WKA EL CON ASSOCIATES
JOINT VENTURE AGREEMENT
DATED JANUARY 9, 1990
WKA EL CON ASSOCIATES
JOINT VENTURE AGREEMENT
Agreement made the 9th day of January, 1990 by and among WMS EL CON
CORP., a Delaware corporation ("WMS"), International Textile Products of Puerto
Rico, Inc., a Puerto Rican corporation ("ITP"), KMA Associates of Puerto Rico,
Inc., a Puerto Rican corporation ("KMA") (ITP and KMA being referred to herein
collectively as the "▇▇▇▇▇▇▇ Venturers") and Hospitality Investor Group, S.E., a
Puerto Rico Special Partnership ("HIG") (WMS, the ▇▇▇▇▇▇▇ Venturers and HIG are
hereinafter sometimes referred to collectively as the "Venturers" and separately
as a "Venturer").
W I T N E S S E T H:
WHEREAS, the Venturers desire to associate themselves and to form a
joint venture (the "Venture") for the purpose of becoming a general partner and
a limited partner of El Conquistador Partnership L.P. to be formed under the
terms of an agreement of limited partnership (the "El Conquistador Partnership
Agreement") between the Venture and Kumagai Caribbean, Inc., a Texas
Corporation; and
WHEREAS, the purpose of El Conquistador Partnership L.P. is to acquire,
own, renovate, construct, develop and operate the facility in Fajardo, Puerto
Rico formerly known as the El Conquistador Hotel as a first-class, luxury
destination mega-resort, all as more fully described in the El Conquistador
Partnership Agreement; and
WHEREAS, the Venturers desire that their respective rights and
obligations in connection with the Venture and their respective participation in
the profits or liabilities derived therefrom be defined by an agreement in
writing;
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions.
Capitalized terms used in this agreement and not otherwise
defined shall have the same meaning ascribed to such terms in the el
Conquistador Partnership Agreement.
1.1. "Appendix" means the Appendix attached to this agreement.
1.2. "Capital Account" is defined in Section hereof.
1.3. "Capital Contribution" means the amount to be contribute
to the Venture by any Venturer pursuant to Article hereof.
1.4. "Committee" is defined in Section hereof.
1.5. "Extraordinary Cashflow" means distributions to the Venture
from El Conquistador Partnership L.P. out of funds constituting Extraordinary
Cashflow under the El Conquistador Partnership Agreement plus the proceeds from
the sale or financing of all or any portion of the Venture's interest in El
Conquistador Partnership L.P. less all costs and expenses associated with such
sale or financings and any amounts reasonably reserved by the Committee.
1.6. "Gain from a Capital Transaction" means amounts constituting
a Gain from a Capital Transaction under the El Conquistador Partnership
Agreement allocated to the Venture and gain realized by the Venture from the
sale of all or any portion of the Venture's interest in the El Conquistador
Partnership L.P.
1.7. "Interest" is defined in Section hereof.
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1.8. "Operating Cashflow" means distributions to the Venture from
El Conquistador Partnership L.P. out of funds constituting Operating Cash Flow
under the El Conquistador Partnership Agreement and interest income received by
the Venture from the investment of funds less all cash expended or reserved for
currently due or maturing liabilities.
1.9. "Percentage Interest" is defined in Section hereof.
1.10. "Target Capital Account" means for any Venturer the
Capital Account of such Venturer (which may be positive or negative) as of the
most recently completed fiscal year which would equal the hypothetical
distribution that any such Venturer would receive if the Venture sold all of its
assets (including cash) for cash equal to the tax basis of such assets as of the
end of such fiscal year (or book value if any adjustment has been made pursuant
to Regulation Section 1.704-1(b)(2)(iv)(g)) and all liabilities allocable to
those assets were due and satisfied according to their terms (limited with
respect to each nonrecourse liability to the book basis of the assets securing
that liability, or book value if an adjustment has been made pursuant to
Regulation Section 1.704-1(b)(2)(iv)(g)) and all net assets of the Partnership
(including the proceeds from the disposition) were distributed pursuant to
Sections 10.2.3 and 10.2.4 hereof as of the last day of such fiscal year
reduced by each Venturer's share of Partnership Minimum Gain and Partner
Minimum Gain immediately prior to the hypothetical sale and such Venturer's
share of Distributable Cash of the El Conquistador Partnership L.P. which
is to be distributed to such Venturer which if taken into account hereunder
shall not be taken into account when distributed and increased by the amount
distributable to such Venturer pursuant to the last sentence of Section 10.3
and reduced by the Capital Contribution such Venturer would be required to
maKe to the Venture pursuant to Section 10.3.
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1.11. "Tax Matters Partner" is defined in Section 5.5 hereof.
1.12. "Unrecovered Capital" means with respect to each
Venturer the amount at any time of such Venturer's Capital Contribution actually
made to the Venture, reduced (but not below zero) by distributions to such
Venturer of (i) proceeds from El Conquistador Partnership L.P. which are treated
under the El Conquistador Partnership Agreement as a return of Unrecovered
Capital and (ii) proceeds from the sale or refinancing of the Venturer's
interest in El Conquistador Partnership L.P.
2. The Venture.
2.1. The Venturers hereby form the Venture under the general
partnership law of the State of New York for the purpose of becoming a general
partner and a limited partner of El Conquistador Partnership L.P., and to
perform any and all acts and services necessary or desirable in connection
therewith and the financing thereof.
2.2. The name of the Venture shall be WKA El Con Associates or
such other name as the Venturers may agree. Promptly after the execution hereof,
the Venturers shall execute and cause to be filed such certificates of doing
business under an assumed name or other documents as may be required by law to
authorize the Venture to conduct its business, including compliance with any
applicable laws of the Commonwealth of Puerto Rico.
2.3. The principal office of the Venture shall be located in
such place as the Venturers may agree.
2.4. The term of the Venture shall commence as of the date of
this agreement and continue for 50 years from the date hereof, unless sooner
terminated as provided in Article 10 hereof.
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2.5. The relationship among the Venturers shall be limited to the
performance of the specific purposes and objectives of the Venture as set forth
in this agreement. Nothing herein shall be construed to create a general purpose
partnership among the Venturers; to authorize any Venturer to act as general
agent for any other; or to confer or grant to any Venturer any proprietary
interest in, or to subject any Venturer to any liability for or in respect of,
the business, assets, profits or obligations of any other Venturer, except only
to the extent contemplated by this agreement.
