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EXHIBIT 1.1
EXECUTION COPY
PURCHASE AGREEMENT
CLUB ▇▇▇▇▇▇ RESORTS, INC.
CR RESORTS CAPITAL, S. DE ▇. ▇. DE C. V.
100,000 Units consisting in the aggregate of
13% Senior Notes due 2004
and Warrants to Purchase 1,869,962 Shares of Common Stock
of Club ▇▇▇▇▇▇ Resorts, Inc.
November 26, 1997
▇▇▇▇▇▇▇▇▇ & COMPANY, INC.
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PURCHASE AGREEMENT
100,000 Units of 13% Senior Notes due ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Resorts, Inc. and CR Resorts Capital, S. de ▇. ▇. de C. V.
and Warrants to purchase 1,869,962 shares of Common Stock
of Club ▇▇▇▇▇▇ Resorts, Inc.
November 26, 1997
▇▇▇▇▇▇▇▇▇ & COMPANY, INC.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Club ▇▇▇▇▇▇ Resorts, Inc., a Nevada corporation ("CR US"), and CR
Resorts Capital, a Mexican Sociedad de Responsibilidad Limitada de Capital
Variable ("CR Mexico"; together with CR US, the "Issuers"), propose to issue and
sell to ▇▇▇▇▇▇▇▇▇ & Company, Inc. (the "Initial Purchaser") 100,000 units (the
"Units") consisting in the aggregate of $100,000,000 in aggregate principal
amount of their 13% Series A Senior Notes due 2004 (the "Series A Notes") and
warrants (the "Warrants") to purchase 1,869,962 shares (the "Warrant Shares") of
common stock, par value $.001 per shares (the "Common Stock") of CR US, subject
to the terms and conditions set forth herein. The Series A Notes are to be
issued pursuant to the provisions of an indenture (the "Indenture"), to be dated
as of the Closing Date (as defined below), among the Issuers and IBJ ▇▇▇▇▇▇▇▇
Bank & Trust Company, as trustee (the "Trustee"). The Series A Notes and the
Series B Notes (as defined below) issuable in exchange therefor are collectively
referred to herein as the "Notes." The Warrants will be issued pursuant to a
warrant agreement (the "Warrant Agreement"), to be dated the Closing Date,
between CR US and IBJ ▇▇▇▇▇▇▇▇ Bank & Trust Company, as warrant agent (the
"Warrant Agent"). The Notes and the Warrants will not be separately tradeable
until the earlier to occur of (i) June 1, 1998, (ii) the occurrence of a Change
of Control and (iii) such earlier date as may be determined by the Initial
Purchaser. The Units, the Notes and the Warrants are collectively referred to
herein as the "Securities." Capitalized terms used but not defined herein shall
have the meanings given to such terms in the Indenture.
1. OFFERING CIRCULAR.
The Securities will be offered and sold to the Initial Purchaser
pursuant to one or more exemptions from the registration requirements under the
Securities Act of 1933, as amended (the "Act"). The Issuers have prepared a
preliminary offering circular, dated
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November 13, 1997 (the "Preliminary Offering Circular") and a final offering
circular, dated November 26, 1997 (the "Offering Circular"), relating to the
Securities.
Upon original issuance thereof, and until such time as the same is no
longer required under applicable requirements of the Act, the Units, the Series
A Notes, the Warrants and the Warrant Shares (and all securities issued in
exchange therefor, in substitution thereof or upon conversion thereof) shall
bear the following legend:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION
IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE THAT IS
TWO YEARS (OR SUCH SHORTER PERIOD THAT MAY HEREAFTER BE PROVIDED UNDER RULE
144(k) AS PERMITTING RESALES BY NON-AFFILIATES OF RESTRICTED SECURITIES
WITHOUT RESTRICTION) AFTER THE LATER OF THE ORIGINAL CLOSING DATE HEREOF
AND THE LAST DATE ON WHICH THE ISSUERS OR ANY AFFILIATE OF THE ISSUERS WAS
THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) EXCEPT (A)
TO THE ISSUERS, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A,
(D) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT,
(E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE
501 (A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS PURCHASING THE
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
"ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR
FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANOTHER
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AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE ISSUERS' AND THE [TRUSTEE'S] [WARRANT AGENT'S] RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR
(F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE
FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE [TRUSTEE]
[WARRANT AGENT].
2. AGREEMENTS TO SELL AND PURCHASE; ADDITIONAL AGREEMENTS.
(a) On the basis of the representations, warranties and covenants
contained in this Agreement, and subject to the terms and conditions contained
herein, the Issuers agree to issue and sell to the Initial Purchaser, and the
Initial Purchaser agrees to purchase from the Issuers, the Units at a purchase
price equal to $96,000,000 (the "Purchase Price").
