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EXHIBIT 10.1
SECOND AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
by and between
BANCOMER S.A., INSTITUCION DE BANCA MULTIPLE, GRUPO FINANCIERO
and
DESARROLLOS TURISTICOS ▇▇▇▇▇▇, S. DE ▇.▇. DE C.V.
and
CLUB ▇▇▇▇▇▇ RESORTS, INC.,
and
CR HOTEL ACQUISITION COMPANY, LLC
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Dated as of August 18, 1997
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TABLE OF CONTENTS
ARTICLE I......................................................................2
1.1 Definitions..........................................................2
1.2 Captions.............................................................8
1.3 Number and Gender....................................................8
1.4 Knowledge............................................................8
1.5 Amendment and Restatement of Original Agreements.....................8
ARTICLE II.....................................................................9
2.1 Purchase and Sale of Shares..........................................9
2.2 Purchase Price Adjustment............................................9
2.3 Closing.............................................................11
2.4 Ancillary Agreements to be Delivered At or Prior to the Closing.....11
2.5 Escrow..............................................................11
ARTICLE III...................................................................11
3.1 Information Review..................................................12
3.2 Physical Inspection.................................................12
3.3 No Effect on Other Provisions.......................................12
ARTICLE IV....................................................................12
4.1 Organization and Good Standing......................................13
4.2 Authorization and Validity..........................................13
4.3 No Governmental Approvals...........................................13
4.4 No Conflicts........................................................13
4.5 Certain Proceedings.................................................13
4.6 No Brokers or Finders...............................................13
4.7 Acknowledgment Regarding A Shares...................................13
4.8 Acknowledgment Regarding Recapitalization of Real Estate Companies..14
ARTICLE V.....................................................................14
5.1 Organization and Good Standing......................................14
5.2 Capitalization......................................................14
5.3 Other Subsidiaries..................................................14
5.4 Authorization and Validity..........................................14
5.5 No Governmental Approvals...........................................15
5.6 No Conflicts........................................................15
5.7 Historical Financial Statements.....................................15
5.8 Projections.........................................................16
5.9 Absence of Undisclosed Liabilities..................................16
5.10 Title to Properties; Liens..........................................16
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5.11 Condition and Sufficiency of Assets.................................17
5.12 Accounts Receivable.................................................17
5.13 Inventory...........................................................17
5.14 Insurance...........................................................17
5.15 Certain Proceedings.................................................18
5.16 Compliance with Laws................................................18
5.17 Environmental Matters...............................................18
5.18 Taxes...............................................................19
5.19 Intellectual Property...............................................20
5.20 Contracts...........................................................20
5.21 Absence of Changes or Events........................................20
5.22 Licenses, Permits and Tariffs.......................................21
5.23 Absence of Certain Business Practices; Internal Accounting Controls.22
5.24 Customers and Suppliers.............................................22
5.25 Bank Accounts.......................................................22
5.26 No Broker...........................................................22
5.27 Employees...........................................................22
5.28 Labor Relations; Compliance.........................................23
5.29 Employee Benefit Plans..............................................23
ARTICLE VI....................................................................24
6.1 Access to Information...............................................24
6.2 Taking of Necessary Action..........................................25
6.3 Expenses............................................................25
6.4 Notice of Certain Changes...........................................25
6.5 Confidentiality; Press Releases.....................................26
6.6 [Intentionally Omitted].............................................26
6.7 Title Insurance, Surveys, etc.......................................26
6.8 Consummation of Debt Commitments....................................27
ARTICLE VII...................................................................27
7.1 Ordinary Course.....................................................27
7.2 Dividends and Issuance and Purchase of Securities; Loans............27
7.3 Government Documents; Inconsistent Agreements.......................28
7.4 No Other Bids.......................................................28
7.5 Acquisitions........................................................28
7.6 Indebtedness........................................................28
7.7 Employee Contracts and Benefit Plans................................28
7.8 Prohibited Dispositions.............................................29
7.9 Lines of Business and Capital Expenditures..........................29
7.10 Accounting Methods..................................................29
7.11 Settlements.........................................................29
7.12 Completion of Los Cabos Club ▇▇▇▇▇▇ Units...........................29
ARTICLE VIII..................................................................29
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8.1 Conditions to All Parties' Obligations..............................29
8.2 Buyer's Conditions..................................................30
8.3 Seller's Conditions.................................................31
ARTICLE IX....................................................................32
9.1 Risk of Loss........................................................32
9.2 Casualty............................................................32
9.3 Condemnation........................................................33
ARTICLE X.....................................................................33
10.1 Termination.........................................................33
10.2 Effect of Termination...............................................34
ARTICLE XI....................................................................35
11.1 Indemnification by Seller...........................................35
11.2 Indemnification by Buyer............................................35
11.3 Notice, Participation and Duration..................................35
11.4 Reimbursement.......................................................35
ARTICLE XII...................................................................36
12.1 Arbitration.........................................................36
ARTICLE XIII..................................................................37
13.1 Survival of Representations, Warranties and Agreements..............37
13.2 Effect of Due Diligence.............................................37
13.3 Notices.............................................................37
13.4 Attorneys' Fees.....................................................38
13.5 Counterparts........................................................38
13.6 Miscellaneous.......................................................38
13.7 Governing Law.......................................................38
13.8 Incorporation of Exhibits and Schedules.............................38
13.9 Waiver..............................................................38
13.10 Specific Performance................................................39
13.11 Release of CR Hotel.................................................39
ARTICLE XIV...................................................................39
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SECOND AMENDED AND RESTATED STOCK PURCHASE AGREEMENT
This SECOND AMENDED AND RESTATED STOCK PURCHASE AGREEMENT (this
"Agreement"), dated as of August 18, 1997, is by and among Bancomer S.A.,
Institucion de Banca Multiple, Grupo Financiero, a Mexican corporation
("Seller"), and Desarrollos Turisticos ▇▇▇▇▇▇, S. de ▇.▇. de C.V., a Mexican
corporation (f/k/a Desarrollos Turisticos Bancomer, S.A. de C.V.) (the
"Company"), on the one hand, and Club ▇▇▇▇▇▇ Resorts, Inc., a Nevada
corporation, formerly known as CR Timeshare Acquisition Company, Inc. ("Buyer"),
and CR Hotel Acquisition Company, LLC, a Delaware limited liability company ("CR
Hotel"), on the other.
R E C I T A L S
WHEREAS, on December 20, 1996 (the "Original Agreement Date"), Buyer
and Seller entered into that certain Stock Purchase Agreement by and between
Buyer and Seller (the "Timeshare Agreement");
WHEREAS, on the Original Agreement Date, CR Hotel and the Company
entered into that certain Stock Purchase Agreement by and between the Company
and CR Hotel (the "Hotel Agreement" and, together with the Timeshare Agreement,
the "Original Agreements");
WHEREAS, on June 25, 1997, the Company, CR Hotel, Buyer and Seller
amended and restated the Hotel Agreement and the Timeshare Agreement,
respectively, into the First Amended and Restated Stock Purchase Agreement (the
"First Amended Agreement"), by and among Seller and the Company, on the one
hand, and Buyer and CR Hotel, on the other.
WHEREAS, the Company and CR Hotel, and Buyer and Seller, wish to amend
and restate the First Amended Agreement;
WHEREAS, Seller owns or controls all of the issued and outstanding
shares of capital stock of the Company;
WHEREAS, the Company, through its subsidiaries, has been engaged in
both the hotel and the vacation ownership interval business in Mexico, primarily
in Cabo San ▇▇▇▇▇, Puerto Vallarta and Cancun, under the name "▇▇▇▇▇▇ ▇▇▇▇▇▇ and
Club ▇▇▇▇▇▇";
WHEREAS, Buyer has deposited US $3.0 million into escrow as
contemplated by Section 2.5;
WHEREAS, Seller desires to sell and Buyer desires to purchase all of
the outstanding shares of capital stock of the Company and all of the shares of
capital stock of the Real Estate Companies (as defined herein) held by Seller on
the terms and conditions hereinafter stated; and
WHEREAS, the parties hereto have previously executed that certain
Purchase Proposal which set forth the parties intent as to the transactions
contemplated hereby, a copy of which is attached hereto as Exhibit A.
NOW, THEREFORE, in consideration of the above and the mutual covenants
and agreements set forth herein, and for other good and valuable consideration,
the receipt and
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sufficiency of which is hereby acknowledged by the parties hereto, Seller, the
Company, Buyer and CR Hotel hereby agree as follows:
ARTICLE I.
DEFINITIONS AND CONSTRUCTION
1.1 Definitions. The following terms when used in this Agreement (including
all of the Exhibits and Schedules) will have the meanings set forth below:
"Accounts Receivable" shall mean all accounts receivable of the Company,
other than the Timeshare Receivables, that are reflected on the Interim
Historical Balance Sheet or on the accounting records of the Company as of the
Closing Date.
"Actual Employees" shall mean all individuals, including without
limitation, agents or representatives, rendering subordinated services to the
Company as of the Original Agreement Date.
"Affiliate" shall mean with respect to a Person, any other Person that,
directly or indirectly, controls, or is controlled by or under common control
with such Person. For purposes of this definition, control (including the terms
controlled by and under common control with), as used with respect to any
Person, means the power to direct or cause the direction of the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities or by Contract or otherwise.
"Ancillary Agreements" shall have that meaning set forth in Section 2.4.
"Applicable Environmental and Safety Laws" shall mean any and all
environmental or health and safety related laws, regulations, rules, permits,
orders, ordinances, decrees or determinations of Governmental Bodies in effect
on the Closing Date, in any and all jurisdictions in which the Property is
located or the Company conducts operations and applicable to such Property or
operations, as the case may be, including without limitation, the Mexican
General Law on Ecological Equilibrium and Environmental Protection, the Mexican
National Waters Law and other applicable environmental and health and safety
related laws, rules, ordinances, directives and regulations.
"Average Sales Expense" shall mean the average Selling Expense per Module
of the Sold Timeshare Intervals, as derived from and reflected in the Company's
audited consolidated financial statements for the year ended December 31, 1996,
stated as a percentage and calculated on a historical US dollar basis.
"Average Sales Price" shall mean the average sales price per Module of the
Sold Timeshare Intervals, as derived from and reflected in the Company's audited
consolidated financial statements for the year ended December 31, 1996 and
calculated on a historical US dollar basis.
"Balance Sheet Date" shall have the meaning set forth in Section 5.7.
"Business" shall mean the business conducted by the Company.
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"Business Day" shall mean any day other than a Saturday, Sunday or a legal
holiday under the federal laws of either the United States of America or the
United Mexican States.
"CSL Timeshare Sub" shall mean the Mexican corporation to be formed as a
subsidiary of the Company for purposes of holding the Timeshare Property in Cabo
San ▇▇▇▇▇.
"Cancun Timeshare Sub" shall mean the Mexican corporation to be formed as a
subsidiary of the Company for purposes of holding the Timeshare Property in
Cancun.
"Capital Expenditures" shall mean any expenditure for replacement, repair,
improvement or addition to the Property which is, in accordance with GAAP, an
expenditure which should be capitalized on the books and records of the Company.
"Closing" shall have the meaning set forth in Section 2.3.
"Closing Date" shall have the meaning set forth in Section 2.3.
"Closing Date Timeshare Intervals" shall mean the Timeshare Intervals as of
the Closing Date.
"Closing Date Timeshare Receivables" shall mean the amount of Timeshare
Receivables as of the Closing Date.
"Club ▇▇▇▇▇▇" shall mean Club ▇▇▇▇▇▇, S.A. de C.V., a Mexican corporation.
"Commissioners" shall mean all agents and third parties that are hired from
time to time by the Company to provide a specific service, including the
promotion and sale of timeshares.
"Commitments" shall mean subscriptions, options, warrants, calls, rights,
commitments or any other Contracts of any character obligating a Person to issue
any shares of its capital stock or any other securities convertible into,
exchangeable or exercisable for, or evidencing the right to subscribe for, any
such shares.
"Company" shall mean Desarrollos Turisticos ▇▇▇▇▇▇, S de ▇.▇. de C.V., a
Mexican corporation, and, unless otherwise provided, its Subsidiaries.
"Contract" shall mean any contract, lease, license, deed of trust,
mortgage, commitment, license, franchise, indenture, note, other agreement,
instrument or obligation.
"Controversy" shall have the meaning set forth in Section 12.1.
"Corporate Banking" shall mean Bancomer, S.A., Banca Corporativa, Division
de Comunicacion y Servicios.
"Current Assets" shall mean those assets known as "current assets" under
GAAP; provided, however, that for purposes of calculating Working Capital, the
term "Current Assets" shall not include Timeshare Receivables.
"Current Liabilities" shall mean those liabilities known as "current
liabilities" under GAAP.
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"Damages" shall mean all damages, losses (including any diminution in
value), liabilities (joint or several), payments, obligations, penalties,
claims, demands, defenses, judgments, suits, proceedings, costs, disbursements
or expenses (including, without limitation, reasonable and duly documented fees,
disbursements and expenses of attorneys, accountants and other professional
advisors and of expert witnesses and costs of investigation and preparation) of
any kind or nature whatsoever.
"Debt Commitment" shall mean the Hotel Debt Commitment and the Timeshare
Debt Commitment.
"Default" by either party ("Defaulting Party") shall include the failure to
consummate the Closing on or before the Termination Date if the failure to
consummate the Closing on or before such date resulted from the willful and
knowing failure by the Defaulting Party to fulfill any undertaking or commitment
provided for herein that is required to be fulfilled by such Defaulting Party at
or prior to Closing; provided that the other party ("Non-Defaulting Party")
shall have given written notice of the undertaking or commitment failed to be
properly fulfilled by the Defaulting Party and permitting the Defaulting Party a
10 Business Day period in which to fulfill such undertaking or commitment and
close the transactions contemplated hereby.
"Defects" shall have that meaning set forth in Section 3.2.