3. Management of the Venture.
3.1. The business and affairs of the Venture shall be supervised
by and, except as otherwise provided herein, all acts and decisions of the
Venture in its capacity as general partner of El Conquistador Partnership L.P.
or otherwise shall be performed or made by a Venturers Committee (the
"Committee"). The Committee shall consist of six persons, three of whom shall be
designated in writing by WMS, two of whom shall be designated in writing by the
▇▇▇▇▇▇▇ Venturers, and one of whom shall be designated in writing by HIG. The
initial designees of the Venturers to serve on the Committee shall be ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ for WMS, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ for the ▇▇▇▇▇▇▇ Venturers and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ for HIG. Any
Venturer may change its Committee designees by notice given to the other
Venturers not less than ten days prior to the effective date of such change.
3.2. The Committee shall meet in person or by telephone
conference call at times and places fixed by the Committee or by the WMS
designees as necessary for conducting the business of the Venture upon at least
24 hours' prior notice. At any meeting, a majority of
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the full number of members of the Committee shall be required for any and all
action to be taken by the Committee. In lieu of a meeting, any action to be
taken by the Committee may be taken by written consent executed by a majority of
the full number of members of the Committee. Any member of the Committee is
authorized to give written certification to any third party as to any action
taken by the Committee as aforesaid.
3.3. The Committee shall have authority to appoint and employ
such managers, employees, consultants and agents for the Venture as it shall
deem appropriate and may delegate to them any and all of its power and authority
hereunder.
3.4. The EL Conquistador Partnership Agreement in the form
annexed hereto as Exhibit A and all agreements annexed to such agreement or
referred to therein as being executed concurrently therewith are specifically
authorized and approved by each of the Venturers, and each Venturer, acting
alone, is authorized to execute such agreements on behalf of the Venture. The
Venturers authorize the Committee to cause the Venture to make capital
contributions to El Conquistador Partnership L.P. as and when required by the
Venture under the El Conquistador Partnership Agreement and to otherwise do all
things and execute all documents as may be necessary or desirable in connection
therewith and performance of the Venture's obligations thereunder.
4. Capital Contributions and Liabilities.
4.1. The Venturers shall contribute up to an aggregate of NINE
MILLION Dollars ($9,000,000) to the capital of the Venture in cash, in such
amounts and at such time or times as shall be determined by the Committee. The
maximum amount of each Venturer's
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capital contribution ("Capital Contribution') and each Venturer's percentage
interest in the Venture (the "Percentage Interest") shall be as follows:
MAXIMUM CAPITAL CONTRIBUTION PERCENTAGE INTEREST
WMS $4,500,000.00 50%
ITP 1,800,000.00 20%
KMA 1,800,000.00 20%
HIG 900,000.00 10%
------------ ---
$9,000,000.00 100%
; provided, however, that the Venturers are considering adjusting their capital
contributions and Percentage Interests in the Venture to increase HIG's interest
to 33 1/3 and reduce the interests of the other Venturers. Any such adjustment
will be effected only by a written amendment to this agreement.
Whenever Capital Contributions are to be made, each Venturer shall make such
Capital Contribution within 5 business days after its receipt of a written
notice therefor from the Committee and each Venturer's Capital Contribution
shall be made in the same proportion as such Venturer's Percentage Interest. No
Venturer shall be required to make a Capital Contribution in excess of its
Percentage Interest of the total Capital Contributions then being made.
Notwithstanding the foregoing, in addition to the Capital Contributions required
under this Section 4.1, the ▇▇▇▇▇▇▇ Venturers and HIG shall make the additional
contributions to the Venture, if any, required by Section 10.3 hereof.
4.2. No interest shall be payable to the Venturers by the
Venture on Capital Contributions.
4.3. All liabilities of the Venture in excess of the assets of
the Venture shall be borne by the Venturers in proportion to their Percentage
Interests.
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5. Books and Records, Reports, etc.
5.1. The Venture shall maintain at its principal office full and
proper records and books of account based upon generally accepted accounting
principles consistently applied.
5.2. The fiscal year of the Venture shall end on each June 30 or
such other fiscal year as shall be determined by the Committee.
5.3. Each of the Venturers shall have the right at all reasonable
times to have any and all of the Venture's records and books of account
inspected at its own expense by its own employees, attorneys or accountants.
5.4. Initially the firm of Ernst and Young shall serve as the
independent certified public accountants for the Venture.
5.5. WMS is hereby designated as the tax matters partner within
the meaning of Section 6231(a)(7) of the Internal Revenue Code of 1986, as
amended (the "Tax Matters Partner").
(A) Duties of Tax Matters Partner. To the extent and
in the manner provided by applicable law and regulations, the Tax Matters
Partner shall:
(1) furnish the name, address, interest in the
Venture and taxpayer identification number of each Venturer, including any
successor to a Venturer, to the Secretary of the Treasury or his delegate (the
"Secretary");
(2) keep each Venturer informed of any
administrative or judicial proceedings for the adjustment at the Venture level
of any item required to be taken into account by a Venturer for income tax
purposes (such administrative proceeding referred to
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hereinafter as a "tax audit" and such judicial proceeding referred to
hereinafter as "judicial review").
(B) Authority of Tax Matters Partner. Without the
consent of the other Venturers, the Tax Matters Partner shall not:
(1) enter into any settlement with the Internal
Revenue Service, the Secretary or other taxing authority;
(2) seek judicial review of any administrative
adjustment;
(3) file a request for an administrative adjustment
or a petition for judicial review with respect thereto;
(4) enter into any agreement with the Internal
Revenue Service or other taxing authority to extend the period for assessing any
tax which is attributable to any item required to be taken into account by a
Venturer for tax purposes, or an item affected by such item; or
(5) take any other action on behalf of the
Venturers or the Venture in connection with any tax audit or judicial review
regardless of whether or not permitted by applicable law or regulations.
(C) Participation by Other Venturers. The Tax Matters
Partner shall give reasonable advance notice to the other Venturers of all
meetings and discussions between the Venture and the Internal Revenue Service,
the Secretary and all other governmental authorities and courts asserting
jurisdiction with respect to tax matters and all agents and representatives of
the foregoing and the other Venturers shall have the right, together with the
Tax Matters Partner, to meet, discuss and negotiate with such persons and
entities.
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5.6. The Venture shall maintain such bank accounts as shall
be approved by the Committee.
6. Profits/Losses and Cash Distributions.
6.1. The Venture shall establish and maintain a "Capital Account"
for each Venturer throughout the full term of the Venture in accordance with
Treasury Regulation ("Treas. Reg.") 'SS'1.704-1(b)(2)(iv), as such regulation
may be amended from time to time. To the extent not inconsistent with such
rules, the following provisions shall apply (capitalized terms used in this
Article and not otherwise defined herein or in the Appendix shall have the
same meaning ascribed to such terms in the El Conquistador Partnership Agreement
as applied to the Venture and shall refer to those amounts or funds
constituting such defined terms under the El Conquistador Partnership
Agreement which are allocated to the Venture except that the term Net Loss
as used herein shall include Net Loss from a Capital Transaction):
The Capital Account of each Venturer shall be credited with (i)
such Venturer's Capital Contribution and (ii) such Venturer's share of Net
Income and Gain from a Capital Transaction (or items thereof) of the Venture.