(b) In addition, on the Closing Date, (i) the Issuers agree to pay
to the Initial Purchaser an advisory fee of $2,000,000 (in addition to any other
fees that may be owed to the Initial Purchaser pursuant to the letter agreement
dated August 18, 1997 between CR US and the Initial Purchaser), (ii) CR US
agrees to issue to the Initial Purchaser 258,450 shares of Common Stock and
(iii) CR US agrees to grant to the Initial Purchaser (or one or more of its
designees) warrants to acquire shares of Common Stock at a purchase price equal
to the lesser of $7.00 per share or the lowest purchase price for shares of
Common Stock issued by CR US in a private placement (other than with respect to
transfers by shareholders to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and parties whose rights to
purchase shares are related to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, and transfers of shares
related to AEW Mexico Company, L.L.C.) after the date hereof and to pay the
reasonable out-of-pocket expenses (including reasonable legal fees) incurred in
connection with the exercise of such warrants; provided that such warrant shall
expire on the earlier of one year from the date hereof and the date CR US closes
an initial public offering of its Common Stock; and provided further that such
warrants shall have the customary terms and conditions (including such terms and
conditions as are applicable to the Warrants to be issued in this transaction,
to the extent appropriate). The total number of shares to be issued pursuant to
the warrants described in clause (iii) shall be equal to 4,000,000 divided by
the exercise price of such warrant (as such exercise price is determined in
accordance with clause (iii) and such other terms of such warrants).
3. TERMS OF OFFERING.
The Initial Purchaser has advised the Issuers that the Initial
Purchaser will make offers (the "Exempt Resales") of the Units purchased
hereunder on the terms set forth in the Offering Circular, as amended or
supplemented, solely to (i) persons whom the Initial Purchaser reasonably
believes to be "qualified institutional buyers" as defined in Rule 144A under
the Act ("QIBs"), and (ii) other institutional "accredited investors," as
defined in Rule 501(a) (1), (2), (3) or (7) under the Act, that make certain
representations and agreements to the Issuers (each, an
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"Accredited Institution") (such persons specified in clauses (i) and (ii) being
referred to herein as the "Eligible Purchasers"). The Initial Purchaser will
offer the Series A Notes to Eligible Purchasers initially at the price set forth
herein. Such price may be changed at any time without notice.
Holders (including subsequent transferees) of the Series A Notes will
have the registration rights set forth in the A/B Exchange Registration Rights
Agreement (the "Notes Registration Rights Agreement"), to be dated the Closing
Date, in substantially the form of Exhibit A-1 hereto and holders (including
subsequent transferees) of the Warrants will have registration rights set forth
in the Warrant Shares Registration Rights Agreement (the "Warrant Shares
Registration Rights Agreement"), to be dated the Closing Date, in substantially
the form of Exhibit A-2 hereto, for so long as such Notes, Warrants or any
Warrant Shares constitute "Transfer Restricted Securities" (as defined in each
such agreement, respectively). Pursuant to the Notes Registration Rights
Agreement, the Issuers will agree to file with the Securities and Exchange
Commission (the "Commission") under the circumstances set forth therein, (i) a
registration statement under the Act (the "Exchange Offer Registration
Statement") relating to the Issuers' 13% Series B Notes due 2004 (the "Series B
Notes"), to be offered in exchange for the Series A Notes (such offer to
exchange being referred to as the "Exchange Offer") and (ii) a shelf
registration statement pursuant to Rule 415 under the Act (the "Shelf
Registration Statement" and, together with the Exchange Offer Registration
Statement, the "Notes Registration Statements") relating to the resale by
certain holders of the Series A Notes and to use their best efforts to cause
such Notes Registration Statements to be declared and remain effective and
usable for the periods specified in the Notes Registration Rights Agreement and
to consummate the Exchange Offer. Pursuant to the Warrant Shares Registration
Rights Agreement, CR US will agree to file with the Commission, under the
circumstances set forth therein, a shelf registration statement pursuant to Rule
415 under the Securities Act (the "Warrant Shares Shelf Registration Statement")
relating to the exercise of the Warrants and the resale by certain holders of
Warrants and Warrant Shares, and to use its best efforts to cause such Warrant
Shares Shelf Registration Statement to be declared effective. This Agreement,
the Indenture, the Units, the Notes, the Warrant Agreement, the Warrants, the
Warrant Shares, the Notes Registrations Right Agreement and the Warrant Shares
Registration Rights Agreement are hereinafter sometimes referred to collectively
as the "Operative Documents."
4. DELIVERY AND PAYMENT.
(a) Delivery of, and payment of the Purchase Price for, the Series A
Notes shall be made at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, or such other location as may be mutually acceptable.
Such delivery and payment shall be made at 9:00 a.m. New York City time, on
December 5, 1997 or at such other time as shall be agreed upon by the Initial
Purchaser and the Issuers. The time and date of such delivery and the payment
are herein called the "Closing Date."