"Defect Notice" shall have that meaning set forth in Section 3.2.
"Definitive Purchase Price Adjustment" shall have that meaning set forth in
Section 2.2(c).
"Desarrollos" shall mean Desarrollos Turisticos Integrales Cabo San ▇▇▇▇▇,
▇. ▇. de C. V., a Mexican corporation and a partially-owned subsidiary of the
Company.
"DTI Cozumel" shall mean Desarrollos Turisticos Integrales Cozumel, S.A. de
C.V., a Mexican corporation and wholly owned subsidiary of the Company.
"Employees" shall mean the Actual Employees and the Commissioners.
"Escrow Agreement" shall mean that certain Escrow Agreement dated as of
December 20, 1996 by and among CR Hotel, the Company and Texas Commerce Bank
National Association, a national banking association ("TCB").
"Escrow Deposit" shall have that meaning specified in Section 2.5.
"Exchange Rate" shall mean the exchange rate of Pesos for US Dollars as
published by Banco de Mexico in the Diario Oficial de la Federacion (Official
Gazette) for the settlement of obligations denominated in US Dollars as of the
close of business on the Business Day immediately preceding the date of
measurement.
"First Amended Agreement" shall have the meaning set forth in the Recitals.
"GAAP" shall mean Mexican generally accepted accounting principles
consistently applied.
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"Governmental Body" shall mean any competent court or any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
other instrumentality, domestic or foreign, in the US, the United Mexican
States, or elsewhere.
"Hazardous Material" shall mean any pollutant, contaminant, toxic
substance, hazardous waste, hazardous substance, oil, or petroleum product as
defined in or pursuant to the Mexican General Law on Ecological Equilibrium and
Environmental Protection, the Mexican Regulations on Hazardous Wastes, the
Mexican Regulation for the Land Transportation of Hazardous Wastes and Materials
and the Mexican Law on National Waters and its Regulations, or any other
environmental or health and safety-related law, regulation, ordinance or rule at
the federal, state or local level, whether existing as of the Original Agreement
Date, previously in force, or subsequently enacted.
"Hotel Agreement" shall have the meaning set forth in the recitals.
"Hotel Business" shall mean the assets, business and operations of
Desarrollos, Nizuc and Prodepa, relating to the hotels and related assets of
such companies in Cabo San ▇▇▇▇▇, Cancun and Puerto Vallarta, Mexico.
"Hotel Debt Commitment" shall mean the commitment of Corporate Banking to
loan funds pursuant to the commitment letter dated the date hereof.
"Hotel Property" shall mean the real estate, furniture, fixtures, equipment
and other assets comprising the Hotel Business.
"House Sub" shall mean Corporacion Habitacional Mexicana, S. A. de C.V., a
Mexican corporation and wholly-owned subsidiary of the Company, which currently
owns all of the houses and other residential properties owned by the Company,
including, without limitation, those listed on Schedule 5.10.
"Information" shall have the meaning set forth in Section 3.1.
"Initial Timeshare Intervals" shall mean the Timeshare Intervals as of June
30, 1996.
"Intangibles" shall mean all of the Company's rights, if any, to any
telephone numbers currently in use by the Company; all as built plans and
specifications in the Company's possession; warranties and guaranties relating
to the Property; original, or where appropriate, copies of all financial,
personnel and other books, records and files relating to the ownership or
operation of the Property wherever located and held by the Company or its
agents, in computer readable form where available without additional cost or
expense, and all Intellectual Property used in the operation of the Property.
"Intellectual Property" shall mean trademarks, service marks, trade dress,
logos and trade names, together with all goodwill associated therewith and all
registrations, applications, renewals, translations, adaptations, derivations
and combinations thereof, copyrights and copyrightable works and all
registrations, applications and renewals therefor; trade secrets and
confidential information (including, without limitation, ideas, drawings,
specifications, designs, plans, proposals, financial and accounting data,
business and marketing plans, and customer and supplier lists); computer
software; other intellectual property rights; and all copies and tangible
embodiments of the foregoing (in whatever form or medium).
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"Laws" shall mean all laws (common or statutory), statutes, ordinances,
rules, regulations and decrees applicable to the referenced matter.
"Leases" shall mean those leases listed on Schedule 5.20 under the heading
"Leases".
"Legal Requirements" shall mean all Laws affecting or in any way relating
to the Company or its operations, including, without limitation, the Applicable
Environmental and Safety Laws.
"Liabilities" shall mean, as to any Person, any liability, obligation, cost
or expense of any nature whatsoever, whether now known or unknown, asserted or
unasserted, accrued or unaccrued, liquidated, unliquidated or due or to become
due, including, without limitation, any liability in respect of Taxes of any
kind whatsoever that affect such Person or its Subsidiaries or the operation
thereof.
"Lien" shall mean any lien, mechanic's lien, materialman's lien, lease,
easement, charge, encumbrance, mortgage, conditional sale agreement, title
retention agreement, agreement to sell or convey, option, right of third Person
to prohibit assignment or transfer of title without such Person's consent,
claim, title imperfection, restrictive covenant, encroachment or other survey
defect, pledge, restriction, security interest or other adverse claim, whether
arising by Contract or under Law or otherwise.
"Management Agreements" shall mean those agreements with Westin relating to
the management and operation of the Property in Cabo San ▇▇▇▇▇, Cancun and
Puerto Vallarta, as more particularly described on Schedule 5.20.
"Material Adverse Effect" shall mean, with respect to any Person, a
material adverse effect on or with respect to the business, assets, financial
condition or results of operations of such Person and its Subsidiaries, taken as
a whole.
"Mexico Hotel Holding" shall mean the Mexican corporation to be formed for
purposes of holding the stock of the Real Estate Companies and 50% of the stock
of the House Sub.
"Module" shall mean a single room.
"Nizuc" shall mean Promotora Turistica Nizuc, S.A. de C.V., a Mexican
corporation and a partially-owned subsidiary of the Company.
"Order" shall mean any order, injunction, decree of a court or charge of a
Governmental Body.
"Ordinary Course of Business" shall mean the ordinary course of business
generally consistent with past custom and practice (including with respect to
quantity and frequency).
"Original Agreements" shall have the meaning set forth in the recitals.
"Original Agreement Date" shall have the meaning set forth in the recitals.
"Other Business" shall mean all of the assets, business and operations of
the Company other than the Hotel Business and the Timeshare Business.
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"Other Property" shall mean the real estate, furniture, fixtures, equipment
and other assets comprising the Other Business.
"PV Timeshare Sub" shall mean the Mexican corporation to be formed as a
subsidiary of the Company for purposes of holding the Timeshare Property in
Puerto Vallarta.
"Permitted Hotel Property Lien" shall have the meaning set forth in Section
6.7(a)(iii).
"Permitted Timeshare Property Liens" shall have the meaning set forth in
Section 6.7(a)(iv).
"Person" shall mean an individual, corporation, joint venture, partnership
(limited or general), limited liability company, trust or unincorporated
organization or other entity or Governmental Body.
"Preliminary Adjustment Schedule" shall have that meaning specified in
Section 2.2(c).
"Proceeding" shall mean any claim, action, suit, proceeding, formal
complaint, show cause Order or cease and desist Order, arbitration,
adjudication, settlement proceeding, or formal Governmental Body investigation,
in each case, if applicable, whether at equity or at law.
"Prodepa" shall mean Promotora y Desarrolladora del ▇▇▇▇▇▇▇▇, ▇.▇. de C.V.,
a Mexican corporation and a partially-owned subsidiary of the Company.
"Projections" shall mean Seller's internal management projections dated
June 1996 relating to the business and operations of the Company.
"Property" shall mean the assets of the Company.
"Purchase Price" shall have the meaning set forth in Section 2.1.
"Real Estate Companies" shall mean Desarrollos, Nizuc and Prodepa.
"Release" shall mean any release, spill, emission, leaking, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the
atmosphere, or on, into, under or from the soil, surface water, ground water or
property.
"Requisite Regulatory Approvals" shall mean all permits, approvals,
filings, consents and waivers required to be obtained or made, and all waiting
periods required to expire, before the consummation of the transactions
contemplated by this Agreement, as applicable, under all applicable Laws of any
jurisdiction, domestic or foreign, having jurisdiction over the transactions
contemplated by this Agreement, including, without limitation, notifications,
approvals, orders, authorizations or filings required by the Mexican Federal Law
of Economic Competition and the Mexican Foreign Investment Law.
"Schedules" shall have the meaning set forth in Section 14.1.
"Seller's Estimated Purchase Price Adjustment" shall have that meaning set
forth in Section 2.2(b).
"Seller's Response" shall have that meaning set forth in Section 3.3.
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"Selling Expense" shall mean all costs and expenses related to the
promotion, sale, financing, administration and closing of the sale of Timeshare
Intervals, including those incurred by the sales office and identifiable in the
financial statements and accounting books and records of the Company as "Cost of
Sales" (at "GOP"), which historically have averaged approximately 50%.
"Sold Timeshare Intervals" shall have that meaning set forth in Section 2.2
(a) (iii).
"Stock" shall mean the outstanding shares of stock of the (i) Company
listed on Schedule 5.2, and, (ii) Real Estate Companies held by Seller listed on
Schedule 5.3.
"Subsidiary" shall mean, as to any Person, any corporation, joint venture,
partnership or other business entity of which securities or other ownership
interests are, at the time as of which any determination is being made, owned
directly or indirectly by the parent or one or more subsidiaries of the parent;
provided, that with respect to the Company, "Subsidiary" shall include, without
limitation, those entities listed on Schedule 5.3 hereto.
"Tax Return" shall include any statement, form, return, or other documents
required to be supplied to a taxing authority in connection with Taxes.
"Taxes" shall mean all taxes, charges, fees, levies, or other assessments,
including without limitation, income, gross receipts, excise, property, sales,
occupation, use, service, license, payroll, franchise, ad valorem, value added,
withholding, social security, national insurance (or other similar contributions
or payments), estimated, severance, transfer, stamp and recording taxes, fees
and charges imposed by any Governmental Body (including any interest, fines,
penalties or additions attributable to, or imposed on or with respect to, any
such taxes or other assessments) whether computed on a separate, consolidated,
unitary, combined or any other basis.
"Termination Date" shall mean August 15, 1997; provided, however, that (i)
if the conditions to Closing set forth in Sections 8.1 and 8.2 (other than
Sections 8.2(f), (h) and (j)) have not been satisfied at least ten Business Days
prior to July 31, 1997, then the Termination Date shall be automatically
extended to the tenth Business Day following the date on which all conditions to
Closing set forth in Sections 8.1 and 8.2 (other than Sections 8.2(f), (h) and
(j)) have been satisfied, and (ii) Buyer shall have the option to extend the
Termination Date for fifteen days from the date the Termination Date would
otherwise occur hereunder by depositing into escrow with the Escrow Agent, on or
before 5:00 p.m. (Houston, Texas time) on the date the Termination Date would
otherwise occur, an additional amount such that the total amount held in escrow
in connection with the transactions contemplated hereby is US $61.5 million.
"Third Party Offer" shall mean a proposal or offer from any Person other
than Buyer relating to the direct or indirect acquisition or purchase of assets
of the Company (or any of its Subsidiaries) or of any of the stock of the
Company (or of any of its Subsidiaries), by way of sale, merger, exchange or any
similar transaction or business combination, for a specified consideration or
consideration within a specified range.
"Timeshare Agreement" shall have the meaning set forth in the recitals.
"Timeshare Business" shall mean all of the assets, business and operations
of the Company relating to its vacation interval business.
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"Timeshare Debt Commitment" shall mean the commitment of Corporate Banking
to loan funds to CR Resorts Capital S. de ▇.▇. de C.V., pursuant to the
commitment letter dated the date hereof.
"Timeshare Intervals" shall mean the number of Modules available for sale
as of the date in question multiplied by 52, as sold through Series "B" Shares
of Club ▇▇▇▇▇▇.
"Timeshare Mezzanine Note" shall mean the promissory note evidencing the
"Tranche B" financing under the Timeshare Debt Commitment.
"Timeshare Property" shall mean the real estate, furniture, fixtures,
equipment and other assets comprising the Timeshare Business.
"Timeshare Receivables" shall mean the outstanding balance derived from the
sale of Series "B" Shares of Club ▇▇▇▇▇▇ and the sale of Vacation Ownership Club
(VOC) memberships.
"Trusts" shall mean those Trusts identified on Schedule 1.1 hereto.
"US" shall mean the United States of America.
"US Hotel Holding" shall mean the limited liability company to be formed
pursuant to the laws of the State of Delaware or such other State in the United
States of America as Buyer may determine, for purposes of holding the stock of
Mexico Hotel Holding.
"Westin" shall mean those Westin entities which are parties to the
Management Agreements, including Westin Hotel Company and Westin Mexico, S.A. de
C.V.
"Working Capital" shall mean the amount equal to the Current Assets minus
the Current Liabilities of the Company.
1.2 Captions. Titles and captions of articles and Sections set forth in
this Agreement are inserted only as a matter of convenience and for reference,
and in no way define, limit, extend or describe the scope of this Agreement or
the meaning of any provision set forth herein.
1.3 Number and Gender. Whenever required by the context, the singular
number shall include the plural and the gender of any pronoun shall include the
other genders.
1.4 Knowledge. When used in this Agreement, "knowledge" shall mean the
actual, not implied or assumed, knowledge of the directors and officers of the
Person in question and such Person's Subsidiaries and Affiliates.
1.5 Amendment and Restatement of Original Agreements. This Agreement
amends restates, replaces and supersedes the Original Agreements and the First
Amended Agreement in their entirety.
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ARTICLE II.
PURCHASE AND SALE OF SHARES
2.1 Purchase and Sale of Shares. Subject to the terms and conditions of
this Agreement, Buyer agrees to purchase from Seller at the Closing, and Seller
agrees to sell to Buyer (or a direct or indirect wholly owned Subsidiary
thereof) at the Closing, the Stock, for the aggregate purchase price of US
$231.5 million (the "Purchase Price"), subject to adjustment as set forth in
Section 2.2, payable on the Closing Date by delivery either by certified check
or wire transfer.