The Capital Account of each Venturer shall be debited by (i) the amount of
distributions made to such Venturer and (ii) such Venturer's share of Net Loss
(or items thereof), including expenditures which can neither be capitalized nor
deducted for tax purposes.
6.2. Income and losses of the Venture for U.S. Federal income tax
purposes shall be allocated and charged to the Venturers' Capital Accounts as
provided in the Appendix annexed hereto.
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6.3. The Venture shall distribute cash in such amounts and at
such times as shall be determined by the Committee, to the Venturers in
proportion to their Percentage Interests, provided however that the ▇▇▇▇▇▇▇
Venturers and HIG are required to restore certain distributions to the Venture
in connection with a liquidation of the Venture in accordance with Section
10.3 hereof and further provided that proceeds from the sale of substantially
all of the assets of the Venture or a distribution to the Venture representing
the liquidation of El Conquistador Partnership L.P. or the Interest of the
Venture in El Conquistador Partnership L.P. or the sale of substantially all
of the assets of El Conquistador Partnership L.P. shall be distributed in
accordance with Sections 10.2.3 and 10.2.4 hereof.
7. Restriction on Dispositions of Interests in the Venture.
No Venturer may assign, transfer, sell, pledge, hypothecate,
mortgage, exchange or otherwise transfer or dispose of (any of the foregoing
being referred to by the terms "Dispose" or "Disposition") all or any part of
its interest in the Venture (referred to herein as an "Interest"), without the
written consent of the other Venturers, except that each Venturer shall be
entitled to transfer all or any portion of its Interest to an affiliate which
transferee shall be admitted as a Venturer hereunder, provided such transfer
does not have an adverse tax impact on the other Venturers, and each Venturer
shall be entitled to pledge its interest in the Venture as collateral security
for obtaining financing in connection with such Venturer's Capital Contribution.
Any attempted Disposition by a Venturer in violation of this Section 7, without
such consent, shall be null and void.
8. Representations and Warranties.
Each Venturer represents and warrants to each other Venturer as
follows:
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8.1. WMS is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
8.2. Each of the ▇▇▇▇▇▇▇ Venturers is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Puerto Rico.
8.3. HIG is a special partnership (pursuant to Supplement P of
Puerto Rico Tax Act of 1954, as amended), organized and existing under the laws
of the Commonwealth of Puerto Rico, and HASN, Inc., a corporation organized and
existing under the laws of the Commonwealth of Puerto Rico is the sole general
partner thereof.
8.4. Each Venturer represents and warrants to the other Venturers
that the execution, delivery and performance by such Venturer of this agreement
have been duly authorized by all necessary corporate or partnership action on
the part of such Venturer, and no further action or approval is required in
order to constitute this agreement as the valid and binding obligation of such
Venturer enforceable in accordance with its terms.
8.5. Each Venturer represents and warrants to the other Venturers
that this agreement constitutes the legal, valid and binding obligation of such
Venturer, enforceable against such Venturer in accordance with its terms.
8.6. Such Venturer is acquiring its interest in the Venture for
its own account and not with a view to distribution or resale thereof other than
in accordance with the provisions of this agreement and applicable securities
laws.
9. Puerto Rico Gaming Authority Approvals; Tax Exemptions and
Elections.
9.1. Each Venturer shall use its best efforts to obtain and
thereafter maintain all consents, approvals and authorizations which are
necessary or appropriate to be obtained and
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maintained by such Venturer in order to effect the purposes of the Venture,
including all consents, approvals and authorizations from the Treasury of the
Commonwealth of Puerto Rico and any other governmental body or agency having
authority over licensing of gambling in the Commonwealth of Puerto Rico and any
tax exemption granted to the Venture by the Commonwealth of Puerto Rico;
provided, however, that nothing contained in this Article shall require any
party to consent to modify any provisions of this agreement or any other
document referred to herein in any manner materially adverse to its interests.
9.2. Promptly following the date hereof, the Venture shall file
appropriate documents with the taxing authorities or otherwise to elect to be
treated for Puerto Rican income tax purposes as a special purpose partnership.
The Venture and each of the Ventures shall prepare, execute and file appropriate
documents and returns with the taxing authorities of Puerto Rico or otherwise in
a manner so as to reduce, minimize or eliminate Puerto Rican income taxes
payable by the Venturers including, without limitation, the election by the
Venture to be treated for Puerto Rican income tax purposes as a special purpose
partnership. The Venture shall maintain separate books and records with respect
to allocations of income and loss and affects on each Venturer's Capital Account
for purposes of Puerto Rico income tax reporting requirements.
10. Termination and Liquidation.
10.1. The Venture shall terminate upon the occurrence of any of
the following events:
(A) The end of its term as provided in Section hereof.
(B) Mutual agreement of the Venturers.
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(C) The sale of all of the Venture's Interests in El
Conquistador Partnership L.P.
(D) The termination of El Conquistador Partnership L.P.
10.2. Upon termination of the Venture for any reason, the
Venture shall continue its business solely for the purpose of winding up its
affairs and shall be liquidated as rapidly as sound business judgment permits.
All decisions with respect to disposition of Venture assets, collection or
compromise of any amounts receivable and payment or compromise of any amounts
payable by the Venture shall be made by the Committee or, if the Committee has
ceased to exist, the Venturers having Percentage Interests in excess of 50%. The
assets of the Venture shall be applied for the following purposes in the
following order:
10.2.1. First, to the payment or provision for payment
of all just debts and obligations of the Venture to creditors other than the
Venturers, and for the expenses of winding up the affairs of the Venture.
10.2.2. Next, to the payment of all amounts due from
the Venture to the Venturers other than amounts due the Venturers under Sections
10.2.3, 10.2.4 and 10.2.5, and hereof.
10.2.3. Next to WMS in an amount equal to its Unrecovered
Capital.
10.2.4. Next to the ▇▇▇▇▇▇▇ Venturers and HIG in
proposition to their respective Percentage Interests in an amount equal to their
Unrecovered Capital.
10.2.5. Any remaining assets of the Venture shall be
distributed pro rata to the Venturers in proportion to their respective
Percentage Interests.
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10.3. In the event that the distribution to WMS under Section
10.2.3 is less than its Unrecovered Capital, the ▇▇▇▇▇▇▇ Venturers and HIG
shall each contribute to the Venture in proportion to their respective
Percentage Interests the lesser of (i) the balance of WMS's Unrecovered Capital
or (ii) an amount equal to all distributions to them of Extraordinary Cashflow
from the inception of the Venture.
11. Miscellaneous.
11.1. 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.