(b) One or more Units in definitive global form, registered in the
name of Cede & Co., as nominee of the Depository Trust Company ("DTC"), having
an aggregate amount corresponding to the aggregate amount of the Units sold
pursuant to Exempt Resales to
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Eligible Purchasers (collectively, the "Global Unit"), each such Global Unit
consisting of $1,000 aggregate principal amount of Notes in definitive form,
registered in the name of Cede & Co., as nominee of DTC (the "Global Note"), and
one global Warrant in definitive form to purchase 1,869,962 shares of Common
Stock, registered in the name of Cede & Co., as nominee of DTC (the "Global
Warrant"), shall be delivered by the Issuers to the Initial Purchaser (or as the
Initial Purchaser directs) in each case with any transfer taxes thereon duly
paid by the Issuers, against payment by the Initial Purchaser of the purchase
price therefor, by wire transfer of immediately available funds to the account
of either Issuer or as directed in writing by the Issuers, provided that the
Issuers shall give at least two business days' prior written notice to the
Initial Purchaser of the information required to effect such wire transfer. In
addition, at the request of the Initial Purchaser, the Issuers shall deliver one
or more Units in certificated form registered in the name of one or more persons
or entities specified by the Initial Purchaser. The Global Unit (as well as any
certificated Units) shall be made available to the Initial Purchaser for
inspection not later than 9:30 a.m. on the business day immediately preceding
the Closing Date.
5. AGREEMENTS OF THE ISSUERS.
The Issuers hereby agree with the Initial Purchaser as follows:
(a) To advise the Initial Purchaser promptly and, if requested by
the Initial Purchaser, confirm such advice in writing, (i) of the issuance by
any state securities commission of any stop order suspending the qualification
or exemption from qualification of any Securities for offering or sale in any
jurisdiction designated by the Initial Purchaser pursuant to Section 5(e)
hereof, or the initiation of any proceeding by any state securities commission
or any other federal or state regulatory authority for such purpose and (ii) of
the happening of any event during the period referred to in Section 5(c) below
that makes any statement of a material fact made in the Preliminary Offering
Circular or the Offering Circular untrue or that requires any additions to or
changes in the Preliminary Offering Circular or the Offering Circular in order
to make the statements therein not misleading. The Issuers shall use their best
efforts to prevent the issuance of any stop order or order suspending the
qualification or exemption of any Securities under any state securities or Blue
Sky laws and, if at any time any state securities commission or other federal or
state regulatory authority shall issue an order suspending the qualification or
exemption of any Securities under any state securities or Blue Sky laws, the
Issuers shall use their best efforts to obtain the withdrawal or lifting of such
order at the earliest possible time.
(b) To furnish the Initial Purchaser and those persons identified by
the Initial Purchaser to the Issuers as many copies of the Preliminary Offering
Circular and the Offering Circular, and any amendments or supplements thereto,
as the Initial Purchaser may reasonably request for the time period specified in
Section 5(c). Subject to the Initial Purchaser's compliance with its
representations and warranties and agreements set forth in Section 7 hereof, the
Issuers consent to the use of the Preliminary Offering Circular and the Offering
Circular, and any amendments and supplements thereto required pursuant hereto,
by the Initial Purchaser in connection with Exempt Resales.
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(c) During such period as in the opinion of counsel for the Initial
Purchaser an Offering Circular is required by law to be delivered in connection
with Exempt Resales by the Initial Purchaser and in connection with
market-making activities of the Initial Purchaser until consummation of the
Exchange Offer (in the case of the Notes) and until the Warrant Shares have been
registered pursuant to the Warrant Shares Shelf Registration Statement (in the
case of the Warrants), (i) not to make any amendment or supplement to the
Offering Circular of which the Initial Purchaser shall not previously have been
advised or to which the Initial Purchaser shall reasonably object after being so
advised and (ii) to prepare promptly upon the Initial Purchaser's reasonable
request, any amendment or supplement to the Offering Circular which may be
necessary or advisable in connection with such Exempt Resales or such
market-making activities.
(d) If, during the period referred to in Section 5(c) above, any
event shall occur or condition shall exist as a result of which, in the opinion
of counsel to the Initial Purchaser, it becomes necessary to amend or supplement
the Offering Circular in order to make the statements therein, in the light of
the circumstances when such Offering Circular is delivered to an Eligible
Purchaser, not misleading, or if, in the opinion of counsel to the Initial
Purchaser, it is necessary to amend or supplement the Offering Circular to
comply with any applicable law, forthwith to prepare an appropriate amendment or
supplement to such Offering Circular so that the statements therein, as so
amended or supplemented, will not, in the light of the circumstances when it is
so delivered, be misleading, or so that such Offering Circular will comply with
applicable law, and to furnish to the Initial Purchaser and such other persons
as the Initial Purchaser may designate such number of copies thereof as the
Initial Purchaser may reasonably request.