2.2 Purchase Price Adjustment.
a) Purchase Price Adjustments. The Purchase Price shall be subject
to the following adjustments (collectively, the "Purchase Price
Adjustments"):
(i) Timeshare Receivables. The Purchase Price shall be
increased by any amount by which the Closing Date
Timeshare Receivables exceed US $28.5 million, or
decreased by any amount by which the Closing Date
Timeshare Receivables are less than US $28.5 million.
(ii) Nonperforming Timeshare Receivables. The Purchase Price
shall be decreased by the amount equal to the total amount
of Closing Date Timeshare Receivables which have been
outstanding for 90 days or more as of such date,
multiplied by 25%.
(iii) Sales of Timeshare Intervals. The Purchase Price shall be
reduced by an amount equal to (A) the Initial Timeshare
Intervals minus the Closing Date Timeshare Intervals (the
"Sold Timeshare Intervals"), (B) multiplied by the Average
Sales Price (C) multiplied by the amount equal to 100%
minus the Average Sales Expense.
(iv) Working Capital. The Purchase Price shall be increased by
the amount by which the Working Capital as of the Closing
Date exceeds US $333,000, and decreased by the amount by
which the Working Capital as of the Closing Date is less
than US $333,000.
(v) Replacement Reserve. The Purchase Price shall be reduced
by the amount of US $1.4 million.
Provided,that any of the amounts specified in subparagraphs (i) through
(iv) above which are denominated in Pesos shall be converted into their US
Dollar equivalent at the Exchange Rate.
b) Estimated Purchase Price Adjustment. Five (5) calendar days prior
to the Closing Date, (A) Seller shall deliver to Buyer (after consultation
with and review by Buyer) its good faith estimate of each of the
adjustments to the Purchase Price to be made pursuant to Section 2.2(a)
(the sum of such adjustments being hereinafter referred to as the
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"Seller's Estimated Purchase Price Adjustment"). If the Seller's Estimated
Purchase Price Adjustment indicates that the Purchase Price shall be
increased, then at Closing the principal balance of the Timeshare Mezzanine
Note shall be increased by an amount equal to the Seller's Estimated Purchase
Price Adjustment. If the Seller's Estimated Purchase Price Adjustment
indicates that the Purchase Price shall be decreased, then at Closing the
principal amount of the Timeshare Mezzanine Note shall be reduced by an
amount equal to the Seller's Estimated Purchase Price Adjustment.
c) Definitive Purchase Price Adjustment.
(i) As promptly as practicable but in no event later than 90
calendar days after the Closing Date, Buyer shall deliver
to Seller, a schedule (the "Preliminary Adjustment
Schedule") setting forth in reasonable detail the
calculation of the actual Purchase Price Adjustments
contemplated by paragraphs (i) through (v) of Section
2.2(a), but shall use the actual values and quantities on
the Closing Date for the calculations to be made at
Closing pursuant to the applicable provisions of
paragraphs (i) through (v) of Section 2.2(a).
(ii) The Preliminary Adjustment Schedule shall be subject to
review by Seller. In reviewing the Preliminary Adjustment
Schedule, Seller shall have the right to communicate with,
and to review the work papers, schedules, memoranda and
other documents prepared or reviewed by Buyer during the
preparation of the Preliminary Adjustment Schedule and
thereafter shall have access to all relevant books and
records, all to the extent reasonably required by Seller
in order to complete its review of the Preliminary
Adjustment Schedule. Within 30 calendar days after its
receipt of the Preliminary Adjustment Schedule, Seller
shall advise Buyer whether, based on such review, it has
any exceptions to the Preliminary Adjustment Schedule.
Unless Seller shall deliver to Buyer within such 30
calendar day period a letter specifying in reasonable
detail any such exceptions, the Preliminary Adjustment
Schedule shall be conclusive and binding on Buyer and the
Seller. If Seller shall submit a letter detailing any
exceptions to the Preliminary Exception Schedule, then
Seller and Buyer shall mutually agree on which exceptions
shall result in adjustments to the Preliminary
Consideration Adjustment. If Buyer and Seller are unable
to agree on the Definitive Purchase Price Adjustment, then
the matter shall be referred to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., who
shall determine the Definitive Purchase Price Adjustment,
which determination shall be final and binding on Buyer
and Seller for all purposes. The "Definitive Purchase
Price Adjustment" shall mean the Preliminary
Consideration Adjustment, with any adjustment required by
this subparagraph (ii).
(iii) (A) If the Definitive Purchase Price Adjustment is greater
than the Estimated Purchase Price Adjustment, then the
principal balance of
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the Timeshare Mezzanine Note shall be decreased by an
amount equal to such difference, together with interest
thereon at a rate of 10% per annum during the period
commencing on the Closing Date and continuing through and
including the date the Definitive Purchase Price
Adjustment is determined.
(iv) (B) If the Definitive Purchase Price Adjustment is less
than the Estimated Purchase Price Adjustment, then the
principal balance of the Timeshare Mezzanine Note shall be
increased by an amount equal to such difference, together
with interest thereon at a rate of 10% per annum during
the period commencing on the Closing Date and continuing
through and including the date the Definitive Purchase
Price Adjustment is determined.
2.3 Closing. Subject to the provisions set forth in the definition of
"Termination Date", the parties hereto agree to use all commercially reasonable
efforts to consummate the transactions contemplated by this Agreement (the
"Closing") on or before August 15, 1997, at the offices of Seller, Av.
Universidad 1200, Col. Xoco, ▇▇▇▇▇ ▇▇▇▇▇▇, D.F. The date on which such Closing
occurs is herein referred to as the "Closing Date". The parties shall conduct a
pre-closing at the offices of Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P., 1900
Pennzoil Place - South Tower, 711 Louisiana, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ on the date
that is five (5) Business Days prior to the Closing Date, or at such other time
and place as the parties may mutually agree.
2.4 Ancillary Agreements to be Delivered At or Prior to the Closing. In
connection with the transactions contemplated hereby, at or prior to the
Closing, the following documents and/or agreements, in form and substance
satisfactory to the parties hereto, shall have been entered into among the
parties thereto, the effectiveness of which shall be conditioned upon the
occurrence of the Closing (collectively, the "Ancillary Agreements").
a) Option Agreement. Buyer and Seller shall have entered into an
Option Agreement setting forth the terms of Seller's grant to Buyer of the
one-year option to acquire and right of first refusal with respect to the
35,000 square meters of beachfront property in Cancun.
b) [Intentionally Omitted.]
c) Tax Allocation Agreement. Seller, Buyer and/or the Company
shall have executed and delivered such documents, agreements and
instruments as may be necessary or desirable to evidence the allocation
between Buyer and Seller of the Company's Taxes for the period prior to the
Closing Date.
d) Other Agreements. Seller, Buyer and the Companies hereby agree
that all arrangements currently in place between Seller and the Company as
leases, credit cards and other matters shall continue on substantially the
same terms and conditions as are currently being observed except as the
parties hereto shall otherwise agree.
2.5 Escrow. Buyer has deposited in escrow with Escrow Agent the sum of US
$3.0 million (the "Escrow Deposit") pursuant to the terms of the Escrow
Agreement.
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ARTICLE III
INSPECTION PERIOD AND PROCESS
3.1 Information Review.
a) Pursuant to its letter dated December 27, 1996, a copy of which
is attached hereto as Exhibit 3.1, Buyer's counsel, ▇▇▇▇▇▇▇▇▇▇▇ y Steta,
requested that certain information described therein (the "Information") be
made available for review. As of the date hereof, Seller has provided
substantially all of such Information to Buyer. Seller hereby undertakes to
provide full, complete and accurate copies of the remaining Information to
Buyer as promptly as practicable.
b) Buyer has submitted to Seller a written report of all issues
discovered by Buyer during the course of its review of such Information.
c) Seller has delivered to Buyer a report of the actions it was
taking to resolve the matters identified on Bancomer's written report.
d) Buyer's knowledge of the items on Schedule 3.1(b) shall not be
deemed to be a waiver of the items listed thereon for the purposes of this
Agreement.
3.2 Physical Inspection.
a) Buyer has delivered to Seller full, complete and accurate copies
of the written reports of the physical and environmental inspection of the
Property and the Company's assets which identify all defects discovered by
Buyer during the course of its inspection ("Defects") and an estimate of
the cost to correct such Defects (such notice being hereinafter referred to
as the "Defect Notice").
b) Seller has advised Buyer of all Defects to which Seller takes
objection ("Seller's Response").
c) With respect to the Defects, Buyer and Seller have agreed that
the amount of Defects for which Seller will be responsible is $333,000, and
that Seller's responsibility therefor has been resolved by adjusting the
target Working Capital as of the Closing Date set forth in Section
2.2(a)(iv) by $333,000.
3.3 No Effect on Other Provisions. Notwithstanding any provision of this
Agreement to the contrary, no failure on the part of Buyer to perform any
specified level of due diligence shall be asserted by Seller, whether or not in
connection with any Proceeding, (i) as a default by Buyer under this Agreement,
(ii) as the failure of a covenant under this Agreement, (iii) as an action
giving rise to a claim by Seller for Damages or a right to specifically enforce
such covenant, or (iv) as an action, in whole or in part, that mitigates or
excuses Seller's obligations and covenants under this Agreement.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
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4.1 Organization and Good Standing. As of the Closing Date, Buyer will be
a corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada. On or before the Closing, Buyer will have delivered
or made available to Seller complete and correct copies of its Articles of
Incorporation and Bylaws, or similar organizational documents, as amended and in
effect on the Original Agreement Date, of Buyer, and of all minutes and consents
relating to shareholder and director approval of the transactions contemplated
by this Agreement.
4.2 Authorization and Validity. As of the Closing Date, Buyer will have
the corporate power and authority to enter into this Agreement and the Ancillary
Agreements to which it is party and, subject to the obtaining of all Requisite
Regulatory Approvals referenced in Section 4.3, to carry out its obligations
hereunder and thereunder. Each of the execution, delivery and performance by
Buyer of this Agreement and the Ancillary Agreements to which it is a party has
been duly authorized by all requisite action. This Agreement and the Ancillary
Agreements to which it is a party constitute the legal, valid and binding
obligations of Buyer, enforceable against Buyer in accordance with their terms,
subject to bankruptcy, reorganization, insolvency, and similar Laws of general
application relating to or affecting the rights of creditors, and subject to
general principles of equity.
4.3 No Governmental Approvals. No Requisite Regulatory Approval is
required on the part of Buyer in connection with the execution and delivery by
Buyer of this Agreement or the Ancillary Agreements to which it is a party or
the consummation by Buyer of the transactions contemplated by this Agreement,
except for (a) those set forth on Schedule 4.3, and (b) any Requisite Regulatory
Approval that, if not obtained, would not reasonably be expected to have a
Material Adverse Effect on Buyer after giving effect to the transactions
contemplated hereby.
4.4 No Conflicts. Except as set forth in Schedule 4.4 to this Agreement,
and assuming the receipt of all Requisite Regulatory Approvals referenced in
Section 4.3, the execution, delivery and performance by Buyer of this Agreement
and the Ancillary Agreements to which it is a party and the consummation of the
transactions contemplated by this Agreement will not conflict with, or result in
any violation of or default or loss of any benefit under, any provision of the
certificate of incorporation or bylaws of Buyer, or any agreement or other
arrangement to which Buyer is a party or of any permit, concession, grant,
franchise, license, judgment, Order or Law applicable to Buyer as of the
Original Agreement Date or the properties of Buyer, other than any conflict,
violation, default or loss that would not reasonably be expected to have
Material Adverse Effect on Buyer after giving effect to the transactions
contemplated hereby.
4.5 Certain Proceedings. There are no Proceedings pending or, to Buyer's
knowledge, threatened against Buyer that challenge, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, the
transactions contemplated by this Agreement.
4.6 No Brokers or Finders. Buyer has not incurred any obligation or
Liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement or the
transactions contemplated hereby.
4.7 Acknowledgment Regarding A Shares. Buyer acknowledges that the
Company has issued A Shares which may only be owned by Mexican Persons.
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4.8 Acknowledgment Regarding Recapitalization of Real Estate Companies.
Buyer hereby acknowledges that Seller exchanged (i) $22,531,000 in debt of Nizuc
in return for the shares owned by Seller listed on Schedule 5.3, (ii)
$53,497,664 in debt of Prodepa in return for the shares of capital stock of
Prodepa listed on Schedule 5.3, and (iii) $43,971,336 in debt of Desarrollos in
return for the shares of Desarrollos capital stock listed on Schedule 5.3.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
5.1 Organization and Good Standing. The Company (and each of its
Subsidiaries) is duly organized and validly existing under the laws of the
jurisdiction of its organization and has all requisite power and authority to
own, lease and operate all properties and assets now owned, leased or operated
by it and to carry on its business as currently conducted. Seller has delivered
or made available to Buyer complete and correct copies of the Articles of
Incorporation and Bylaws, or similar organizational documents, as amended and in
effect on the Original Agreement Date, of the Company and each of its
Subsidiaries and all minutes and consents relating to shareholder and director
action taken from the inception of the Company and each of its Subsidiaries to
the Original Agreement Date. Seller, the Company and each of its Subsidiaries is
duly qualified to conduct business in the jurisdictions set forth on Schedule
5.1, which jurisdictions comprise all such jurisdictions in which the nature of
the business transacted by it requires qualification and where the failure to so
qualify would reasonably be expected to have a Material Adverse Effect on the
Company.