11.2. 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.
11.3. 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.
11.4. 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 sufficiently given or furnished for all purposes if in
writing and delivered personally to such Venturer; transmitted by confirmed fax;
sent by certified mail, in a sealed envelope, with postage prepaid; or sent by
responsible overnight delivery service addressed to such Venturer at its address
set forth on Exhibit C annexed hereto or at such other address as such Venturer
shall have previously designated by written notice as provided in this Section
to the other
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Venturers; and shall be effective when personally delivered or transmitted, five
business days after mailing or the next business day after delivery to a
responsible overnight delivery service.
11.5. 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 a similar or different nature, unless
expressly so stated in writing. No amendment of the provisions hereof shall be
effective unless in writing and signed by all of the parties hereto.
11.6. 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.
11.7. This agreement shall be governed, interpreted and
construed in accordance with the laws of the State of New York.
11.8. Each of the parties hereto 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 itself to the jurisdiction of such courts and
agrees that service of process upon 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 a party hereto at the address for such party set forth in
Section 11.4 hereof. In addition, the parties hereto agree that the venue for
any state court action shall be New York County.
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11.9. This agreement and the various rights and obligations
arising hereunder shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns. Except for
Dispositions of Interests permitted by this agreement, 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.
11.10. The headings or captions to 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.
IN WITNESS WHEREOF, this agreement has been made and executed as
of the date and year first above written.
WMS EL CON CORP.
By:
-----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
INTERNATIONAL TEXTILE PRODUCTS OF
PUERTO RICO, INC.
By:
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
KMA ASSOCIATES OF PUERTO RICO, INC.
By:
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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HOSPITALITY INVESTOR GROUP, S.E.
By: HASN, INC., general partner
By:
--------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
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APPENDIX
The following constitutes an Appendix to the WKS EL CON ASSOCIATES JOINT VENTURE
AGREEMENT dated January 9, 1990 and shall be deemed a part thereof as if fully
set forth therein.
The allocations to the Capital Account of each Venturer for Federal
income tax purposes of Net Income, Gain from a Capital Transaction, Net Loss,
and Depreciation or, where required, the allocation of items or elements of any
of the foregoing, and the allocation of gross income, if required, shall be made
in accordance with this Appendix. The Venturers wish to have the allocations
made in accordance with Article I of this Appendix but recognize that under
certain circumstances such allocations may diverge from allocations that may be
required to be made for tax purposes. Article II of this Appendix sets forth
certain targets which must be met by the allocations in Article I. To the extent
that there is divergence between the results of allocations under Article I and
Article II, Article I is subject to Article II. Article II prescribes the order
in which the allocations in Article I are to be adjusted if such adjustments
are required to bring the Article I allocations into conformity with the
results mandated by Article II. Article III sets forth certain provisions
required by the Regulations and both Article I and Article II are subject to
Article III.
I. ALLOCATIONS OF NET INCOME, NET LOSS AND GAIN
FROM A CAPITAL TRANSACTION AND DEPRECIATION
1. NET INCOME: For each fiscal year of the Venture for which the
Venture has Net Income represented by Operating Cash Flow an amount of Net
Income equal to the Operating
Cash Flow which is to be distributed to each Venturer shall be allocated to such
Venturer, and the balance, if any, of such Net Income shall be allocated.
FIRST: To WMS to the extent its Capital Account is less than its
Unrecovered Capital after giving effect to the distribution of the cash.
SECOND: To the ▇▇▇▇▇▇▇ Venturers and HIG to the extent that their
respective Capital Accounts are less than their Unrecovered Capital in
proportion to their respective Percentage Interests until the Capital Account of
each Venturer equals its Unrecovered Capital.
THIRD: To WMS, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ in proportion to their
respective Percentage Interests.
2. NET LOSS: For each year of the Venture with respect to which the
Venture has a Net Loss such Net Loss shall be allocated and charged to the
Capital Accounts of the Venturers in the following manner:
FIRST: 100% to the ▇▇▇▇▇▇▇ Venturers and HIG in proportion
to their respective Percentage Interests until the Capital Accounts of such
Venturers have been reduced to zero;
SECOND: To the ▇▇▇▇▇▇▇ Venturers and HIG in proportion to their
respective Percentage Interests to the extent that the sum of (i) prior
allocations to them of Net Loss under this Paragraph SECOND and Paragraph FIRST
of this Section 2 and (ii) prior allocations of Depreciation under Paragraphs
FIRST and SECOND of Section 4 of this Appendix are less than $4.5 million. (The
▇▇▇▇▇▇▇ Venturers and HIG are each in effect required to restore a deficit in
its Capital Account attributable to allocation to them of Net Loss under this
Paragraph SECOND).
A-2
THIRD: To WMS until the Capital Account of WMS has been reduced
to zero.
FOURTH: To the Venturers in proportion to their respective
Percentage Interests.
Notwithstanding the foregoing, Nonrecourse Deductions shall be
allocated (a) 50% to WMS and (b) 50% to the ▇▇▇▇▇▇▇ Venturers and HIG in
proportion to their respective Percentage Interests.
3. GAIN FROM A CAPITAL TRANSACTION: Gain from a Capital Transaction
realized by the Venture after giving effect to Sections 3 and 4 of Article III
of this Appendix but prior to giving effect to any distribution of Extraordinary
Cashflow in respect of such transaction shall be allocated and credited to the
Capital Accounts of the Venturers as follows:
FIRST: To WMS to the extent its Capital Account is less than its
Unrecovered Capital;
SECOND: To the ▇▇▇▇▇▇▇ Venturers and HIG in proportion to their
Percentage Interests to the extent their Capital Accounts are less than their
Unrecovered Capital;
THIRD: To WMS, the ▇▇▇▇▇▇▇ Venturers and HIG in proportion
to their Percentage Interests.
4. ALLOCATION OF DEPRECIATION:
(A) For each fiscal year of the Venture there shall be charged to
the Capital Account of each Venturer, and allocated to each Venturer for income
tax purposes, an amount of the Depreciation (which is not a Nonrecourse
Deduction) as follows:
FIRST: To the ▇▇▇▇▇▇▇ Venturers and HIG in proportion to their
respective Percentage Interests until their Capital Accounts shall be reduced to
zero;
A-3
SECOND: To the ▇▇▇▇▇▇▇ Venturers and HIG in proportion to their
respective Percentage Interests to the extent that the sum of (i) current and
prior allocations of Net Loss under Paragraphs FIRST and SECOND of Section 2,
(ii) prior allocations of Depreciation under this Paragraph and Paragraph FIRST
of this Section 4 are less that $6 million. The ▇▇▇▇▇▇▇ Venturers and HIG shall
each be in effect required to restore any deficit in its Capital Accounts
attributable to depreciation allocated under this Paragraph;
THIRD: To WMS until its Capital Account shall be reduced to
zero; and
FOURTH: Subject to Section 2 of Article III of this Appendix,
any remaining Depreciation shall be allocated to the Venturers in proportion to
their Percentage Interests.