(e) Prior to the sale of all Securities pursuant to Exempt Resales
as contemplated hereby, to cooperate with the Initial Purchaser and counsel to
the Initial Purchaser in connection with the registration or qualification of
the Securities for offer and sale to the Initial Purchaser and pursuant to
Exempt Resales under the securities or Blue Sky laws of such jurisdictions as
the Initial Purchaser may request and to continue such registration or
qualification in effect so long as required for Exempt Resales and to file such
consents to service of process or other documents as may be necessary in order
to effect such registration or qualification; provided, however, that neither
Issuer shall be required in connection therewith to qualify as a foreign
corporation in any jurisdiction in which it is not now so qualified or to take
any action that would subject it to general consent to service of process or
taxation other than as to matters and transactions relating to the Preliminary
Offering Circular, the Offering Circular or Exempt Resales, in any jurisdiction
in which it is not now so subject.
(f) So long as the Notes are outstanding, to furnish to the Initial
Purchaser as soon as available copies of all reports or other communications
furnished by the Issuers to their security holders (including holders of the
Notes) or furnished to or filed with the Commission or any national securities
exchange on which any class of securities of either Issuer is listed and such
other publicly available information concerning the CR US and/or its
subsidiaries as the Initial Purchaser may reasonably request.
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(g) So long as any of the Series A Notes remain outstanding and
during any period in which the Issuers are not subject to Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to make
available to any holder of Series A Notes in connection with any sale thereof
and any prospective purchaser of such Series A Notes from such holder, the
information ("Rule 144A Information") required by Rule 144A(d)(4) under the Act.
(h) To pay or cause to be paid, whether or not the transactions
contemplated in this Agreement are consummated or this Agreement is terminated,
all expenses incident to the performance of the obligations of the Issuers under
this Agreement, including: (i) the fees, disbursements and expenses of counsel
to the Issuers and accountants of the Issuers in connection with the sale and
delivery of the Securities to the Initial Purchaser and pursuant to Exempt
Resales, and all other fees and expenses in connection with the preparation,
printing, filing and distribution of the Preliminary Offering Circular, the
Offering Circular and all amendments and supplements to any of the foregoing
(including financial statements), including the mailing and delivering of copies
thereof to the Initial Purchaser and persons designated by it in the quantities
specified herein, (ii) all costs and expenses related to the transfer and
delivery of the Securities to the Initial Purchaser and pursuant to Exempt
Resales, including any transfer or other taxes payable thereon, (iii) all costs
of printing or producing this Agreement, the other Operative Documents and any
other agreements or documents in connection with the offering, purchase, sale or
delivery of the Securities, (iv) all expenses in connection with the
registration or qualification of the Securities for offer and sale under the
securities or Blue Sky laws of the several states and all costs of printing or
producing any preliminary and supplemental Blue Sky memoranda in connection
therewith (including the filing fees and fees and disbursements of counsel for
the Initial Purchaser in connection with such registration or qualification and
memoranda relating thereto), (v) the cost of printing certificates representing
the Securities, (vi) all expenses and listing fees in connection with the
application for quotation of the Notes in the National Association of Securities
Dealers, Inc. ("NASD") Automated Quotation System - PORTAL ("PORTAL"), (vii) the
fees and expenses of the Trustee and the Trustee's counsel in connection with
the Indenture and the Notes, (viii) the fees and expenses of the Warrant Agent
and the Warrant Agent's counsel in connection with the Warrant Agreement and the
Warrants, (ix) the costs and charges of any transfer agent, registrar and/or
depositary (including DTC), (x) any fees charged by rating agencies for the
rating of the Securities, (xi) all costs and expenses of the Exchange Offer and
any Registration Statement, as set forth in the Notes Registration Rights
Agreement, (xii) all costs and expenses of any Warrant Shares Shelf Registration
Statement as set forth in the Warrant Shares Shelf Registration Rights
Agreement, and (xiii) and all other costs and expenses incident to the
performance of the obligations of the Issuers hereunder for which provision is
not otherwise made in this Section.
(i) To use their best efforts to effect the inclusion of the
Securities in PORTAL and to maintain the listing of the Securities on PORTAL for
so long as the Securities are outstanding.
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(j) To obtain the approval of DTC for "book-entry" transfer of the
Securities, and to comply with all of its agreements set forth in the
representation letters of the Issuers to DTC relating to the approval of the
Securities by DTC for "book-entry" transfer.
(k) During the period beginning on the date hereof and continuing to
and including the Closing Date, not to offer, sell, contract to sell or
otherwise transfer or dispose of any debt securities of either of the Issuers or
any warrants, rights or options to purchase or otherwise acquire debt securities
of either of the Issuers substantially similar to the Notes (other than (i) the
Notes and (ii) commercial paper issued in the ordinary course of business),
without the prior written consent of the Initial Purchaser.
(l) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act) that
would be integrated with the sale of the Units to the Initial Purchaser or
pursuant to Exempt Resales in a manner that would require the registration of
any such sale of any of the Securities under the Act.