5.2 Capitalization. As of the Original Agreement Date, the authorized
capital stock of the Company is as set forth on Schedule 5.2 hereto. All of such
outstanding shares of stock are validly issued, fully paid and nonassessable. As
of the Original Agreement Date, there are no Commitments, preemptive rights or
agreements of any character to which Seller, the Company or any of its
Subsidiaries is a party or by which any party is bound obligating the Company or
any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of the Company or any of
its Subsidiaries or any securities or obligations convertible into or
exchangeable for such shares, or to grant, extend or enter into any Commitment,
preemptive right or similar agreement.
5.3 Other Subsidiaries. Schedule 5.3 sets forth a list of all of the
Subsidiaries of the Company. Schedule 5.3 indicates for each Subsidiary of the
Company as of the date of this Agreement; (a) the number and class of
authorized, issued and outstanding shares of capital stock of each Subsidiary,
(b) the percentage and type of equity securities of the Subsidiary owned by the
Company (and with respect to the Real Estate Subsidiaries, Seller) and its
Subsidiaries, (c) the identity of any other beneficial or record owner of any
interest in any Subsidiary and the percentage and type of the ownership and (d)
the jurisdiction of incorporation or organization. Except as set forth in
Schedule 5.3, all equity securities listed thereon as being owned by the
Company, Seller or a Subsidiary of the Company are owned by such Person free and
clear of all Liens of any nature whatsoever.
5.4 Authorization and Validity. Seller has all requisite power and
authority to enter into this Agreement and the Ancillary Agreements to which it
is party and, subject to obtaining
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all Requisite Regulatory Approvals referenced in Section 5.5, to carry out
its obligations hereunder and thereunder. Each of the execution, delivery and
performance by Seller of this Agreement and the Ancillary Agreements to which it
is a party has been duly authorized by all requisite action. This Agreement and
the Ancillary Agreements constitute the legal, valid and binding obligations of
Seller, enforceable against Seller in accordance with their terms, subject to
bankruptcy, reorganization, insolvency and similar Laws of general application
relating to or affecting the rights of creditors, and subject to general
principles of equity.
5.5 No Governmental Approvals. No Requisite Regulatory Approval is
required on the part of Seller, the Company or any of its Subsidiaries in
connection with the execution and delivery by Seller of this Agreement or any
Ancillary Agreement to which it is a party or the consummation by Seller of the
transactions contemplated by this Agreement, except for (a) the compliance with
the Requisite Regulatory Approvals set forth on Schedule 5.5 hereto and (b) any
Requisite Regulatory Approval that, if not obtained, would not reasonably be
expected to have a Material Adverse Effect on the Company.
5.6 No Conflicts. Except as set forth in Schedule 5.6 to this Agreement,
and assuming the receipt of all Requisite Regulatory Approvals referenced in
Section 5.5, the execution, delivery and performance by Seller of this Agreement
and the Ancillary Agreements to which it is a party and the consummation of the
transactions contemplated by this Agreement will not conflict with, or result in
any violation of or default or loss of any benefit under, any provision of the
certificate of incorporation or bylaws of Seller, the Company, of the
certificate of incorporation, bylaws or other organization or governing
instrument of any of the Company's Subsidiaries, or any Contract listed on
Schedule 5.20 to which any of them is a party or of any permit, concession,
grant, franchise, license, judgment, Order or Law applicable to Seller, the
Company or any of its Subsidiaries as of the Original Agreement Date or the
Properties, other than any conflict, violation, default or loss that would not
reasonably be expected to have a Material Adverse Effect on the Company.
5.7 Historical Financial Statements. Seller has delivered or has caused
the Company to deliver to Buyer (i) audited consolidated balance sheets of the
Company and its Subsidiaries as at December 31 for each of the years from the
Company's inception through 1996 and the related audited consolidated statements
of income, changes in stockholders' equity and cash flow for each of the fiscal
years then ended, together with the report thereon of ▇▇▇▇▇▇▇ S.C., the Mexican
branch of Ernst & Young, independent certified public accountants, including the
notes thereto (the "Historical Audited Statements") and (ii) an unaudited
consolidated balance sheet (the "Interim Historical Balance Sheet") (which does
not reflect the effects of inflation) of the Company and its Subsidiaries as at
June 30, 1997 (the "Balance Sheet Date") and the related unaudited consolidated
statements of income, changes in stockholders' equity and cash flow for the
three months then ended (the "Interim Historical Financial Statements" and,
together with the Historical Audited Statements, the "Historical Financial
Statements"). The Historical Financial Statements and notes have been prepared
in accordance with GAAP and present fairly and accurately the financial position
and results of operations of the Company as of the dates of such statements and
for the periods covered thereby, subject to normal recurring year-end
adjustments the effect of which will not, individually, or in the aggregate,
have a Material Adverse Effect on the Company. Except as set forth on Schedule
5.7:
(i) there have been no write-ups of inventories or other
assets; and
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(ii) the Company's and each of its Subsidiary's books and
records of accounts have been kept accurately in the Ordinary Course
of Business, the transactions entered therein represent bona fide
transactions, and the revenues, expenses, assets and Liabilities of
the Company and its Subsidiaries have been properly recorded in such
books.
5.8 Projections. Seller has previously delivered to Buyer the Projections.
Except as set forth on Schedule 5.8, Seller is not aware of any facts or
circumstances which (i) would render inaccurate the Projections, or (ii) are
inconsistent with the assumptions used in preparing the Projections. Buyer
acknowledges that actual results may vary materially from the Projections.
5.9 Absence of Undisclosed Liabilities. Except as contemplated by this
Agreement or as set forth on Schedule 5.9, neither the Company nor any of its
Subsidiaries is subject to any Liabilities other than those set forth or
adequately reserved against in the Interim Historical Financial Statements or
those incurred since the Balance Sheet Date in the Ordinary Course of Business.
5.10 Title to Properties; Liens. Schedule 5.10 contains a complete and
accurate list of all real property, leaseholds, or other interests therein owned
by the Company or any of its Subsidiaries. Seller has delivered or made
available to Buyer copies of the deeds and other instruments (as recorded) by
which the Company or its Subsidiaries, as applicable, acquired such real
property and interests, and copies of all title insurance policies, if any,
opinions, abstracts, and surveys in the possession of Seller, the Company or its
Subsidiaries and relating to such property or interests. The Company and its
Subsidiaries own (with good and marketable title in the case of all real estate
associated with the Hotel Business, the Timeshare Business and the Other
Business, respectively, subject only to the matters permitted by the following
sentence) all the properties and assets (whether real, personal, or mixed and
whether tangible or intangible) that they purport to own, or reflected as owned
in the books and records of the Company and its Subsidiaries, including all of
the properties and assets reflected in the Interim Historical Balance Sheet
(except for assets held under capitalized leases disclosed on Schedule 5.10 and
personal property sold since the Balance Sheet Date, as the case may be, in the
Ordinary Course of Business), and all of the properties and assets purchased or
otherwise acquired by the Company and its Subsidiaries since the Balance Sheet
Date (except for personal property consistent with past practice), which
subsequently purchased or acquired properties and assets (other than inventory
and short-term investments) are listed on Schedule 5.10. Except as set forth on
Schedule 5.10, all properties and assets reflected in the Interim Historical
Balance Sheet are free and clear of all Liens and are not, in the case of real
property, subject to any rights of way, building use restrictions, exceptions,
variances, reservations, or limitations of any nature except, with respect to
all such properties and assets, (a) mortgages or security interests shown on the
Interim Historical Balance Sheet as securing specified liabilities or
obligations, with respect to which no default (/or event that, with notice or
lapse of time or both, would constitute a default) exists, (b) mortgages or
security interests incurred in connection with the purchase of property or
assets after March 31, 1997 (such mortgages and security interests being limited
to the property or assets so acquired), with respect to which no default (or
event that, with notice or lapse of time or both, would constitute a default)
exists, (c) Liens for current taxes not yet due, and (d) with respect to real
property, (i) minor imperfections in title, if any, none of which is substantial
in amount, materially detracts from the value or impairs the use of the property
subject thereto, or impairs the operations of the Company or any of its
Subsidiaries, and (ii) zoning laws and other land use restrictions that do not
impair the present or anticipated use of the property subject
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thereto. All buildings, facilities, and structures owned by the Company and its
Subsidiaries lie wholly within the boundaries of the real property owned by the
Company and its Subsidiaries and do not encroach upon the property of, or
otherwise conflict with the property rights of, any other Person.
5.11 Conditions and Sufficiency of Assets. The buildings, plants,
structures and equipment of the Company and its Subsidiaries are structurally
sound, are in good operating condition and repair, and are adequate for the uses
to which they are being put, and none of such buildings, plants, structures, or
equipment is in need of maintenance or repairs except for ordinary, routine
maintenance and repairs that are not material in nature or cost, and have
available to them sufficient utilities to conduct the Business as currently
conducted. The building, plants, structures and equipment of the Company and its
Subsidiaries are sufficient for the continued conduct of the Hotel Business,
Timeshare Business and Other Business after the Closing in substantially the
same manner as conducted prior to the Closing.
5.12 Accounts Receivable. All Accounts Receivable and the Timeshare
Receivables represent or will represent valid obligations arising from sales
actually made or services actually performed in the Ordinary Course of Business.
Unless paid prior to the Closing Date, the Accounts Receivable are or will be as
of the Closing Date current and collectable net of the respective reserves shown
on the Interim Historical Balance Sheet or on the accounting records of the
Company and its Subsidiaries as of the Closing Date (which reserves are adequate
and calculated consistent with past practice and, in the case of the reserve as
of the Closing Date, will not represent a greater percentage of the Accounts
Receivable as of the Closing Date than the reserve reflected in the Interim
Historical Balance Sheet represented of the Accounts Receivable reflected
therein and will not represent a material adverse change in the composition of
such Accounts Receivable in terms of aging). Subject to such reserves, each of
the Accounts Receivable, other than the Timeshare Receivables, either has been
or will be collected in full, without any set-off, within ninety days after the
day on which it first became due and payable. There is no contest, claim, or
right of set-off, other than returns in the Ordinary Course of Business, under
any Contract with any obligor of an Accounts Receivable or Timeshare Receivable
relating to the amount or validity of such Accounts Receivable or Timeshare
Receivable. Schedule 5.12 contains a complete and accurate list of all Accounts
Receivable and Timeshare Receivables as of the date of the Interim Historical
Balance Sheet, which list sets forth the aging of such Accounts Receivable and
Timeshare Receivables. The number of Timeshare Intervals as of July 1, 1996 was
that number set forth on Schedule 5.12 under the heading "Timeshare Intervals."
5.13 Inventory. Except as set forth on Schedule 5.13, all inventory of the
Company and its Subsidiaries, whether or not reflected in the Interim Historical
Balance Sheet, consists of a quantity usable and salable in the Ordinary Course
of Business, except for obsolete items and items of below-standard quality, all
of which have been written off or written down to net realizable value in the
Interim Historical Balance Sheet or on the accounting records of the Company and
its Subsidiaries as of the Closing Date, as the case may be. All inventories not
written off have been priced at the lower of cost or market value. The
quantities of each item of inventory (whether raw materials, work-in-process, or
finished goods) are not excessive, but are reasonable in the present
circumstances of the Company and its Subsidiaries.
5.14 Insurance. Schedule 5.14 sets forth a list of all policies of
insurance to which the Company or any of its
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Subsidiaries is a party or under which the Company or any of its Subsidiaries,
or any director or officer of the Company or any of its Subsidiaries, is or has
been covered at any time from inception of operations. Such insurance is in an
amount and with a scope of coverage that is consistent with industry standards.
Complete copies of all such policies have been delivered to Buyer. All such
policies are in full force and effect. None of Seller, the Company or any of its
Subsidiaries has received notice from any insurance carrier of the intention of
such carrier to discontinue any insurance coverage afforded to the Company.
5.15 Certain Proceedings. Except as set forth in Schedule 5.15, there is
no pending Proceeding (i) that has been commenced by or against Seller, the
Company or any of its Subsidiaries or that otherwise relates to or may affect
the business of, or any of the assets owned or used by, the Company or any of
its Subsidiaries, or (ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with the
transactions contemplated by this Agreement. To the knowledge of Seller, (1) no
such Proceeding has been threatened, and (2) no event has occurred or
circumstance exists that may give rise to or serve as a basis for the
commencement of any such Proceeding. Seller has delivered to Buyer copies of all
pleadings, correspondence, and other documents relating to each Proceeding
listed on Schedule 5.15. The Proceedings listed on Schedule 5.15 would not,
either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company.
5.16 Compliance with Laws. Except as set forth in Schedule 5.16, and
with respect to the matters addressed by Section 5.17 of this Agreement, the
businesses of the Company and its Subsidiaries have been conducted in compliance
with all Laws (including, without limitation, those relating to licenses and
permits for the ownership, occupancy and operation of their properties), except
for violations that individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect on the Company. Except as disclosed
in Schedule 5.16, and except for any investigation or review that would not
reasonably be expected to have a Material Adverse Effect on the Company, as of
the Original Agreement Date no investigation or review by any Governmental Body
(including without limitation any audit or similar review by any federal, state
or local taxing authority) with respect to the Company or any of its
Subsidiaries or any of their respective properties is pending or, to the
knowledge of Seller, threatened.
5.17 Environmental Matters. Specifically, without limiting the
representations contained in Section 5.16, and except as set forth in Schedule
5.17 to this Agreement, as of the Original Agreement Date:
a) The Company and its Subsidiaries have complied, and are in
compliance, with all Applicable Environmental and Safety Laws, except where
the failure to comply would not reasonably be expected to have a Material
Adverse Effect on the Company. There is no Proceeding now pending or, to
Seller's knowledge, threatened, against or affecting the Company or any of
its Subsidiaries, the resolution of which would reasonably be expected to
have a Material Adverse Effect on the Company (i) for noncompliance by the
Company or any of its Subsidiaries with any Applicable Environmental and
Safety Law or (ii) relating to the Release by the Company or any of its
Subsidiaries (or, to Seller's knowledge, any predecessor to any of the
businesses or assets of the Company or any of its Subsidiaries with respect
to those businesses or assets) of any Hazardous Material whether or not
occurring at or on or being released from a site owned, leased or operated
by the Company or any of its Subsidiaries.