Notwithstanding the foregoing Paragraphs FIRST through FOURTH,
Depreciation which is a Nonrecourse Deduction shall be allocated to the
Venturers in accordance with the last sentence of Section 2 of this Article.
(B) Recapture shall be allocated to the Venturers as follows
(i.e., the portion of the gain allocated to a Venturer which constitutes
Recapture shall be determined as follows): to the extent possible, there shall
be allocated to each Venturer that portion of such Recapture which is equal to
the fraction, the numerator of which is the Depreciation deductions that
generated such Recapture allowable with respect to the property being sold
theretofore allocated to such Venturer (or a predecessor in interest to such
Venturer), and the denominator of which is the total Depreciation deductions
that generated such Recapture (or other items of deduction that generated such
Recapture) allowable with respect to the Venture property being sold theretofore
allocated to all Venturers provided, however, that under no circumstances shall
there
A-4
be allocated to any Venturer Recapture in excess of the Gain from a Capital
Transaction allocated to such Venturer (and such excess shall be allocated
instead to the other Venturers).
II. ALLOCATIONS TO CONFORM TO TARGET CAPITAL ACCOUNTS.
If the Capital Account of a Venturer at the end of any fiscal year as
determined by the application of Article I and III differs from that Venturer's
Target Capital Account, the allocations provided for in Article I of this
Appendix shall be modified so that each Venturer's Capital Account shall
equal its Target Capital Account. Modification pursuant to the preceding
sentence shall be subject to the requirements that (i) the ceiling rule as
set forth in Code Section 1.704-1(a)(2) as it may be applied by the Internal
Revenue Service will not be violated and (ii) the provisions of Article III of
this Appendix may not be violated. Subject to the foregoing, the modifications
required hereunder shall be made by first reallocating Net Income or Net Loss,
as the case may be, and then Gain from a Capital Transaction and next by
reallocating Depreciation and then, if necessary, by reallocating Items of
Net Income and Net Loss but the allocation of Non-recourse Deductions in Article
I shall not be modified.
III. EXCEPTIONS.
Notwithstanding anything to the contrary contained in this Appendix, the
following shall apply:
1. GENERAL LIMITATION: No allocation shall be made to a Venturer which
would cause such Venturer to have a deficit balance in its Adjusted Capital
Account which exceeds the sum of such Venturer's share of Partnership Minimum
Gain and such Venturer's Share of Minimum Gain Attributable to Partnership
Nonrecourse Debt and, in the case of the ▇▇▇▇▇▇▇
A-5
Venturers and HIG, the deficit balance in their Capital Accounts that they are
obligated to restore.
2. VENTURER NONRECOURSE DEDUCTIONS: Any and all items of Net Loss and
deduction and any and all expenditures described in Section 705(a)(2)(B) of the
Code (or treated as expenditures so described pursuant to Section
1.704-1(b)(2)(iv)(i) of the Regulations) (collectively, "Partner Nonrecourse
Deductions") that are (in accordance with the principles set forth in Section
1.704-1T(b)(4)(iv)(h)(3) of the Regulations) attributable to Partner Nonrecourse
Debt shall be allocated to the Venturer that bears the Economic Risk of Loss for
such Partner Nonrecourse Debt. If more than one Venturer bears such Economic
Risk of Loss, such Partner Nonrecourse Deductions shall be allocated between or
among such Venturers in accordance with the ratios in which they share such
Economic Risk of Loss.
3. VENTURE MINIMUM GAIN: If there is a net decrease in Partnership
Minimum Gain for any fiscal year of the Venture, there shall be allocated to
each Venturer for such fiscal year, before any other allocation is made of
Venture items under Article I or Article II of this Appendix, items of income
and gain for such year (and, if necessary, for subsequent years) in proportion
to, and to the extent of, an amount equal to the greater of: (1) the portion of
such Venturer's share of the net decrease in Partnership Minimum Gain during
such fiscal year that is allocable (in accordance with the principles set forth
in Section 1.704-1T(b)(4)(iv)(e)(2) of the Regulations) to the sale or other
disposition of Venture property subject to one or more Nonrecourse Liabilities
of the Venture; or (2) the deficit balance in such Venturer's Adjusted Capital
Account at the end of such fiscal year (other than a deficit balance that such
Venturer is obligated to restore). The amount of such deficit balance which
needs to be eliminated shall
A-6
be reduced by the amount of such Venturer's share of Partnership Minimum Gain
and such Venturer's share of Minimum Gain Attributable to Partner Nonrecourse
Debt (computed, in each case, by reference to the amount of Partnership Minimum
Gain and Minimum Gain Attributable to Partnership Nonrecourse Debt after taking
into account any changes thereto during such fiscal year). Items of income and
gain to be allocated pursuant to the foregoing provisions of this Section 3
shall consist first of gains recognized from the disposition of items of Venture
property subject to one or more Nonrecourse Liabilities of the Venture to the
extent of the decrease in Partnership Minimum Gain attributable to the
disposition of such items of Venture property (or a proportionate share of each
such gain if such gains exceed the amount of income and gain required to be
allocated pursuant to the foregoing provisions of this Paragraph for such fiscal
year), and then of a pro rata portion of the other items of Venture income and
gain for that year.
4. MINIMUM GAIN ATTRIBUTABLE TO PARTNER NONRECOURSE DEBT: If there is,
for any fiscal year of the Venture, a net decrease in the Minimum Gain
Attributable to Partner Nonrecourse Debt, there shall be allocated to each
Venturer that has a share of Minimum Gain Attributable to Partner Nonrecourse
Debt at the beginning of such fiscal year before any other allocation under
Section 704(b) of the Code is made pursuant to this Appendix (other than an
allocation required pursuant to the provisions of Section 3 of this Article of
this Appendix) items of income and gain for such fiscal year (and, if necessary,
for subsequent years) in proportion to, and to the extent of, an amount equal to
the greater of: (i) the portion of such Venturer's share of the net decrease in
the Minimum Gain Attributable to Partner Nonrecourse Debt that is allocable (in
accordance with the principles set forth in Section 1.704- 1T(b)(4)(iv)(h)(4) of
the Regulations) to the sale or other disposition of Venture property subject
A-7
to such Partner Nonrecourse Debt; or (2) the deficit balance in such Venturer's
Adjusted Capital Account at the end of such fiscal year (other than a deficit
balance that such Venture is obligated to restore). The amount of such deficit
balance which needs to be eliminated shall be reduced by the amount of such
Venturer's Share of Partnership Minimum Gain and such Venturer's Share of
Minimum Gain Attributable to Partner Nonrecourse Debt (computed, in each case,
by reference to the amount of Partnership Minimum Gain and Minimum Gain
Attributable to Partner Nonrecourse Debt after taking into account any changes
thereto during such fiscal year). The determination of which items of income and
gain to be allocated pursuant to the foregoing provisions of this Paragraph of
this Section shall be made in a manner that is consistent with the principles
contained in Section 1.704-1T(b)(4)(iv)(e)(2) of the Regulations.