(m) Not to voluntarily claim, and to actively resist any attempts to
claim, the benefit of any usury or similar laws against the holders of any
Notes.
(n) To cause the Exchange Offer to be made in the appropriate form
to permit the Series B Notes registered pursuant to the Act to be offered in
exchange for the Series A Notes and to comply with all applicable federal and
state securities laws in connection with the Exchange Offer.
(o) To comply with all of its agreements set forth in the Notes
Registration Rights Agreement and the Warrant Shares Registration Rights
Agreement.
(p) To reserve and continue to reserve, so long as any Warrants are
outstanding, a sufficient number of shares of Common Stock for issuance upon
exercise of the Warrants.
(q) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by it prior to the
Closing Date and to satisfy all conditions precedent to the delivery of the
Units.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE ISSUERS. As of the
date hereof, each of the Issuers represents and warrants to, and agrees with,
the Initial Purchaser that:
(a) No Misstatements or Omissions. The Preliminary Offering Circular
and the Offering Circular do not, and any supplement or amendment to them will
not, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties contained in this
paragraph (a) shall not apply to statements in or omissions from the Preliminary
Offering Circular or the Offering Circular (or any supplement or amendment
thereto) contained in (a) the
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last paragraph of the cover page of the Offering Circular, (b) the first
paragraph on page (i) of the Offering Circular and (c) the fifth, sixth and
eighth paragraphs under the heading "Plan of Distribution" in the Offering
Circular (collectively, the "Initial Purchaser Information"). No stop order
preventing the use of the Preliminary Offering Circular or the Offering
Circular, or any amendment or supplement thereto, or any order asserting that
any of the transactions contemplated by this Agreement are subject to the
registration requirements of the Act, has been issued.
(b) Organization. Each of CR US and its subsidiaries has been duly
incorporated (in the case of subsidiaries that are corporations) or organized
(in the case of the subsidiaries that are partnerships), is validly existing as
a corporation or partnership (or limited liability company), as applicable, in
good standing under the laws of its jurisdiction of incorporation or formation,
as applicable, and has the corporate or partnership, as applicable, power and
authority (or equivalent power and authority under the laws of Mexico) to carry
on its business as described in the Preliminary Offering Circular and the
Offering Circular and to own, lease and operate its properties, and each is duly
qualified and is in good standing as a foreign corporation or partnership (or
limited liability company), as applicable, authorized to do business in each
jurisdiction in which the nature of its business or its ownership or leasing of
property requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the business, prospects,
financial condition or results of operations of CR US and its subsidiaries,
taken as a whole (a "Material Adverse Effect").
(c) Capital Stock. All outstanding shares of capital stock of CR US
have been duly authorized and validly issued and are fully paid, non-assessable
and not subject to any preemptive or similar rights. There are 45,000,000 shares
of Common Stock authorized, of which 10,300,000 are issued and outstanding.
There are 5,000,000 shares of preferred stock of CR US authorized, of which
37,500 shares of the Class A Redeemable Convertible Preferred Stock are issued
and outstanding.
(d) Subsidiaries. The entities listed on Schedule A hereto are the
only subsidiaries, direct or indirect, of CR US. Schedule A identifies the
ownership structure of each of CR US's subsidiaries. All of the outstanding
shares of capital stock or other equity interests of each of CR US's
subsidiaries have been duly authorized and validly issued and are fully paid,
non-assessable and not subject to any preemptive or similar rights, except for
preemptive rights of direct or indirect subsidiaries of CR US, and, except as
noted on Schedule A, are owned by CR US, directly or indirectly through one or
more subsidiaries, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature (each, a "Lien"). Schedule A
identifies the subsidiaries of CR US that are partnerships, the subsidiaries of
CR US that are corporations and the subsidiaries of CR US that are limited
liability companies.
(e) The Purchase Agreement. This Agreement has been duly authorized,
executed and delivered by each Issuer.
(f) The Indenture. The Indenture has been duly authorized by each
Issuer and, on the Closing Date, will have been validly executed and delivered
by each Issuer.
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When the Indenture has been duly executed and delivered by each Issuer, the
Indenture will be a valid and binding agreement of each Issuer, enforceable
against each Issuer in accordance with its terms except as the enforceability
thereof may be limited by (i) bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (ii) equitable principles of general
applicability. On the Closing Date, the Indenture will conform in all material
respects to the requirements of the Trust Indenture Act of 1939, as amended (the
"TIA" or "Trust Indenture Act"), and the rules and regulations of the Commission
applicable to an indenture which is qualified thereunder.
(g) The Units. The Units have been duly authorized by each Issuer.
(h) The Series A Notes. The Series A Notes have been duly authorized
and, on the Closing Date, will have been validly executed and delivered by each
Issuer. When the Series A Notes have been issued, executed and authenticated in
accordance with the provisions of the Indenture and delivered to and paid for by
the Initial Purchaser in accordance with the terms of this Agreement, the Series
A Notes will be entitled to the benefits of the Indenture and will be valid and
binding obligations of each Issuer, enforceable in accordance with their terms
except as the enforceability thereof may be limited by (i) bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (ii)
equitable principles of general applicability. On the Closing Date, the Series A
Notes will conform as to legal matters to the description thereof contained in
the Offering Circular.