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b) Neither the Company nor any of its Subsidiaries has any
Liability, contingent or otherwise, arising out of or resulting from the
Release, whether on or off its own premises or through other Persons, of
any Hazardous Material, which would reasonably be expected to have a
Material Adverse Effect on the Company.
c) There are no unpaid citations, fines or penalties previously
assessed against the Company or any of its Subsidiaries under any
Applicable Environmental and Safety Law, except for any unpaid citation,
fine or penalty that would not reasonably be expected to have a Material
Adverse Effect on the Company, nor has the Company or any of its
Subsidiaries received any notices or any other communications from any
Governmental Body with respect to any violations or alleged violations of,
or potential Liability under, any Applicable Environmental and Safety Law
that would reasonably be expected to have a Material Adverse Effect on the
Company.
d) The Company and its Subsidiaries have obtained all permits
required by any Applicable Environmental and Safety Law and all such
permits are in good standing and in full force and effect and the Company
and its Subsidiaries are in compliance with all terms and conditions of
such permits, except where the failure to obtain any such permit or to
comply therewith would not reasonably be expected to have a Material
Adverse Effect on the Company.
5.18 Taxes. Except as set forth on Schedule 5.18,
a) To the knowledge of Seller, all Tax Returns required to be filed
on or before the Closing Date by the Company and its Subsidiaries have been
or will be filed within the time prescribed by Law (including extensions of
time approved by the appropriate taxing authority).
b) To the knowledge of Seller, the Tax Returns so filed are
complete and accurate representations of the Tax Liabilities of the Company
and its Subsidiaries in all material respects and such Tax Returns
accurately set forth or will accurately set forth in all material respects
all items to the extent required to be reflected or included in such
returns.
c) The Company has paid or has made adequate provision in the
Interim Historical Balance Sheet for the payment of all Taxes shown due on
such Tax Returns that have been filed or will be filed for periods ending
on or before December 31, 1996.
d) There is no investigation, audit, or claim pending with respect
to the Company and its Subsidiaries regarding any Tax.
e) To the knowledge of Seller, the Company and its Subsidiaries
have withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, creditor,
independent contractor, or other Person.
f) None of the Company or any of its Subsidiaries has waived any
statute of limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency.
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g) The Seller has made available to Buyer correct and complete
copies of all Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by the Company and its
Subsidiaries for all taxable periods beginning on or after January 1, 1990
and ending before January 1, 1997.
5.19 Intellectual Property. Schedule 5.19 contains a list of all
Intellectual Property owned by, issued to, licensed by or used by the Company
and its Subsidiaries. The Intellectual Property listed on Schedule 5.19
comprises all Intellectual Property necessary to conduct the business currently
conducted by the Company and its Subsidiaries. The Company and its Subsidiaries
own or have valid, binding and enforceable rights to use of all of such
Intellectual Property, without any known conflict with the rights of others.
Neither the Company nor any of its Subsidiaries has granted any outstanding
licenses or other rights, and has no obligations to grant licenses or other
rights, under any of such Intellectual Property. The Company has not received
any notice of infringement of or conflict with (and knows of no such
infringement of or conflict with) asserted rights of others with respect to any
such Intellectual Property which, individually or in the aggregate, is
reasonably likely to result in any Material Adverse Effect upon the Company;
and, to the knowledge of Seller, neither the Company nor any of its
Subsidiaries, in the conduct of its business as currently conducted, infringes
or conflicts with any right of any third party, where such infringement or
conflict is reasonably likely to result in any Material Adverse Effect upon the
Company.
5.20 Contracts. Schedule 5.20 sets forth all Contracts to which the
Company or any of its Subsidiaries is a party or to which any of their business,
or Properties is subject and which provide for monthly payments exceeding $2,000
and which are not terminable by the Company or its Subsidiaries by written
notice of 30 days or less without penalty or additional cost. All of such
Contracts are valid, binding and in full force and effect, have not been amended
or supplemented in any manner except as disclosed on Schedule 5.20 and are
enforceable by the Company in accordance with their respective terms. Except as
disclosed on Schedule 5.20, there are no defaults by the Company or any of its
Subsidiaries under any Contracts to which the Company or any of its Subsidiaries
is a party or to which any of their business or Properties is subject and, to
Seller's knowledge, there are no defaults thereunder by any other party thereto,
and no event has occurred that with the lapse of time or action or inaction by
any party thereto would result in a violation thereof or a default thereunder.
None of the rights thereunder will be impaired by the consummation of the
transactions contemplated by this Agreement, and all such rights will inure to
and be enforceable by Buyer and the Company after Closing without the consent,
permit of, or filing with, any other Person. When notice of termination is given
at Closing as contemplated by Section 8.2(g), the Management Agreements will be
terminated effective as of the 60th day after Closing without penalty or
additional cost.
5.21 Absence of Changes or Events. Except as set forth on Schedule 5.21,
since the Balance Sheet Date, the Company and its Subsidiaries have operated
their businesses in the Ordinary Course of Business and have not:
a) incurred any Liability, except for Liabilities incurred in the
Ordinary Course of Business which do not exceed US $150,000 individually or
US $300,000 in the aggregate;
b) created or permitted to be created any Lien on any of their
assets;
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c) sold, transferred, leased to or otherwise disposed of any of
their assets, except for inventory sold in the Ordinary Course of Business
which do not exceed US $150,000 individually or US $300,000 in the
aggregate, or canceled or compromised any material debt or claim, or waived
or released any right of material value except in the Ordinary Course of
Business which do not exceed US $150,000 individually or US $300,000 in the
aggregate;
d) suffered any material damage, destruction or casualty loss
(whether or not covered by insurance);
e) encountered any labor union organizing activity, had any actual
or threatened Employee strikes, work stoppages, slowdowns or lockouts, or
had any material adverse change in their relations with any of the
Employees, agents, customers or suppliers;
f) instituted, settled or agreed to settle any Proceeding before
any Governmental Body;
g) except as contemplated by Section 4.8, entered into any
transaction or Contract other than in the Ordinary Course of Business and
except for this Agreement and the Ancillary Agreements;
h) amended, modified or terminated any Contract except in the
Ordinary Course of Business;
i) with respect to any Subsidiary, purchased or redeemed any
shares of its capital stock or any Commitment with respect to its capital
stock;
j) except as contemplated by Section 4.8, with respect to any
Subsidiary, issued, sold or delivered or agreed to issue, sell or deliver
any additional shares of its capital stock, any Commitment with respect to
any such capital stock, any securities convertible into or exchangeable for
such capital stock or any bonds or other securities;
k) made any material increase in the compensation payable or to
become payable, or any material increase in benefits or benefit plan costs,
or any material increase in bonus, insurance, pension, compensation or
other benefit plans, in each case, with respect to its Employees;
l) entered into any agreement or made any commitment to take any
of the types of action described in subparagraphs (a) through (k) above; or
m) suffered any event or experience which has had, or with the
passage of time could reasonably be expected to have, a Material Adverse
Effect on the Company.
5.22 Licenses, Permits and Tariffs. The Company and its Subsidiaries
possess all the licenses and permits listed in Schedule 5.22, copies of all of
which have been made available to Buyer. Such licenses and permits constitute
all the licenses and permits necessary under Law for the Company and its
Subsidiaries to conduct their business as now conducted and the validity or
effectiveness of such permits will not be effected by the transactions
contemplated by this Agreement. Each of such licenses and permits and the rights
of the Company and its Subsidiaries
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with respect thereto are valid and subsisting and in full force and effect. The
Company and its Subsidiaries are in substantial compliance with the terms of
such licenses and permits. No such license or permit has been, or, to Seller's
knowledge, is threatened to be, revoked, canceled, suspended or modified.
5.23 Absence of Certain Business Practices; Internal Accounting Controls.
a) To Seller's knowledge, the Company and its Subsidiaries, as
well as their directors, officers, employees and agents and all other
Persons acting on their behalf, have complied with lawful and ethical
business practices, and have not undertaken any action which (i) would have
a Material Adverse Effect on the Company, or (ii) would have a Material
Adverse Effect on the covenants and obligations contained herein.
b) The Company maintains a system of internal accounting controls
sufficient to provide that: (i) transactions are executed in accordance
with management's general or specific authorization; and (ii) transactions
are recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain accountability for assets.
5.24 Customers and Suppliers. Schedule 5.24 sets forth a summary of the
Company's and each Subsidiary's relationship with its five largest suppliers
(based on the volume of purchases) for each of the years ended December 31, 1994
and 1995 and for the ten months ended October 31, 1996. Since October 31, 1996,
there has not been any change in the business relationship of the Company or any
of its Subsidiaries with any customer or supplier identified in Schedule 5.24
that would have a Material Adverse Effect on the Company. Except as set forth in
Schedule 5.24, the Company has not received notice of any intention of the
Company's customers or suppliers involving payments and obligations in the
aggregate of $20,000 per month to cease doing business with the Company or any
of its Subsidiaries.
5.25 Bank Accounts. Schedule 5.25 contains a true and correct list of
the names of each bank, savings and loan or other financial institution in which
the Company or any of its Subsidiaries has an account, including cash
contribution accounts, money market accounts, safe deposit boxes, certificates
of deposits and lock box arrangements, and the names of all Persons authorized
to draw thereon or to have access thereto.
5.26 No Broker. Seller has not incurred any obligation or Liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement or the transactions
contemplated hereby.
5.27 Employees.
a) Schedule 5.27 contains, for each of the specified categories,
a current, complete and accurate itemized list of information for each
category of Employee or director of the Company and its Subsidiaries,
including Employees on leave of absence or layoff status; compensation paid
or payable, vacation days per year, eligibility to participate under any
benefit plans, pension, retirement, profit-sharing, thrift-savings,
deferred compensation, stock bonus, stock option, cash bonus, employee
stock ownerships (including investment credit or payroll stock ownership),
severance pay, insurance, medical, welfare, or vacation plan, other
employee pension benefit plan or
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employee welfare benefit plan, or any other employee benefit plan or any
director plan maintained by the Company or its Subsidiaries.
b) No Employee or director of the Company or any of its
Subsidiaries is a party to, or is otherwise bound by, any agreement or
arrangement, including any confidentiality, noncompetition, or proprietary
rights agreement, between such employee or director and any other Person
("Proprietary Rights Agreement") that in any way adversely affects or will
affect (i) the performance of his duties as an employee or director, or
(ii) the ability of the Company or any of its Subsidiaries to conduct its
business. To Seller's knowledge, no director, officer or other key
employee of the Company or any of its Subsidiaries intends to terminate
his employment with the Company or any of its Subsidiaries.
c) Schedule 5.27 also contains a complete and accurate list of the
following information for each retired Employee or director of the Company
and its Subsidiaries or their dependents, receiving benefits or scheduled
to receive benefits in the future: name, pension benefit, pension option
election, retiree medical insurance coverage, retiree life insurance
coverage, and other benefits.
5.28 Labor Relations; Compliance. To Seller's knowledge, all applicable
labor relations and/or obligations within the scope of this Agreement, and in
particular, labor relations dealing with the Company and its Subsidiaries, shall
be construed and subject to applicable Mexican Labor Law. Except as set forth on
Schedule 5.28, since December 31, 1994 to the best of Seller's knowledge,
neither the Company nor any of its Subsidiaries has been or currently is a party
to any collective bargaining or other labor contract. To the best of Seller's
knowledge, since December 31, 1994, there has not been, there is not presently
pending or existing, and to Seller's knowledge there is not threatened, (a) any
strike, slowdown, picketing, work stoppage, or Employee grievance process; (b)
any Proceeding against or affecting the Company or its Subsidiaries relating to
the alleged violation of any Law pertaining to labor relations or employment
matters, organizational activity, or other labor or employment dispute against
or affecting any of the Company or its Subsidiaries or their premises; or (c)
any application for certification of a collective bargaining agent, which may
have a material adverse effect on this Agreement. No event has occurred or
circumstance exists that could provide the basis for any work stoppage or other
labor dispute. There is no lockout of any Employees by the Company or its
Subsidiaries, and no such action is contemplated by the Company or its
Subsidiaries. To Seller's best knowledge, each of the Company and its
Subsidiaries have complied in all material respects with all applicable Mexican
Laws relating to employment.
5.29 Employee Benefit Plans.
a) Schedule 5.29 includes a correct and complete list of all
pension and welfare plans and all other employee benefit agreements or
arrangements for each category of Employee and director, including but not
limited to deferred compensation plans, incentive plans, bonus plans or
arrangements, savings plans, stock option plans, stock purchase plans,
golden parachute agreements, severance pay plans, dependent care plans,
cafeteria plans, employee assistance programs, scholarship programs,
employment contracts and other similar plans, agreements and arrangements
that are currently in effect or were maintained within three years of the
Original Agreement Date, or were approved before the Original Agreement
Date, but were not yet effective, for the benefit of
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directors, officers, Employees or former Employees (or their beneficiaries)
of the Company or any of its Subsidiaries. Seller has delivered to Buyer,
as to each plan, agreement or arrangement, as applicable, a true and
correct copy of (i) the plan, agreement or arrangement, (ii) the trust,
group annuity contract or other document that provides the funding for the
plan, agreement or arrangement, if any, (iii) the most recent actuarial
report or valuation statement, if any, or (iv) the most current summary
plan description, booklet, or other descriptive written materials, if any,
and each summary of material modifications prepared after the last summary
plan description.
b) Every Employee welfare benefit plan and every Employee pension
benefit plan on Schedule 5.29 (i) is in substantial compliance with all
requirements of applicable labor Laws; (ii) has no issue pending (other
than the payment of benefits in the normal course) nor any issue resolved
adversely to the Company or any of its Subsidiaries that may subject the
Company or any of its Subsidiaries in the future to the payment of a
penalty, interest or Tax which would reasonably be expected to have a
Material Adverse Effect on the Company and (iii) can be unilaterally
terminated or amended on no more than 90 days notice, except as set forth
in Schedule 5.29. All voluntary Employee benefit associations maintained or
contributed to by the Company or any of its Subsidiaries have been
submitted to and approved by the Mexican Ministry of Finance and Public
Credit ("SHCP") as exempt from federal income tax. Except as set forth in
Schedule 5.29, neither the Company nor any of its Subsidiaries provides
Employee post-retirement medical or health coverage or contributes to or
maintains any Employee welfare benefit plan that provides for health
benefit coverage following termination of employment. All premiums (and any
interest, charges and penalties for late payment of premiums) due with
respect to each employee pension benefit plan listed on Schedule 5.29 for
which premiums are required have been paid when due. No Employee pension
benefit plan, whether or not listed on Schedule 5.29, has been, or is
reasonably expected to be, terminated under circumstances that could result
in liability by the Company or any of its Subsidiaries. Either the
applicable plan document or Schedule 5.29 contains a complete and accurate
statement of all actuarial assumptions applied to determine the present
value of accrued benefits under all Employee benefit plans subject to
actuarial assumptions. All amounts owed under the deferred compensation
arrangements described in Schedule 5.29 are included as liabilities in the
Interim Historical Financial Statements.