5. QUALIFIED INCOME OFFSET: In the event any Venturer unexpectedly
receives any adjustments, allocations or distributions described in Section
1.704-1(b)(2)(ii)(d)(4), (5), or (6) of the Regulations (modified, as
appropriate, by Sections 1.704-1T(b)(4)(iv)(e)(3) and (h)(4) of the
Regulations), there shall be specially allocated to such Venturer such items of
Venture income and gain, at such times and in such amounts as will eliminate as
quickly as possible the deficit balance (if any) in its Capital Account (in
excess of the sum of such Venturer's share of Partnership Minimum Gain, such
Venturer's share of Minimum Gain Attributable to Partner Nonrecourse Debt and
the deficit balance that such Venturer is obligated to restore) created by such
adjustments, allocations or distributions.
6. For purposes of this Article the Venture shall take into account (1)
the sum of its share of Nonrecourse Deductions of El Conquistador Partnership
L.P. (which in this paragraph shall include any other partnership in which it
owns an interest) and distributions to
A-8
it of the Proceeds of a Nonrecourse Liability that are allocable to an increase
in the Partnership Minimum Gain of El Conquistador Partnership, (2) its share of
any net decrease in the Partnership Minimum Gain of El Conquistador Partnership
L.P., (3) its share of any net decrease in the Partnership Minimum Gain of El
Conquistador Partnership L.P. that is allocable to the disposition of property
of the El Conquistador Partnership subject to one or more Nonrecourse
Liabilities of El Conquistador Partnership L.P., (4) distributions to it by El
Conquistador Partnership L.P. of the proceeds of a Nonrecourse Liability that
are allocable to an increase in the Partnership Minimum Gain of EL Conquistador
Partnership L.P., (5) its share of El Conquistador Partnership L.P. Nonrecourse
Deductions, (6) its share of liabilities of El Conquistador Partnership L.P. all
in accordance with the provisions of Treasury Regulations Section
1.704-IT(b)(4)(iv)(j). This Section is intended to implement the provisions of
Regulations Section 1.704-IT and shall be implemented accordingly.
IV. SPECIAL ALLOCATION RULES AND VENTURE ELECTIONS.
1. Income, gain, loss and deduction with respect to property contributed
to the Venture by a Venturer (and with respect to other circumstances for which
Treas. Reg. 'ss' 1.704-1(b) requires Code Section 704(c) principles to be
applied) shall be allocated among the Venturers for tax purposes so as to take
account of the variation between the basis (within the meaning of Section 704(c)
of the Code) of the property to the Venture and its fair market value at the
time of contribution (or the variation between the basis and value or applicable
Capital Account at the time the principles of Section 704(c) of the Code are to
be applied).
2. In the event a Venturer transfers all or part of its interest in the
Venture, or in the event an interest in the Venture, or in the event an interest
in a Venturer that itself is a
A-9
venture is transferred, the Venture shall, upon request of the transferee,
elect, pursuant to Section 754 of the Code, to adjust the basis of the property
owned by the Venture in accordance with Section 743 of the Code.
3. The Venture shall elect the straight line method of depreciation and
the shortest permissible recovery periods (within the meaning of Section 168 of
the Code) with respect to the Resort.
4. Except as otherwise provided in this agreement, all other elections
required or permitted to be made by the Venture under the Code shall be made by
mutual agreement of all the Venturers.
A-10
EXHIBIT C
ADDRESSES FOR NOTICES
WMS
WMS EL CON CORP.
c/o WMS Industries Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with copy to
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
ITP
International Textile Products
of Puerto Rico, Inc.
c/o Richford American
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - 19th Floor
New York, New York 10022
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
KMA
KMA Associates of Puerto Rico, Inc.
c/o Richford American
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - 19th Floor
New York, New York 10022
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
HOSPITALITY
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Condado Plaza Hotel & Casino
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
FIRST AMENDMENT TO WKA EL CON
ASSOCIATES JOINT VENTURE AGREEMENT
FIRST AMENDMENT (the "First Amendment") dated as of January 31,
1990 by and among WMS EL CON CORP., a Delaware corporation ("WMS"),
INTERNATIONAL TEXTILE PRODUCTS OF PUERTO RICO, INC., a Puerto Rican corporation
("ITP"), KMA ASSOCIATES OF PUERTO RICO, INC., a Puerto Rican corporation ("KMA")
(ITP and KMA being referred to herein collectively as the "▇▇▇▇▇▇▇ Venturers")
and HOSPITALITY INVESTOR GROUP, S.E., a Puerto Rico Special Partnership ("HIG")
(WMS, the ▇▇▇▇▇▇▇ Venturers and HIG being hereinafter sometimes referred to
collectively as the "Venturers" and separately as a "Venturer").
W I T N E S S E T H :
` WHEREAS, on January 9, 1990, the Venturers formed WKA El Con
Associates, a joint venture (the "Venture"), under the terms of a joint venture
agreement (the "Joint Venture Agreement"), for the purpose of becoming a general
partner and a limited partner of El Conquistador Partnership L.P., a Delaware
limited partnership; and
WHEREAS, the Venturers desire to amend the Joint Venture
Agreement to adjust their respective "Capital Contributions" and "Percentage
Interests" in the Venture.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, the parties hereto hereby agree as follows:
1. All capitalized terms used herein and not otherwise defined
shall have the same meanings ascribed to such terms in the Joint Venture
Agreement.
2. Section 4.1 of the Joint Venture Agreement is hereby amended
by deleting the table and proviso set forth therein and substituting in their
place the following:
Maximum Capital Percentage
Contribution Interest
WMS $4,188,600.00 46.540%
ITP $1,675,350.00 18.615%
KMA $1,675,350.00 18.615%
HIG $1,460,700.00 16.230%
------------- ---------
$9,000,000.00 100.000%
3. 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.
4. The amendment set forth herein is limited precisely as written
and shall not be deemed (a) to be a consent to any modification or waiver of any
other term or condition to the Joint Venture Agreement or any other documents
referred to therein.
5. 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.
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be executed by their respective duly authorized officers or
representatives as of the date first above written.
WMS EL CON CORP.
By:/s/
--------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
INTERNATIONAL TEXTILE PRODUCTS
OF PUERTO RICO, INC.
By:/s/
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
KMA ASSOCIATES OF PUERTO
RICO, INC.