(i) The Series B Notes. On the Closing Date, the Series B Notes will
have been duly authorized by each Issuer. When the Series B Notes are issued,
executed and authenticated in accordance with the terms of the Exchange Offer
and the Indenture, the Series B Notes will be entitled to the benefits of the
Indenture and will be the valid and binding obligations of each Issuer,
enforceable against each Issuer in accordance with their terms, except as the
enforceability thereof may be limited by (i) bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (ii) equitable principles of
general applicability.
(j) The Notes Registration Rights Agreement. The Notes Registration
Rights Agreement has been duly authorized by each Issuer and, on the Closing
Date, will have been duly executed and delivered by each Issuer. When the Notes
Registration Rights Agreement has been duly executed and delivered, the Notes
Registration Rights Agreement will be a valid and binding agreement of each
Issuer, enforceable against each Issuer in accordance with its terms except as
the enforceability thereof may be limited by (i) bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii) equitable principles
of general applicability. On the Closing Date, the Notes Registration Rights
Agreement will conform as to legal matters to the description thereof in the
Offering Circular and (iii) the enforceability of the indemnification and
contribution provisions thereof may be limited by federal and state laws
governing the enforcement of such provisions.
(k) The Warrant Agreement. The Warrant Agreement has been duly
authorized by each Issuer and, on the Closing Date, will have been validly
executed and delivered by each Issuer. When the Warrant Agreement has been duly
executed and delivered by
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each Issuer, the Warrant Agreement will be a valid and binding agreement of each
Issuer, enforceable against each Issuer in accordance with its terms except as
the enforceability thereof may be limited by (i) bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii) equitable principles
of general applicability.
(l) The Warrants. The Warrants have been duly authorized and, on the
Closing Date, will have been validly executed and delivered by each Issuer. When
the Warrants have been issued, executed and authenticated in accordance with the
provisions of the Warrant Agreement and delivered to and paid for by the Initial
Purchaser in accordance with the terms of this Agreement, the Warrants will be
entitled to the benefits of the Warrant Agreement and will be valid and binding
obligations of each Issuer, enforceable in accordance with their terms except as
the enforceability thereof may be limited by (i) bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (ii) equitable principles
of general applicability. On the Closing Date, the Warrants will conform as to
legal matters to the description thereof contained in the Offering Circular.
(m) The Warrant Shares Registration Rights Agreement. The Warrant
Shares Registration Rights Agreement has been duly authorized by each Issuer
and, on the Closing Date, will have been duly executed and delivered by each
Issuer. When the Warrant Shares Registration Rights Agreement has been duly
executed and delivered, the Warrant Shares Registration Rights Agreement will be
a valid and binding agreement of each Issuer, enforceable against each Issuer in
accordance with its terms except as (a) the enforceability thereof may be
limited by (i) bankruptcy, insolvency or similar laws affecting creditors'
rights generally or (ii) equitable principles of general applicability, and (b)
the enforceability of the indemnification and contribution provisions thereof
may be limited by federal and state laws governing the enforcement of such
provisions. On the Closing Date, the Warrant Shares Registration Rights
Agreement will conform as to legal matters to the description thereof in the
Offering Circular.
(n) No Violations or Defaults. Neither CR US nor any of its
subsidiaries is in violation of its respective charter or by-laws or other
organizational document or in default in the performance of any obligation,
agreement, covenant or condition contained in any indenture, loan agreement,
mortgage, lease or other agreement or instrument to which CR US or any of its
subsidiaries is a party or by which CR US or any of its subsidiaries or their
respective property is bound, except to the extent that any violations, taken
singly or in the aggregate, would not result in a Material Adverse Effect.
(o) No Conflicts. The execution, delivery and performance of this
Agreement and the other Operative Documents by each Issuer, compliance by each
Issuer with all provisions hereof and thereof and the consummation of the
transactions contemplated hereby and thereby will not (i) require any consent,
approval, authorization or other order of, or qualification with, any court or
governmental body or agency (except such as may be required under the securities
or Blue Sky laws of the various states), (ii) conflict with or constitute a
breach of any of the terms or provisions of, or a default under, (a) the charter
or by-laws of CR US or any of its subsidiaries or (b) any indenture, loan
agreement, mortgage, lease or other agreement to which CR US or any of its
subsidiaries is a party or by which CR US or any of its
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subsidiaries or their respective property is bound (except to the extent any
conflict, breach or default under this clause (ii)(b) would not, singly or in
the aggregate, result in a Material Adverse Effect), (iii) violate or conflict
with any applicable law or any rule, regulation, judgment, order or decree of
any court or any governmental body or agency having jurisdiction over CR US, any
of its subsidiaries or their respective property, (iv) result in the imposition
or creation of (or the obligation to create or impose) a Lien (other than any
Liens which, singly or in the aggregate, would not result in a Material Adverse
Effect) under, any agreement or instrument to which CR US or any of its
subsidiaries is a party or by which CR US or any of its subsidiaries or their
respective property is bound, or (v) result in the termination, suspension or
revocation of any Authorization (as defined below) of CR US or any of its
subsidiaries or result in any other impairment of the rights of the holder of
any such Authorization.