ARTICLE VI.
PRE-CLOSING COVENANTS
6.1 Access to Information. From the Original Agreement Date through the
earlier of the Closing Date or the Termination Date, (i) Seller shall, and shall
cause the Company and each of its Subsidiaries to, afford to Buyer and its
accountants, counsel and other representatives, reasonable access to their
properties, books, contracts, commitments, Tax returns, records and operating
data, (ii) Seller shall provide from time to time such office space within its
executive offices as Buyer may reasonably request for use by their
representatives or agents in reviewing the materials referred to in clause (i)
of this Section 6.1, (iii) Seller shall, and shall cause the Company and each of
its Subsidiaries to, furnish to Buyer as promptly as practicable (w) copies of
any notice terminating, canceling or threatening to terminate or cancel any of
its insurance policies, (x) all financial and operating data and other
information concerning its business, properties and personnel generated or
developed in the Ordinary Course of Business as Buyer
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may reasonably request, (y) copies of any notice of default, or occurrence of
any event, which with the passage of time, giving of notice, or both, could
result in a default under a material agreement described on Schedule 5.20 and
(z) copies of proposed settlements of any Proceedings disclosed on Schedule 5.15
hereto, (iv) Seller shall, and shall cause the Company and each of its
Subsidiaries to, afford to Buyer and its accountants, counsel and other
representatives reasonable access during normal business hours to their officers
and other appropriate employees to discuss the condition, operation, business
and prospects of the Company and its Subsidiaries as a whole, and (v) Seller
shall, and shall cause the Company and each of its Subsidiaries to, cooperate
with and assist Buyer in preparing the Timeshare Business pro forma financial
statements and their reconciliation to US generally accepted accounting
principles (it is the understanding of the parties that Buyer is solely
responsible for preparing such pro forma financial statements).
6.2 Taking of Necessary Action. Subject to the terms and conditions of
this Agreement and to applicable Law, each of Buyer and Seller shall use all
reasonable efforts promptly to take or cause to be taken all action and promptly
to do or cause to be done all things necessary, proper or advisable under
applicable Laws and regulations to consummate and make effective the
transactions contemplated by this Agreement. Without limiting the foregoing,
each of Buyer and Seller shall, and Seller shall cause the Company and each of
its Subsidiaries to, use all reasonable efforts to obtain and make all consents,
approvals, assurances or filings of or with third parties and Governmental
Bodies necessary for the consummation of the transactions contemplated hereby.
Each party shall cooperate with the others in good faith to help the other
satisfy its obligations under this Section 6.2. Seller shall use all reasonable
efforts to provide all documents, instruments, certificates and other
information necessary or desirable for Buyer to obtain at Closing the Title
Policy (as defined herein). If at any time after the Closing Date any further
action is necessary or desirable to carry out the purposes of this Agreement,
including without limitation, to vest Buyer and its Subsidiaries with full title
to all properties, assets, rights, approvals, immunities and franchises of the
Company and its Subsidiaries, the proper officers or directors of each party to
this Agreement shall take that necessary action.
6.3 Expenses. Whether or not the transactions contemplated by this
Agreement are consummated, (i) Seller shall pay all costs and expenses that it
incurs in connection with this Agreement and the transactions contemplated
hereby, including without limitation the fees and expenses of its counsel,
accountants, and other advisors and (ii) Buyer shall pay all costs and expenses
that it incurs in connection with this Agreement and the transactions
contemplated hereby, including without limitation the fees and expenses of its
counsel, accountants, and other advisors. Notwithstanding the foregoing, Buyer
and Seller agree that any and all transfer taxes, appraisal fees, recording
fees, notarial fees and other costs and expenses arising from or relating to the
effectuation of the Condominium Regime (as hereinafter defined) shall be the
sole responsibility of Buyer. For purposes of this Section 6.3, the term
"effectuation of the Condominium Regime" shall mean (i) the constitution of a
condominium regime over the real estate properties of the Real Estate Companies
pursuant to the applicable provisions of the laws of Mexico, in order to legally
separate the Hotel Property, the Timeshare Property and the Other Property and
to create common areas and (ii) the transfer of the Timeshare Property to the PV
Timeshare Sub, the Cancun Timeshare Sub and the CSL Timeshare Sub, together with
the pro-rata share in common areas corresponding to the Timeshare Property as a
directly owned condominium unit.
6.4 Notice of Certain Changes. Each party hereto shall give prompt written
notice to the other party hereto of the occurrence, or non-occurrence, of any
event which would be likely
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to cause any representation or warranty herein to be untrue or inaccurate, or
any covenant, condition or agreement herein not to be complied with or
satisfied.
6.5 Confidentiality; Press Releases. Except as may be required by law or
as otherwise permitted or expressly contemplated herein, no party hereto or
their respective Affiliates, employees, agents and representatives shall
disclose to any third party this Agreement, the subject matter or terms hereof
or any confidential information or other proprietary knowledge concerning the
business or affairs of the other party which it may have acquired from such
party in the course of pursuing the transactions contemplated by this Agreement
without the prior consent of the other party hereto; provided, that any
information that is otherwise publicly available, without breach of this
provision, or has been obtained from a third party, shall not be deemed
confidential information. Seller and Buyer shall consult with each other as to
the timing, form and substance of any press release or public disclosure of
matters related to this Agreement or any of the transactions contemplated by
this Agreement; provided, however, that nothing in this Section 6.5 shall be
deemed to prohibit any party to this Agreement from making any disclosure that
is required to fulfill that party's disclosure obligations imposed by Law or
stock exchange requirements.
6.6 [Intentionally Omitted].
6.7 Title Insurance, Surveys, etc.
a) Seller shall assist Buyer in obtaining, as promptly as
practicable after the date hereof, commitments (the "Commitments") issued
by a title insurance company or companies acceptable to Buyer (the "Title
Company"), accompanied by one legible copy of all recorded or registered
documents relating to or affecting the Property, for the issuance of an
owners and mortgagee's policy of title insurance in such form and substance
as is acceptable to Buyer (the "Title Policy"); including that the Title
Policy shall (i) be in the amount determined by Buyer; (ii) insure that on
the Closing Date the respective condominium interests (A) to the Hotel
Property in Puerto Vallarta to be in the name of Prodepa, (B) to the Hotel
Property in Cancun to be in the name of Nizuc, (C) to the Hotel Property in
Cabo San ▇▇▇▇▇ to be in the name of Desarrollos, (D) to the Timeshare
Property in Puerto Vallarta to be in the name of PV Timeshare Sub, (E) to
the Timeshare Property in Cancun to be in the name of Cancun Timeshare Sub
and (F) to the Timeshare Property in Cabo San ▇▇▇▇▇ to be in the name of
CSL Timeshare Sub; (iii) state that at Closing the Hotel Property is free
and clear of all Liens except for a security interest granted to secure the
debt contemplated by the Hotel Debt Commitment (to the extent the
indebtedness contemplated to be evidenced by such note is required by
Buyer), and such other Liens as may be agreed by Buyer and Corporate
Banking (the "Permitted Hotel Property Lien") and (iv) state that at
Closing the Timeshare Property is free and clear of all Liens except for
(A) a security interest granted to secure the debt contemplated by the
Timeshare Debt Commitment, (B) a right to use the Timeshare Property by the
holders of the A Beneficiary rights previously issued under the Trusts and
(C) a second mortgage granted to secure the debt contemplated by the
Timeshare Debt Commitment, and such other Liens as may be agreed by Buyer
and Corporate Banking (the "Permitted Timeshare Property Liens"). In
connection with the above, Buyer will provide to the Title Company copies
of any and all relevant documents in its possession which the Title Company
requests. In addition, the Title Company will be required to use reasonable
and customary commercial standards in conducting its review and delivering
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the Title Policy contemplated hereby. Seller shall take, and shall cause
the Company to take, any and all such actions as are necessary for the
provisions of subparagraphs (ii) and (iii) above to be true as of the
Closing. The Commitments and the Title Policy shall contain such
endorsements as may be reasonably requested by Buyer. The Title Commitments
shall be later dated as of the Closing.
b) As promptly as practicable after the date hereof, Seller shall
deliver to Buyer and the Title Company an as-built survey of each of the
Properties (the "Surveys") prepared by a licensed and registered land
surveyor or engineer, dated on or after the date hereof, in such form and
substance and certified as required by the Title Company in order to enable
the Title Company to eliminate any exception to the Title Policy coverage
for matters that would be disclosed by an accurate survey. Any Survey may
be a recertification of a prior survey, provided that it meets the
foregoing criteria.
c) Seller shall pay one-third of the cost of the Title Commitments,
the Title Policy and the Surveys; provided, however, that in no event shall
Seller's responsibility therefor exceed US $200,000.
6.8 Consummation of Debt Commitments. Seller shall cause Corporate
Banking to make the loans contemplated by the Debt Commitments.
ARTICLE VII.
CONDUCT OF BUSINESS BY THE
COMPANY AND ITS SUBSIDIARIES
During the period from the Original Agreement Date through the earlier to
occur of the Closing Date or the Termination Date, Seller agrees (except to the
extent Buyer shall otherwise consent in writing, which consent shall not be
unreasonably withheld) that:
7.1 Ordinary Course. The Company shall, and shall cause each of its
Subsidiaries to, (a) carry on its businesses in the usual, regular and ordinary
course and consistent with past practices, (b) use its reasonable best efforts
to preserve its business organization, maintain its rights and franchises, and
preserve its relationships with customers, suppliers and others having business
dealings with it, and (c) use its reasonable best efforts, consistent with the
terms of this Agreement, to keep available the services of sufficient officers
and employees to carry on the business of the Company and its Subsidiaries as
set forth in Article VII.
7.2 Dividends and Issuance and Purchase of Securities; Loans. Except as
set forth below and in Section 4.8, neither the Company nor any of its
Subsidiaries shall (a) declare or pay any dividend on or make any other
distribution in respect of any of its capital stock, (b) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of, its
capital stock, (c) repurchase, redeem or otherwise acquire any shares of its
capital stock, (d) issue, deliver, sell or authorize the issuance, delivery or
sale of any stock appreciation rights or of any shares of its capital stock of
any class or any Commitments therefor, or (e) enter into any agreement or
understanding with respect to the matters referred to in this Section 7.2. The
foregoing shall not preclude (i) the recent reduction in capital of US $54.3
million which is fully reflected in the Interim Historical Financial Statements,
or (ii) the sale of shares of Club ▇▇▇▇▇▇ representing sales of vacation
ownership intervals in the Ordinary Course of Business. Except as contemplated
by Section 4.8,
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neither the Company nor any of its Subsidiaries shall sell or otherwise
dispose of any securities of any Subsidiary, or enter into any agreement or
understanding with respect thereto, except to the extent otherwise permitted
hereunder. Neither the Company nor any of its Subsidiaries will make any loan to
or accept any loan from any of their respective directors, shareholders or
employees.
7.3 Government Documents; Inconsistent Agreements. None of Seller, the
Company nor any of its Subsidiaries shall (a) amend its certificate of
incorporation or bylaws or (b) enter into any agreement or incur any obligation,
the terms of which would be violated by the consummation of the transactions
contemplated by this Agreement.
7.4 No Other Bids. During the term of this Agreement, none of Seller, the
Company nor any of its Subsidiaries shall, nor shall it authorize or knowingly
permit any officer, director or employee of, or any investment banker, attorney,
accountant or other representative retained by it to, solicit, initiate or
encourage the submission or communication of any Third Party Offer, or
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person with respect to a Third Party
Offer. Seller shall promptly notify Buyer in writing upon receipt of a Third
Party Offer, such notice to include the identity of the Person having made such
Third Party Offer. Buyer shall promptly notify Seller in writing upon its
receipt of a Third Party Offer, such notice to include the identity of the
Person having made such Third Party Offer.
7.5 Acquisitions. Except for the purchase of inventory in the Ordinary
Course of Business, neither the Company nor any of its Subsidiaries shall
acquire or agree to acquire any assets in any individual transaction where the
purchase price exceeds US$250,000 or in transactions where the aggregate
purchase price exceeds US$1.0 million.
7.6 Indebtedness. Neither the Company nor any of its Subsidiaries shall,
(a) except pursuant to its existing credit facilities or otherwise in the
Ordinary Course of Business and specifically including for the purposes
permitted under this Agreement, incur any indebtedness for borrowed money or
guarantee any indebtedness, execute any indemnity, or issue or sell any debt
securities of the Company or any of its Subsidiaries or guarantee any debt
securities, or enter into or modify any Contract with respect to the foregoing,
or (b) except with respect to the debt described on Schedule 7.6 and as
contemplated by Section 4.8, make any optional payment of principal of any term
debt or otherwise permanently reduce its revolving credit facility.
