arising with respect to this Agreement, shall subject himself or itself to the
jurisdiction of such courts and agrees that service of process upon him or it
may be made in any manner permitted by the laws of the State of New York.
Without limiting the generality of the foregoing, service of process will be
deemed sufficient if sent by registered or certified mail to Williams, the
Koffman Nominee and Andrews at the address for such persons, person or entity
set forth in Section 7.4 of this Agreement. In addition, the Koffman Nominee and
Andrews agree that the venue for any state court action shall be New York
County.
7.9 This Agreement and the various rights and obligations
arising hereunder shall inure to the benefit of and be binding upon and the
parties hereto and their respective successors and assigns. This Agreement shall
not be assignable by any of the parties hereto without the prior written consent
of all other parties hereto and any attempt to assign this Agreement shall be
void and of no effect.
16
7.10 The headings or captions under sections of this Agreement
are for convenience and reference only and do not in any way modify, interpret
or construe the intent of the parties or effect any of the provisions of this
Agreement.
17
IN WITNESS WHEREOF, this Agreement has been made and executed
as of the date and year first above written.
WILLIAMS HOTEL CORPORATION
By: /s/_________________________________
E. JOHN NEMEC,
Vice President
By: /s/_________________________________
BURTON I. KOFFMAN
As Nominee
By: /s/_________________________________
HUGH A. ANDREWS
POSADAS DE PUERTO RICO
ASSOCIATES, INCORPORATED
By: /s/_________________________________
NORMAN J. MENELL
Chairman of the Board and President
18
FIRST AMENDMENT TO
POSADAS DE PUERTO RICO ASSOCIATES, INCORPORATED
STOCKHOLDERS' AGREEMENT
FIRST AMENDMENT dated as of April 20, 1992 (the "First Amendment")
to POSADAS DE PUERTO RICO ASSOCIATES INCORPORATED STOCKHOLDERS' AGREEMENT dated
as of September 23, 1983 by and among WMS HOTEL CORPORATION, a Delaware
corporation ("WMS"); BURTON I. KOFFMAN, as Nominee (the "Koffman Nominee"); HUGH
A. ANDREWS ("Andrews") (WMS, the Koffman Nominee and Andrews are hereinafter
collectively referred to as the "Stockholder"); and POSADAS DE PUERTO RICO
ASSOCIATES, INCORPORATED, a Delaware corporation ("Posadas").
W I T N E S S E T H:
WHEREAS, the Stockholders and Posadas are parties to a Stockholders'
agreement dated September 23, 1983 (the "Stockholders Agreement") among Williams
Hotel Corporation, now known as WMS, the Koffman Nominee, Andrews and Posadas;
and
WHEREAS, WMS owns 800 shares of common stock, without par value (the
"Posadas Stock"), of Posadas, the Koffman Nominee owns 150 shares of Posadas
Stock and Andrews owns 50 shares of Posadas Stock; and
WHEREAS, pursuant to that certain agreement dated as of April 20,
1992 (the "Master Agreement") among the Stockholders, Posadas and certain of
their affiliates, WMS is
purchasing 100 shares of Posadas Stock from the Koffman Nominee and 25 shares of
Posadas Stock from Andrews; and
WHEREAS, pursuant to the Master Agreement both the Koffman Nominee
and Andrews have agreed to indemnify WMS Industries Inc., and its affiliates
under certain circumstances (the "Indemnification Obligations"); and
WHEREAS, as security for their respective Indemnification
Obligations, the Koffman Nominee and Andrews have agreed to pledge, transfer and
assign to WMS Industries Inc. and give a security interest in certain of the
Posadas Stock that each of them owns; and
WHEREAS, the Stockholders and Posadas desire to amend the
Stockholders Agreement to reflect such changes in ownership, provide for the
pledge of Posadas Stock and accurately reflect the current state of facts among
the parties.
NOW THEREFORE, in consideration of the mutual covenants hereinafter
contained, and other valuable consideration, receipt of which is hereby
acknowledged, the parties hereto agree that the Stockholders Agreement be
amended as follow:
1. All capitalized terms used herein and not otherwise defined shall
have the same meanings ascribed to such terms in the Stockholders Agreement.