(p) No Legal or Governmental Proceedings. There are no legal or
governmental proceedings pending or threatened to which CR US or any of its
subsidiaries is or could be a party or to which any of their respective property
is or could be subject, which might result, singly or in the aggregate, in a
Material Adverse Effect.
(q) Compliance with Laws. Neither CR US nor any of its subsidiaries
has violated or is in violation of any, federal, state, local or Mexican or
other foreign law, ordinance, or administrative or governmental rule including
(i) any federal, state, local or Mexican or other foreign law or regulation
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) any provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") (or any provision of any similar
Mexican law), or the rules and regulations promulgated thereunder or (iii) any
provision of the Mexican Securities Market Law (Ley del ▇▇▇▇▇▇▇ de Valores) or
any rule or regulation promulgated thereunder, except, in each case, for such
violations which, singly or in the aggregate, would not have a Material Adverse
Effect.
(r) No Environmental Liabilities. There are no costs or liabilities
associated with Environmental Laws (including, without limitation, any capital
or operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any Authorization, any related constraints
on operating activities and any potential liabilities to third parties) which
would, singly or in the aggregate, have a Material Adverse Effect.
(s) Authorizations. Each of CR US and its subsidiaries has such
permits, licenses, consents, exemptions, franchises, authorizations and other
approvals (each, an "Authorization") of, and has made all filings with and
notices to, all governmental or regulatory authorities and self-regulatory
organizations and all courts and other tribunals, including without limitation,
under any applicable Environmental Laws, as are necessary to own, lease, license
and operate its respective properties and to conduct its business, except where
the failure to have any such Authorization or to make any such filing or notice
would not, singly or in the aggregate, have a Material Adverse Effect. Each such
Authorization is valid and in full force and effect and each of CR US and its
subsidiaries is in compliance with all the terms and conditions thereof and
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with the rules and regulations of the authorities and governing bodies having
jurisdiction with respect thereto; and no event has occurred (including, without
limitation, the receipt of any notice from any authority or governing body)
which allows or, after notice or lapse of time or both, would allow, revocation,
suspension or termination of any such Authorization or results or, after notice
or lapse of time or both, would result in any other impairment of the rights of
the holder of any such Authorization; and such Authorizations contain no
restrictions that are burdensome to CR US or any of its subsidiaries; except, in
each case, where such failure to be valid and in full force and effect or to be
in compliance, the occurrence of any such event or the presence of any such
restriction would not, singly or in the aggregate, have a Material Adverse
Effect.
(t) Purchase Transactions. All requisite consents, approvals,
authorizations, registrations or qualifications of any Mexican governmental
agency or authority to the consummation of the Purchase Transactions ( as
defined in the Offering Circular) were obtained prior to such consummation
(other than any consents, approvals, authorizations, registrations or
qualifications which, if not obtained, would not have a Material Adverse
Effect.).
(u) Certification by Independent Accountants. The accountants, Ernst
& Young LLP, that have certified the financial statements and supporting
schedules included in the Preliminary Offering Circular and the Offering
Circular are independent public accountants with respect to each Issuer, as
would be required by the Act and the Exchange Act. Except as disclosed in the
comfort letter contemplated by Section 9(j), the historical financial
statements, together with related schedules and notes, set forth in the
Preliminary Offering Circular and the Offering Circular comply as to form in all
material respects with the requirements applicable to registration statements on
Form S-1 under the Act.
(v) Historical Financial Statements. The historical financial
statements, together with related schedules and notes forming part of the
Preliminary Offering Circular and the Offering Circular (and any amendment or
supplement thereto), present fairly the consolidated financial position, results
of operations and changes in financial position of the Issuers on the basis
stated in the Preliminary Offering Circular and the Offering Circular at the
respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved, except as disclosed therein; and, except as disclosed therein,
the other financial and statistical information and data set forth in the
Preliminary Offering Circular and the Offering Circular (and any amendment or
supplement thereto) are, in all material respects, accurately presented and
prepared on a basis consistent with such financial statements and the books and
records of the Issuers.