7.7 Employee Contracts and Benefit Plans. During the term of this
Agreement, neither the Company nor any of its Subsidiaries shall (i) adopt or
amend (other than amendments that reduce the amounts payable by the Company or
any of its Subsidiaries or amendments required by Law to preserve the qualified
status of a plan or a contract) any collective bargaining agreement or employee
benefit plan, (ii) enter into any employment or severance arrangement with any
Person (including, without limitation, contracts with management of the Company
or any of its Subsidiaries that might require that payments be made upon the
consummation of the transactions contemplated hereby), except for severance
arrangements entered into in the ordinary Course of Business which do not
obligate the Company to pay more than US$150,000 individually or US$300,000 in
the aggregate, or (iii) amend any existing contracts to increase any amounts
payable thereunder or benefits provided thereunder. Neither the Company nor any
of its Subsidiaries shall grant any increase in compensation to its employees.
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7.8 Prohibited Dispositions. During the term of this Agreement, except for
sales of inventory in the Ordinary Course of Business, neither the Company nor
any of its Subsidiaries shall sell, lease or otherwise dispose of any of its
assets having a book or market value in excess of US$250,000 in any one
transaction or in excess of US$1.0 million in the aggregate.
7.9 Lines of Business and Capital Expenditures. During the term of this
Agreement, neither the Company nor any of its Subsidiaries will (a) enter into
any new material line of business or (b) incur or commit to any capital
expenditures other than (i) up to $1.0 million in the aggregate for acquisitions
as permitted under Section 7.5 and (ii) up to $1.0 million in the aggregate for
any other capital expenditures.
7.10 Accounting Methods. The Company will not change in any material
respect its methods of accounting (a) in effect at December 31, 1996, except as
required by Law, the Ministry of Finance & Pubic Credit, Undersecretary of
Revenue regulation or changes in generally accepted accounting principles as
concurred in by Ernst & Young, its independent auditors, or (b) for income and
deductions for federal income tax purposes from those employed in the
preparation of the consolidated federal income tax return of the Company and
each of the Subsidiaries for the taxable year ending December 31, 1996, except
as required by Law. The Company will not change its fiscal year.
7.11 Settlements. During the term of this Agreement, neither the Company
nor any of its Subsidiaries shall effect any settlements of any Proceedings.
7.12 Completion of Los Cabos Club ▇▇▇▇▇▇ Units. Seller will complete and
furnish the remaining (80 as of the Original Agreement Date) Club ▇▇▇▇▇▇
timeshare Units currently under construction at the Los Cabos Club ▇▇▇▇▇▇
consistent with building plans and of a quality comparable to the Company's
other properties.
ARTICLE VIII.
CONDITIONS TO CLOSING
8.1 Conditions to All Parties' Obligations. The obligations of all the
parties to this Agreement to effect the transactions contemplated hereby shall
be subject to the fulfillment of the following conditions:
a) No Order and no other legal restraint or prohibition that would
prevent or have the effect of preventing the consummation of the
transactions contemplated by this Agreement shall be in effect; provided,
however, that no party hereto may invoke this condition unless such party
shall have complied fully with its obligations under Section 6.2 hereof
and, in addition shall have used all reasonable efforts to have any such
Order vacated.
b) The Requisite Regulatory Approvals referenced in Section 4.3 and
Section 5.5 shall have been obtained and shall be in full force and effect,
other than any Requisite Regulatory Approval that, if not obtained, would
not have a Material Adverse Effect on the business or operations of Buyer,
the Company and their Subsidiaries, taken as a whole, after giving effect
to the transactions contemplated hereby.
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c) There shall not have been any outbreak of war or civil unrest or a
suspension of financial markets or any other event generally adversely
affecting the normal conduct of business affecting either the United States
of America or the United Mexican States.
d) All issues identified pursuant to Article III or Article XIV shall
have been resolved in accordance with such provisions during the time
periods provided thereunder.
8.2 Buyer's Conditions. The obligation of Buyer to consummate the
transactions contemplated by this Agreement is subject to satisfaction on or
before Closing of the following conditions any of which may be waived in whole
or in part by Buyer, but only in writing at or prior to Closing. A failure to
discover, or a waiver of, any circumstances made a condition under this Section
8.2 shall not constitute a waiver of any warranties and representations provided
for elsewhere in this Agreement, unless any such waiver specifically so states.
a) Since the Original Agreement Date, nothing shall have occurred
which has had or could reasonably be expected to have a Material Adverse
Effect with respect to the Company.
b) The representations and warranties of Seller contained in this
Agreement shall be true and correct in all material respects at and as of
the Closing Date (except to the extent that they expressly relate only to
an earlier time, in which case they shall have been true and correct in all
material respects as of such earlier time), other than such breaches of
such representations and warranties which in the aggregate would not
reasonably be expected to have a Material Adverse Effect on the Company. No
Default or failure to perform which, with notice and/or lapse of time,
would constitute a Default by Seller, the Company or any of its
Subsidiaries under any of the agreements or covenants required by this
Agreement to be theretofore performed or complied with by any of them shall
have occurred and be continuing. Seller shall have delivered to Buyer a
certificate dated as of the Closing Date, signed either by its chairman,
chief executive officer, president, any vice president or the secretary of
the Board and its chief financial officer, in their capacities as officers
of Seller, to the effect set forth in this Section 8.2(b).
c) The Seller shall have delivered to Buyer the certificates
representing the Stock registered in the name of Seller free and clear of
all Liens, duly endorsed by Seller for transfer or accompanied by stock
transfer powers duly endorsed in blank.
d) Buyer shall have received an opinion dated the Closing Date of
each of the General Counsel to Seller and ▇▇▇▇▇▇▇▇▇▇▇ y Steta, in form
and substance satisfactory to Buyer, as to the matters set forth in
Sections 5.1, 5.2, 5.3, 5.4, 5.5, 5.6, 5.10, 5.15, 5.16, 5.20, 5.22 and
5.29, and such other matters as Buyer may reasonably request.
e) Buyer shall have received all requisite consents of third Persons
necessary for the consummation of the transactions contemplated by this
Agreement.
f) (i) Corporate Banking shall have loaned to Buyer and the other
parties contemplated under the Debt Commitments the funds contemplated
thereby, and (ii) Buyer shall have received the funds required to make
payments hereunder in addition to those contemplated by the Debt
Commitments.
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g) On the Closing Date, Seller shall have notified Westin that the
Management Agreements will be terminated, unless Buyer waives this
requirement.
h) The Commitments shall have been delivered to Buyer and issuance of
the Title Policy shall be subject only to such conditions and/or exceptions
as Buyer may reasonably agree.
i) Each Ancillary Agreement required under this Agreement shall have
been executed and delivered by the parties thereto.
j) For each of the hotel and timeshare properties (each a "Site")
(A)(i) a legally enforceable declaration of condominium will have been
properly executed before a notary public dividing each Site into a hotel
condominium unit, a timeshare condominium unit and common areas; (ii) an
appropriate deed to the Site will have been properly executed before a
notary public to transfer title to the respective Site to the appropriate
Real Estate Company; (iii) an appropriate deed to the Timeshare Property
portion of each Site will have been properly executed before a notary
public to transfer title to the respective Timeshare Property to the Cancun
Timeshare Sub, PV Timeshare Sub and CSL Timeshare Sub; (iv) the respective
mortgage documentation will have been executed before a notary public to
effectuate the various mortgages contemplated by this Agreement, (B) the
items listed in clauses (i), (ii) and (iii), and, to the extent required
under financing arrangements, the items listed in clause (iv), will all
have been presented to the appropriate public registries; and (C) any other
appropriate steps will have been taken to induce the Title Company to
insure that the various titles have vested in the grantees; and (D) the
lender will have authorized the release of the mortgage financing proceeds
(hereinafter referred to collectively as the "Condominium Regime").
k) Seller shall have taken all necessary actions with respect to the
organizational documents of the Company and each of its Subsidiaries such
that the capital stock of such entities can be purchased and held by Buyer
as contemplated in this Agreement.
l) The Real Estate Companies shall have good and marketable direct
title to the Property, free and clear of all Liens.
8.3 Seller's Conditions. The obligation of Seller to consummate the
transactions contemplated by this Agreement is subject to satisfaction on or
before Closing of the following conditions any of which may be waived in whole
or in part by Seller, but only in writing at or prior to the Closing. A failure
to discover, or a waiver of, any circumstances made a condition under this
Section 8.3 shall not constitute a waiver of any warranties and representations
provided for elsewhere in this Agreement unless any such waiver specifically so
states.
a) Since the Original Agreement Date, nothing shall have occurred
which has had or could reasonably be expected to have a Material Adverse
Effect with respect to Buyer.
b) The representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects at and as of
the Closing Date (except to the extent that they expressly relate only to
an earlier time, in which case they shall have
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been true and correct in all materials respects as of such earlier time),
other than such breaches of such representations and warranties which in
the aggregate would not reasonably be expected to have a Material Adverse
Effect on Buyer. No Default or failure to perform which, with notice and/or
lapse of time, would constitute a Default by Buyer under any of the
agreements or covenants required by this Agreement to be theretofore
performed or complied with by it shall have occurred and be continuing.
Buyer shall have delivered to Seller a certificate dated as of the Closing
Date, signed by its chairman, chief executive officer, president or any
vice president and its chief financial officer, in their capacities as
officers of Buyer, to the effect set forth in this Section 8.3(b).
c) The Seller shall have received from Buyer the Purchase Price due
under Section 2.1.
d) Seller shall have received an opinion dated the Closing Date of
▇▇▇▇▇▇▇▇▇▇▇ y Steta, in form and substance satisfactory to Seller.
e) Each Ancillary Agreement required under this Agreement shall have
been executed and delivered by the parties thereto.
f) Buyer shall have received all requisite consents of third Persons
necessary for it to fulfill its obligations under this Agreement.
ARTICLE IX.
RISK OF LOSS, DESTRUCTION AND CONDEMNATION
9.1 Risk of Loss. Risk of loss for damage to the Property, or any part
thereof, by fire or other casualty at any time prior to and including the
Closing Date will be on Seller. Upon Closing, full risk of loss with respect to
the Property will pass to Buyer.
9.2 Casualty.
a) Major Damage. If, prior to the Closing, the Property, or any
portion thereof, is damaged by fire, or any other cause of whatsoever
nature, Seller will promptly give Buyer written notice of such damage. If
the cost for repairing such damage, in the reasonable judgment of Buyer, in
consultation with Seller, after taking into account insurance coverage
exceeds US$1.0 million, Buyer will have the option, exercisable by written
notice delivered to Seller within ten Business Days of Seller's notice of
damage to Buyer either (i) to require Seller to convey the Property to
Buyer on the Closing Date, in its damaged condition and to assign to Buyer
all of Seller's right, title and interest in and to any claims Seller may
have under the property insurance policies covering the Property, in which
event Seller will pay to Buyer the amount of any deductible under
applicable insurance policies but Seller will have no further liability or
obligation to repair or replace the Property, or (ii) to terminate this
Agreement. If Buyer elects to terminate this Agreement, the Escrow Deposit
and interest thereon shall be returned to Buyer, and thereafter neither
party hereto will have any further duties or obligations hereunder.
b) Minor Damage. If the cost for repairing such damage will not, in
the reasonable judgment of Buyer, in consultation with Seller, after taking
into account insurance coverage exceed US $1.0 million, Buyer will have the
option, exercisable by written notice
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delivered to Seller within ten Business Days of Seller's notice of
damage to Buyer, either (i) to require Seller to repair and restore the
Property to substantially the same condition it was in prior to such
casualty, in which event the Closing Date shall be postponed for a
reasonable period of time to allow Seller to accomplish such repair and
restoration, or (ii) to require Seller to convey the Property to Buyer on
the Closing Date in its damaged condition and assign to Buyer all of
Seller's right, title and interest in and to any claims Seller may have
under the insurance policies covering the Property, in which event Seller
will pay to Buyer the amount of any deductible under applicable insurance
policies but Seller will have no further liability or obligation to repair
or replace the Property.
9.3 Condemnation. If during the pendency of this Agreement and prior to
Closing, condemnation/expropriation proceedings are commenced with respect to
the Property or any portion thereof, Buyer may, at Buyer's election, terminate
this Agreement by written notice to Seller within ten Business Days after Buyer
has been notified of the commencement of condemnation/expropriation proceedings.
In the event of such termination, the Escrow Deposit and interest thereon will
be promptly refunded to Buyer and, after the return of the Escrow Deposit to
Buyer, neither party will have any further duties or obligations hereunder. If
Buyer does not exercise such right to terminate within the period prescribed,
the Seller and Buyer, by their respective attorneys, will have the right to
appear and to defend their respective interests in the Property in such
condemnation/expropriation proceedings, and any award in
condemnation/expropriation will become the property of Seller and will reduce
the Purchase Price by the same amount.
ARTICLE X.
TERMINATION
10.1 Termination. This Agreement may be terminated, with the effect set
forth in Section 10.2, at any time before the Closing:
a) by written consent of Buyer and Seller, which termination shall be
approved by the board of directors of Buyer and Seller;
b) by either Buyer or Seller if the Closing shall not have occurred by
the close of business on the Termination Date, other than as a result of a
Default by the terminating party;
c) by Seller after the occurrence and during the continuation of a
Default by Buyer, provided that no Default, or event which, with notice
and/or the lapse of time, would constitute a Default, by Seller shall have
occurred and be continuing;
d) by Buyer after the occurrence and during the continuation of a
Default by Seller, provided that no Default, or event which, with notice
and/or lapse of time, would constitute a Default, by Buyer shall have
occurred and be continuing; or
e) by Seller if the Closing shall not have occurred by the close of
business on the Termination Date, and if all conditions to Closing set
forth in Article VIII shall have been satisfied except for the financing
condition set forth in Section 8.2(f)(i).