By:/s/
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
HOSPITALITY INVESTOR GROUP, S.E.
By: HASN, INC., general partner
By:/s/
----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
3
SECOND AMENDMENT TO WKA EL CON
ASSOCIATES JOINT VENTURE AGREEMENT
SECOND AMENDMENT TO WKA EL CON ASSOCIATES JOINT VENTURE AGREEMENT (the
"Second Amendment") dated January 18, 1991 by and among WMS EL CON CORP., a
Delaware corporation ("WMS"), AMK CONQUISTADOR, S.E., a Puerto Rico special
partnership ("AMK"), and HOSPITALITY INVESTOR GROUP, S.E., a Puerto Rico Special
Partnership ("HIG") (WMS, AMK AND HIG being hereinafter sometimes referred to
collectively as the "Venturers" and separately as a "Venturer").
W I T N E S S E T H
WHEREAS, on January 9, 1990, WMS, HIG, International Textile Products of
Puerto Rico, Inc., a Puerto Rico corporation ("ITP"), and KMA Associates of
Puerto Rico, Inc., a Puerto Rico corporation ("KMS"), formed WKA El Con
Associates, a joint venture (the "Venture"), under the terms of a joint venture
agreement, amended by First Amendment dated as of January 31, 1990 (as amended,
the "Joint Venture Agreement") with the intent that the Venture become a general
partner and a limited partner of El Conquistador Partnership L.P., a Delaware
limited partnership (the "Partnership"); and
WHEREAS, immediately prior to the execution and delivery of this Second
Amendment, ITP and KMA formed AMK under the terms of a Deed of Constitution of a
Civil Partnership under the Provisions of the Special Partnership Act, pursuant
to which they have assigned to AMK their respective Interests in the Venture and
all their rights and obligations under the Joint Venture Agreement and AMK has
agreed to assume their obligations thereunder; and
WHEREAS, the Ventures desire to amend the Joint Venture Agreement to
reflect such assignment, the admittance of AMK as a new Venturer in the Venture
and the continuance of the Venture; and
WHEREAS, the Venturers also desire to amend the Joint Venture Agreement
to provide for certain changes in the Capital Contributions to be made by them
to the Venture.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto hereby agree as follows:
1. All capitalized terms used herein and not otherwise defined shall
have the same meanings ascribed to such terms in the Joint Venture Agreement.
2. Each of WMS and HIG hereby consent pursuant to Section 7 of the Joint
Venture Agreement to the assignment by ITP and KMA of their respective Interests
in the Venture to AMK, the withdrawal of ITP and KMA as Venturers, the
admittance of AMK as a new Venturer in the Venture and the assumption by AMK of
the obligations of the ▇▇▇▇▇▇▇ Venturers under the Joint Venture Agreement.
3. All references to "ITP," "KMA," "▇▇▇▇▇▇▇ Venturer" and "▇▇▇▇▇▇▇
Venturers" in the Joint Venture Agreement shall henceforth be deemed to be
references to AMK, and AMK shall be bound by and entitled to the benefits of and
shall perform the obligations of such entities under the Joint Venture Agreement
as if it were an original party thereto:
4. Section 4.1 of the Joint Venture Agreement is hereby amended by
deleting the first two sentences thereof, including the table set forth therein,
and substituting in their place the following:
The Venturers shall contribute up to an aggregate of NINE MILLION
DOLLARS ($9,000,000) plus all WHMC Loan
2
Amounts (as hereinafter defined) to the capital of the Venture in
cash, in such amounts and at such time or times as shall be
determined by the Committee (each Venturer's portion of any such
amount being hereinafter referred to as a "Capital
Contribution"). The amount of each Venturer's Capital
Contribution with respect to such $9,000,000 and each Venturer's
percentage interest in the Venture (the "Percentage Interest" )
shall be as follows:
Capital Percentage
Contribution Interest
WMS $4,188,600.00 46.54%
AMK $3,350,700.00 37.23%
HIG $1,460,700.00 16.23%
------------- ------
$9,000,000.00 100.00%
The amount of each Venturer's Capital Contribution with respect
to each WHMC Loan Amount shall be determined by multiplying such
WHMC Loan Amount by such Venturer's Percentage Interest. As used
herein, the term "WHMC Loan Amount" means each of the following
amounts payable by the Venturer to ▇▇▇▇▇▇▇▇ Hospitality
Management Corporation ("WHMC") pursuant to the Loan and
Reimbursement Agreement, dated as of June 30, 1990, between WHMC
and the Venture (the "WHMC Loan Agreement"), calculated as of the
date on which such amounts are paid or to be paid to WHMC: (a)
all interest due and payable to WHMC on the Loans (as defined in
the WHMC Loan Agreement), (b) all costs and expenses incurred by
WHMC in obtaining the ScotiaBank Loan (as defined in the WHMC
Loan Agreement), including, without limitation, the $190,000
commitment fee paid by WHMC to ScotiaBank de Puerto Rico in
connection with the ScotiaBank Loan, and (c) all principal due
and payable on the Carrying Cost Loan (as defined in the WHMC
Loan Agreement).
5. Representations and Warranties
AMK represents and warrants to WMS and HIG as follows:
(a) AMK is a special partnership duly organized, validly existing
and in good standing under the laws of the Commonwealth of Puerto Rico.
The sole partners of AMK are ITP and KMA.
3
(b) The execution and delivery of this Second Amendment and the
performance by AMK of its obligations under the Joint Venture Agreement,
as amended hereby, have been duly authorized by all necessary
partnership action on the part of AMK, and no further action or approval
is required in order to constitute the Joint Venture Agreement, as
amended hereby, the valid and binding obligation of AMK, enforceable in
accordance with its terms.
(c) Each of this Second Amendment and the Joint Venture
Agreement, as amended hereby, constitutes the legal, valid and binding
obligation of AMK, enforceable against AMK in accordance with its terms.
(d) AMK is acquiring its Interest for its own account and not
with a view to distribution or resale thereof other than in accordance
with the provisions of the Joint Venture Agreement, as amended hereby,
and applicable securities laws.
6. Each of WMS and HIG reconfirms for the benefit of AMK its respective
representations and warranties in Section 8 of the Joint Venture Agreement and
further represents and warrants to the other Venturers that
(a) the execution and delivery of this Second Amendment and the
performance by such Venturer of its obligations under the Joint Venture
Agreement, as amended hereby, have been duly authorized by all necessary
corporate or partnership action on the part of such Venturer, and no
further action or approval is required in order to constitute the Joint
Venture Agreement, as
4
amended hereby, the valid and binding obligation of such Venturer in
accordance with its terms.
(b) Each of this Second Amendment and the Joint Venture
Agreement, as amended hereby, constitutes the legal, valid and binding
obligation of such Venturer, enforceable against such Venturer in
accordance with its terms.