2. The Stockholders Agreement is hereby amended by deleting Article
3 in its entirety and substituting in its place the following:
"3. Certificate Legends.
So long as this Agreement shall be in effect, all certificates
representing shares of Common Stock, Class A Preferred Stock or Class B
Preferred Stock now or hereafter issued by Posadas shall be marked with the
following legend:
`The shares of Stock evidenced by this Certificate are and will be
subject to, and cannot be transferred except in accordance with, an
agreement dated September
2
23, 1983, as amended from time to time, among the Corporation and
its stockholders (the "Stockholders' Agreement"), a copy of which is
on file and may be obtained at the principal office of the
Corporation, which Stockholders' Agreement provides, among other
things, for restrictions on the transfer of the shares of Stock of
the Corporation.'"
3. The Stockholders Agreement is hereby further amended by adding a
new Section 4.11 to read as follows:
"4.11 (a) WMS may purchase 100 shares of Posadas Stock from the
Koffman Nominee on such terms as they may agree, such shares to
remain subject to all of the provisions of the Agreement to the same
extent as all other shares of Posadas Stock owned by WMS.
(b) WMS may purchase 25 shares of Posadas Stock from Andrews
on such terms as they may agree, such shares to remain subject to
all of the provisions of this Agreement to the same extent as all
other shares of Posadas stock owned by WMS."
4. The Stockholders Agreement is hereby further amended by adding a
new Section 4.12.1 to read as follows:
"4.12.1 (a) The Koffman Nominee may dispose of fifteen (15) shares
of Posadas Stock by pledging such shares, together with any shares
or dividends issued in respect thereof (the "Koffman Collateral"),
to WMS Industries Inc. as security for its Indemnification
Obligations.
(b) Andrews may dispose of seven and one-half (7.5)
shares of Posadas Stock by pledging such shares, together with any
shares or dividends issued in respect thereof (the "Andrews
Collateral"), to WMS Industries Inc. as security for his
Indemnification Obligation."
5. The Stockholders Agreement is hereby further amended by adding a
new Section 4.12.2 to read as follows:
"4.12.2 If WMS Industries Inc. shall foreclose on any portion of the
Koffman Collateral or Andrews Collateral or otherwise taking
possession of the Collateral in satisfaction of all or any portion
of the Indemnification Obligations (collectively, the "Collateral"),
such shares may (i) be registered in the name of WMS Industries
Inc., and WMS Industries Inc. shall agree in writing to be bound by
all of the provisions of this Agreement to the same extent as all
other parties
3
hereto, or (ii) WMS Industries Inc. may Dispose of such shares to
WMS Hotel, and such shares shall remain subject to all the
provisions of this Agreement to the same extent as all other Posadas
Stock owned by WMS."
6. The Stockholders Agreement is hereby further amended by adding a
new Section 4.12.3 to read as follows:
"4.12.3 Notwithstanding anything to the contrary in this Article 4,
except for Section 4.3, as of the date hereof if the Collateral or
any portion thereof, is sold, transferred, assigned or disposed of
in any manner, to any third party, by reason of foreclosure or other
actions taken by WMS Industries Inc. to realize on the Collateral,
such sale, transfer, assignment or disposition shall be permitted
and such third party shall take the Collateral free and clear of any
restrictions or rights under this Agreement."
7. This First Amendment may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all of the counterparts shall together constitute one and the same
instrument.
8. The amendments set forth herein are limited precisely as written
and shall not be deemed to be a consent to any modification or waiver of any
other term or condition of the Stockholders Agreement or any other documents
referred to therein.
9. This First Amendment, including the validity hereof and the
rights and obligations of the parties hereunder, shall be construed in
accordance with and governed by the law of the State of New York, without giving
effect to the choice of law provisions thereof.
4
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be executed by their respective duly authorized officers or
representatives on the date first above written.
WMS HOTEL CORPORATION
By: /s/ ________________________________
Louis J. Nicastro,
Chairman
By: /s/ ________________________________
BURTON I. KOFFMAN, as Nominee
By: /s/ ________________________________
HUGH A. ANDREWS
POSADAS DE PUERTO RICO
ASSOCIATES, INCORPORATED
By: /s/ ________________________________
Louis J. Nicastro,
Chairman and Chief Executive Officer
5