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Termination of this Agreement pursuant to this Section 10.1 shall be
effected by written notice by the party terminating this Agreement to the
other party of the termination and the basis for such termination.
10.2 Effect of Termination.
a) If this Agreement is terminated by either Buyer or Seller as
provided in Section 10.1 of this Agreement, then, except as provided in
this Section 10.2, this Agreement shall become void and there shall be no
Liability with respect to the terminated provisions of this Agreement on
the part of Buyer or Seller, or their respective officers or directors.
b) If this Agreement is terminated by Seller pursuant to Section
10.1(c), then Buyer shall pay to Seller, on the first Business Day
following such termination, the amount of US $3.0 million, with such amount
to be paid from the Escrow Account, to compensate Seller for, among other
things, its expenses and management time in pursuing the transactions
contemplated hereby and for lost opportunity costs. Seller agrees that such
payment shall be its sole and total damages and relief hereunder upon such
a termination. Notwithstanding the foregoing, if at the time of such
termination, Seller is in Default hereunder, or an event which, with notice
and/or lapse of time, would constitute a Default by Seller shall have
occurred and be continuing, then no such fee shall be due or payable
hereunder by Buyer.
c) If this Agreement is terminated by Buyer pursuant to Section
10.1(d), then the Escrow Deposit, plus accrued interest, shall be returned
to Buyer and Seller shall pay to Buyer, on the first Business Day following
such termination, the amount of US $3.0 million by wire transfer of
immediately available funds to an account designated by Buyer, to
compensate Buyer for, among other things, its expenses and management time
in pursuing the transactions contemplated hereby and for lost opportunity
costs. Buyer agrees that such payment shall be its sole and total damages
and relief hereunder upon such termination. Notwithstanding the foregoing,
if at the time of such termination, Buyer is in Default hereunder, or an
event which, with notice and/or lapse of time, would constitute a Default
by Buyer shall have occurred and be continuing, then no such fee shall be
due or payable hereunder by Seller.
d) If this Agreement is terminated by Seller pursuant to Section
10.1(e), then Seller shall be entitled to receive the Escrow Deposit,
together with all interest accrued thereon.
e) The termination of this Agreement shall not relieve any party of
its obligation to pay its costs and expenses as provided under Section 6.3
or its obligations under this Section 10.2 of this Agreement.
f) Notwithstanding anything herein to the contrary, in no event shall
the total amount paid to or recovered by Buyer or Seller under this
Agreement exceed the amount of US$3.0 million or the Escrow Deposit with
interest thereon, as applicable.
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ARTICLE XI.
INDEMNIFICATION
11.1 Indemnification by Seller. Seller agrees to indemnify and hold
harmless Buyer and its officers, directors, shareholders, Affiliates, employees
and agents (the "Buyer Indemnitees") from any and all Damages, directly or
indirectly resulting from, relating to, arising out of or attributable to: (a)
any breach of or inaccuracy in any representation or warranty of Seller
contained in this Agreement or in any Ancillary Agreement; (b) any breach or
non-performance, partial or total, by Seller of any covenant or agreement of
Seller contained in this Agreement or in any Ancillary Agreement; and (c) the
operation of the Company and its Subsidiaries prior to 11:59 p.m. on the Closing
Date.
11.2 Indemnification by Buyer. Buyer agrees to indemnify and hold harmless
Seller its officers, directors, shareholders, Affiliates, employees and agents
(the "Seller Indemnitees") from any and all Damages resulting from, arising out
of or attributable to: (a) any breach of or inaccuracy in any representation or
warranty of Buyer contained in this Agreement or in any Ancillary Agreement; (b)
any breach or non-performance, partial or total, by Buyer of any covenant or
agreement of Buyer contained in this Agreement or in any Ancillary Agreement,
and (c) the operation of the Company and its Subsidiaries after the Closing
Date.
11.3 Notice, Participation and Duration. If a claim by a third party is
made against a party indemnified pursuant to this Article XI ("Indemnitee"), and
if such Indemnitee intends to seek indemnity with respect thereto under this
Article XI, the Indemnitee shall promptly, and in any event within 60 days of
the assertion of any claim or the discovery of any fact upon which Indemnitee
intends to base a claim for indemnification under this Agreement (a "Claim"),
notify the party or parties from whom indemnification is sought (the
"Indemnitor") of such Claim. Upon any Claim, Indemnitor, at its option, may
assume (with legal counsel reasonably acceptable to the Indemnitee) the defense
of any Proceeding in connection with the Indemnitee's Claim, and may assert any
defense of Indemnitee or Indemnitor; provided that Indemnitee shall have the
right at its own expense to participate jointly with Indemnitor in the defense
of any Proceeding in connection with the Indemnitee's Claim. If Indemnitor
elects to undertake the defense of any Claim hereunder, Indemnitee shall
cooperate with Indemnitor to the extent reasonably requested in regard to all
matters relating to the Claim (including, without limitation, corrective actions
required by applicable Law, assertion of defenses and the determination,
mitigation, negotiation and settlement of all Damages) so as to permit
Indemnitor's management of the same with regard to the amount of Damages payable
by Indemnitor hereunder. Indemnitor shall not settle any indemnifiable Claim
without the prior written consent of Indemnitee unless such settlement involves
only the payment of money and the claimant provides to Indemnitee a release, in
form and substance reasonably satisfactory to Indemnitee, from all Liability in
respect of such Claim.
11.4 Reimbursement. If Indemnitor shall undertake, conduct or control the
defense or settlement of any Claim and it is later determined that such Claim
was not a Claim for which the Indemnitor is required to indemnify Indemnitee
under this Article XI, Indemnitee shall reimburse Indemnitor for all its costs
and expenses with respect to such settlement or defense, including reasonable
attorneys' fees and disbursements.
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ARTICLE XII.
MEDIATION AND ARBITRATION
12.1 Arbitration.
a) In the event that Buyer and Seller are unable to resolve any dispute,
controversy or claim arising out of or in connection with this Agreement (a
"Controversy"), either party may request in writing that the Controversy be
referred to the respective senior level management of each party for decision.
Such managers shall meet immediately and attempt in good faith to negotiate a
resolution of the Controversy. If the managers are unable to resolve the matter
within thirty (30) days of the written request referring the matter to them, any
party may, within thirty (30) days following the end of such thirty (30) day
period, elect to refer the matter to arbitration and the Controversy shall be
settled by binding arbitration in accordance with the Arbitration Rules of the
International Chamber of Commerce (the "ICC") then in effect (the "Rules").
b) There shall be a sole arbitrator selected in accordance with the Rules.
If the parties are unable to agree upon the arbitrator within thirty (30) days
of the referral to arbitration, the International Court of Arbitration of the
ICC shall make such appointment in accordance with the Rules. The arbitration
shall be conducted, and the award shall be rendered, in the English language.
The arbitration shall be held in New York, New York.
c) Each party shall cooperate with the other party in making full
disclosure of and providing access to all information and documents requested by
the other party in connection with such proceedings. The arbitrator shall have
the power to order such disclosure. Should a party fail to comply with such
order, the arbitrator shall take such refusal into account in determining the
award.
d) The decision of the arbitrator shall be final and binding on the
parties and shall be the sole and exclusive remedy regarding any claims,
counterclaims, issues or accounting presented to the arbitrator. Judgment upon
the award may be entered by any court having jurisdiction thereof. The parties
agree to waive any rights of recourse or appeal to any court in connection with
any questions of law arising in the course of the arbitration or with respect
to any award made except for actions to enforce an award.
e) Any monetary award shall be made and payable in United States Dollars.
The arbitrator shall be authorized to grant pre-award and post-award interest at
commercial rates without there being any presumption as to whether such interest
will be granted. Unless otherwise ordered by the arbitrator, each party shall
bear its own costs and fees, including attorneys' fees and expenses. The parties
expressly agree that the arbitrator shall have no power to consider or award
punitive or exemplary damages.
f) This agreement to arbitrate shall be binding upon the successors,
assigns, trustee, receiver or executor of each party.
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ARTICLE XIII.
GENERAL PROVISIONS
13.1 Survival of Representations, Warranties and Agreements. The
representations, warranties, covenants and agreements of Buyer and Seller
contained in this Agreement and any document, instrument or certificate
delivered in connection with the transactions contemplated hereby shall survive
the Closing.
13.2 Effect of Due Diligence. No investigation by any party to this
Agreement into the business, operations and condition of any other party shall
diminish in any way the effect of any representations or warranties made by such
other party in this Agreement or shall relieve such other party of any of its
obligations under this Agreement. The parties agree that any item disclosed on
any schedule to this Agreement shall be deemed to be disclosed for all purposes
of this Agreement, notwithstanding the fact that such item was not disclosed on
any other schedule to this Agreement.
13.3 Notices. Any notice, request, demand, instruction or other
communication to be given to either party hereunder (except those required to be
delivered at Closing) will be in writing, and will be deemed to be delivered
upon the earlier to occur of (i) actual receipt if delivered by hand or by
commercial courier such as "Federal Express" or "DHL", postage prepaid, to the
address indicated or (ii) upon confirmation of receipt if by facsimile
transmission addressed as follows:
If to Buyer:
Club ▇▇▇▇▇▇ Resorts, Inc.
c/o Raintree Capital Acquisition Company
Pennzoil Place - South Tower
Suite 2310, ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
with a copy (which shall not constitute notice) to:
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.
Pennzoil Place - ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
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If to Seller:
Bancomer S.A., Institucion de Banca Multiple, Grupo Financiero
Av. Universidad No. 1200
Col. Xoco
▇.▇. ▇▇▇▇▇, ▇▇▇▇▇▇, ▇.▇.
Fax No.: ▇▇▇-▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Financial Officer
▇▇▇▇▇▇ ▇▇▇▇▇▇ y ▇▇▇▇▇▇
General Counsel
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Mirelles
Director of Mergers and Acquisitions
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Managing Director of Bancomer Tourism Division
The addresses and facsimile numbers for the purpose of this Section may be
changed by either party by giving written notice of such change to the other
party in the manner provided herein.
13.4 Attorneys' Fees. If it becomes necessary for either Buyer or Seller to
enforce this Agreement or any provisions contained herein, the prevailing party
in such Action will be entitled to recover, in addition to all other remedies or
Damages, reasonable attorneys fees and costs of court incurred in connection
with such.
13.5 Counterparts. This Agreement may be executed in counterparts, all of
which shall be considered one and the same Agreement, and shall become effective
when counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
13.6 Miscellaneous. This Agreement and the documents and instruments
contemplated hereby (a) constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter of this Agreement, including, without limitation,
the Original Agreements; and (b) are not intended to confer upon any Person,
other than the parties to this Agreement and such other documents and
instruments, any rights or remedies hereunder. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
13.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of New York without giving effect to the principles of
conflicts of law.
13.8 Incorporation of Exhibits and Schedules. All exhibits and schedules
referred to in this Agreement and attached hereto are hereby made a part of this
Agreement by this reference.
13.9 Waiver. Any term or provision of this Agreement may be waived in
writing at any time by the party that is entitled to the benefits thereof. Any
waiver of any term or condition of this Agreement by any party shall not be
construed as a waiver of any subsequent breach or failure of the same term or
condition, or a waiver of any other term or condition of this Agreement.
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13.10 Specific Performance. Each party hereto agrees with the other party
that the other party would be irreparably damaged if any of the provisions of
this Agreement are not performed in accordance with their specific terms and
that monetary damages would not provide an adequate remedy in such event.
Accordingly, it is agreed that, in addition to any other remedy to which the
nonbreaching party may be entitled, at law or in equity, the nonbreaching party
shall be entitled to injunctive relief to prevent breaches of the provisions of
this Agreement and specifically to enforce the terms and provisions hereof in
any court having subject matter jurisdiction thereof.
13.11 Release of CR Hotel. CR Hotel is hereby released as a party to this
Agreement, the First Amended Agreement and the Original Agreement and the
parties hereto acknowledge that Buyer has succeeded to the rights and
obligations of CR Hotel, if any, hereunder.
ARTICLE XIV.
ALTERNATIVE STRUCTURES
Notwithstanding anything herein to the contrary, Buyer, and Seller
currently anticipate that during the period between the date hereof and Closing,
they will continue to review and analyze the structure of the transactions
contemplated hereby, including without limitation, (i) whether the Hotel
Property, the Timeshare Property or the Other Property will be transferred out
of the trusts which currently hold title thereto (the "Trusts"), (ii) if the
Hotel Property, the Timeshare Property or the Other Property will be transferred
out of the Trusts, the mechanics and timing of such transfer and the identity of
the Persons to whom such property will be transferred, (iii) the source,
collateral, securitization, flow and characterization of the funds to be used to
effectuate the transactions contemplated hereby and (iv) such other matters as
they may identify, and, to the extent and degree that Buyer and Seller agree
that any such matters shall be dealt with in a manner that is different from the
manner set forth herein, then such matter shall be set forth in a written
amendment hereto signed by Buyer and Seller, whereupon this Agreement shall be
amended and superseded to such extent and degree.
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IN WITNESS WHEREOF, each of the parties hereto have caused this Agreement to
above signed as of the date first above written by its duly authorized officer.
BANCOMER S.A., INSTITUCION DE BANCA
MULTIPLE, GRUPO FINANCIERO
By:
-----------------------------------
Printed Name:
------------------------
Title:
--------------------------------
By:
-----------------------------------
Printed Name:
------------------------
Title:
--------------------------------
DESARROLLOS TURISTICOS ▇▇▇▇▇▇,
S. DE ▇.▇. DE C.V.
By:
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Printed Name:
------------------------
Title:
--------------------------------
CLUB ▇▇▇▇▇▇ RESORTS, INC.,
(formerly known as CR Timeshare
Acquisition Company)
By:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇
President
CR HOTEL ACQUISITION COMPANY, L.L.C.
By:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Managing Director