7. The Venturers reconfirm the Venture with AMK, WMS and HIG as
general partners of the Venture and agree that the Venture shall continue its
existence in accordance with the Joint Venture Agreement, as amended hereby.
8. This Second 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.
9. The amendment set forth herein is 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 Joint Venture Agreement or any other documents referred
to therein.
10. This Second 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.
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment
to be executed by their respective duly authorized officers or representatives
on the date first above written.
5
WMS EL CON CORP.
By /s/
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
AMK CONQUISTADOR, S.E.
By INTERNATIONAL TEXTILE
PRODUCTS OF PUERTO RICO, INC.,
Managing Partner
By /s/
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Authorized Representative
HOSPITALITY INVESTOR GROUP, S.E.
By HASN, INC., Managing Partner
By /s/
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
6
THIRD AMENDMENT TO WKA EL CON
ASSOCIATES JOINT VENTURE AGREEMENT
THIRD AMENDMENT TO WKA EL CON ASSOCIATES JOINT VENTURE AGREEMENT (the
"Third Amendment") dated as of April 20, 1992, by and among WMS EL CON CORP., a
Delaware corporation ("WMS"), AMK CONQUISTADOR, S.E., a Puerto Rico special
partnership ("AMK"), and HOSPITALITY INVESTMENT GROUP, S.E., a Puerto Rico
special partnership ("HIG") (WMS, AMK and HIG being hereinafter sometimes
referred to collectively as the "Venturers" and separately as a "Venturer").
W I T N E S S E T H
WHEREAS, on January 9, 1990, WMS, HIG, International Textile
Products of Puerto Rico, Inc., a Puerto Rico corporation, and KMA Associates of
Puerto Rico, Inc., a Puerto Rico corporation, formed WKA El Con Associates, a
joint venture (the "Venture"), under the terms of a joint venture agreement,
amended by First Amendment dated as of January 31, 1990 and amended by Second
Amendment dated as of January 18, 1991 (as amended, the "Joint Venture
Agreement") with the intent that the Venture become a general partner and a
limited partner of El Conquistador Partnership L.P., a Delaware limited
partnership (the "Partnership"); and
WHEREAS, the Venturers have heretofore paid $1,555,700.00 towards
their original Capital Contribution obligations of which $750,000.00 was
credited towards the original Capital Contribution to the Venture of $9,000,000
and $805,700.00 was credited towards WHMC Loan Amounts; and
WHEREAS, the Venturers desire to amend the Joint Venture
Agreement to provide for $8,000,000 of additional capital contributions by the
Venturers.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto hereby agree as follows:
1. All capitalized terms used herein and not otherwise defined shall
have the same meanings ascribed to such terms in the Joint Venture Agreement.
2. Section 4.1 of the Joint Venture Agreement is hereby further amended
by deleting the change made to such Section 4 by Section 4 of the Second
Amendment to the Joint Venture Agreement and substituting in its place the
following:
"4.1(a) The Venturers shall contribute up to an aggregate of SEVENTEEN
MILLION DOLLARS ($17,000,000) plus all WHMC Loan Amounts (as hereinafter
defined) to the capital of the Venture in cash, in such amounts and at
such time or times as shall be determined by the Committee or as set
forth below (each Venturer's portion of any such amount being
hereinafter referred to as a "Capital Contribution"). The amount of each
Venturer's Capital Contribution with respect to such $17,000,000 and
each Venturer's percentage interest in the Venture (the "Percentage
Interest") shall be as follows:
Capital Percentage
Contribution Interest
WMS $ 7,911,800.00 46.54%
AMK $ 6,329,100.00 37.23%
HIG $ 2,759,100.00 16.23%
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$17,000,000.00 100.00%
The amount of each Venturer's Capital Contribution with respect to each
WHMC Loan Amount shall be determined by multiplying such WHMC Loan
Amount by such Venturer's Percentage Interest. As used herein, the term
"WHMC Loan Amount" means each of the following amounts payable by the
Venturer to ▇▇▇▇▇▇▇▇ Hospitality Management Corporation ("WHMC")
pursuant to the Loan and Reimbursement Agreement, dated as of June 30,
1990, between WHMC and the Venture (the "WHMC Loan Agreement"),
calculated as of the date on which such amounts are paid or to be paid
to WHMC: (a) all interest due and payable to WHMC on the Loans (as
defined in the WHMC Loan Agreement), (b) all costs and expenses incurred
by WHMC in obtaining the ScotiaBank Loan (as defined in the WHMC Loan
Agreement), including, without limitation, the $190,000 commitment fee
paid by WHMC to ScotiaBank de Puerto Rico in
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connection with the ScotiaBank Loan, and (c) all principal due and
payable on the Carrying Cost Loan (as defined in the WHMC Loan Agreement)."
3. The Joint Venture Agreement is hereby further amended by adding a
new Section 4.1(b) to read as follows:
"4.1(b) Concurrently herewith the Venturers are paying an aggregate of
EIGHT MILLION DOLLARS ($8,000,000) of the Capital Contribution to the
capital of the Venture in cash in the same proportion as such Venturer's
Percentage Interest as follows:
WMS $3,723,200 46.54%
AMK $2,978,400 37.23%
HIG $1,298,400 16.23%
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$8,000,000 100.00%
The Capital Contribution of $8 million paid to the capital of the
Venture pursuant to this Section 4.1(b) shall be credited towards the
total Capital Contribution of $17,000,000 described in Section 4.1(a)
above. It is intended that this $8,000,000 of the Capital Contribution
shall be used to satisfy the Venture's proportionate share of additional
Capital Contributions to be made to the Partnership or to otherwise
satisfy the loan balancing provisions of Section 9(k) of the Letter of
Credit and Reimbursement Agreement dated February 7, 1991 (the
"Reimbursement Agreement") between the Partnership and The Mitsubishi
Bank, Limited (the "Bank").
4. The Venturers reconfirm the Venture with WMS, AMK and HIG as general
partners of the Venture and agree that the Venture shall continue its existence
in accordance with the Joint Venture Agreement, as amended hereby.
5. The correct name of HIG is "Hospitality Investment Group, S.E." and
HIG confirms that any and all actions taken by HIG in the name "Hospitality
Investor Group, S.E." are the valid, legal and binding obligations of HIG.
6. This Third 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.
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7. 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 Joint Venture Agreement or any other documents referred
to therein.
8. This Third 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.
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment
to be executed by their respective duly authorized officers or representatives
on the date first above written.
WMS EL CON CORP.
By
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman
AMK CONQUISTADOR, S.E.
By /s/
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇
and
By /s/
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Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
HOSPITALITY INVESTMENT GROUP, S.E.
By HASN, INC., managing partner
By /s/
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
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