(w) Pro Forma Financial Statements. The pro forma financial
statements included in the Preliminary Offering Circular and the Offering
Circular have been prepared on a basis consistent with the historical financial
statements of CR US and its subsidiaries and give effect to assumptions used in
the preparation thereof on a reasonable basis and in good faith and present
fairly the historical and proposed transactions contemplated by the Preliminary
Offering Circular and the Offering Circular; and such pro forma financial
statements comply as to form in all material respects with the requirements
applicable to pro forma financial
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statements included in registration statements on Form S-1 under the Act. The
other pro forma financial and statistical information and data included in the
Preliminary Offering Circular and the Offering Circular are, in all material
respects, accurately presented and prepared on a basis consistent with the pro
forma financial statements.
(x) Good and Marketable Title. CR US and its subsidiaries have good
and marketable title in fee simple to all real property (except for real
property currently held by Bancomer, S.A. as trustee for the benefit of the
Operating Subsidiaries pursuant to the Trust Agreements) and good and marketable
title to all personal property owned by them which is material to the business
of CR US and its subsidiaries, in each case free and clear of all Liens and
defects, except such as are described in the Offering Circular or such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by CR US and its subsidiaries; and
any real property and buildings held under lease by CR US and its subsidiaries
are held by them under valid, subsisting and enforceable leases with such
exceptions as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by CR US and its
subsidiaries, in each case except as described in the Offering Circular.
(y) Payment of Indebtedness. All indebtedness of CR US and/or its
subsidiaries that will be repaid with the proceeds of the issuance and sale of
the Units was incurred, and the indebtedness represented by the Notes is being
incurred, for proper purposes and in good faith. Each of CR US and each of its
subsidiaries was, at the time of the incurrence of such indebtedness that will
be repaid with the proceeds of the issuance and sale of the Units, and will be
on the Closing Date (after giving effect to the application of the proceeds from
the issuance of the Units) solvent, and had at the time of the incurrence of
such indebtedness that will be repaid with the proceeds of the issuance and sale
of the Units and will have on the Closing Date (after giving effect to the
application of the proceeds from the issuance of the Units) sufficient capital
for carrying on their respective business and were, at the time of the
incurrence of such indebtedness that will be repaid with the proceeds of the
issuance and sale of the Units, and will be on the Closing Date (after giving
effect to the application of the proceeds from the issuance of the Units), able
to pay their respective debts as they mature.
(z) Issuance and Sale is Permitted. No action has been taken and no
law, statute, rule or regulation or order has been enacted, adopted or issued by
any governmental agency or body which prevents the execution, delivery and
performance of any of the Operative Documents or the issuance of the Securities,
or suspends the sale of the Securities in any jurisdiction referred to in
Section 5(e); and no injunction, restraining order or other order or relief of
any nature by a foreign, federal or state court or other tribunal of competent
jurisdiction has been issued with respect to CR US or any of its subsidiaries
which would prevent or suspend the issuance or sale of the Securities in any
jurisdiction referred to in Section 5(e).
(aa) Intellectual Property Rights. Each of CR US and each of its
subsidiaries has sufficient trademarks, trade names, patent rights, copyrights,
licenses or other similar rights and proprietary knowledge (collectively,
"Intangibles"), approvals and governmental authorizations to conduct its
businesses as now conducted or as described in the
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Offering Circular; the expiration of any Intangibles, approvals or governmental
authorizations will not result in a Material Adverse Effect; and the Issuers
have no knowledge of any material infringement by them or any of CR US's
subsidiaries of any Intangibles, and there is no claim being made against CR US
or any of its subsidiaries regarding any Intangible or other infringement which
could result in a Material Adverse Effect.
(bb) Tax Law Compliance. CR US and each of its subsidiaries have
filed all necessary federal, state, local and Mexican and other foreign income
and franchise tax returns and have paid all taxes shown as due thereon; all
federal, state, local and Mexican and other foreign taxes payable in connection
with the consummation of the Purchase Transactions have been paid; and the
Issuers have no knowledge of any tax deficiency which has been or might be
asserted or threatened against CR US or its subsidiaries, in each case except as
would not, individually or in the aggregate, result in a Material Adverse
Effect.
(cc) Insurance. CR US and its subsidiaries have and will maintain
liability, property and casualty insurance (insured by insurers of recognized
financial responsibility) in favor of CR US and its subsidiaries, with respect
to each of the ▇▇▇▇▇▇ Resorts (as defined in the Offering Circular) and the
other properties owned or leased by them in an amount and on such terms as is
reasonable and customary for businesses of the type proposed to be conducted by
CR US and its subsidiaries, including, among other things, insurance against
business interruption, theft, damage, destruction and acts of vandalism. Neither
CR US nor any of its subsidiaries has received from any insurance company notice
of any material defects or deficiencies affecting the insurability of any such
resort. Title insurance in favor of CR US and its subsidiaries is in force with
respect to each of the ▇▇▇▇▇▇ Resorts (except for the Cancun ▇▇▇▇▇▇ Resort) in
an amount as would be reasonably acceptable to a prudent company in a similar
line of business.
(dd) Certain Losses. Subsequent to the respective dates as of which
information is given in the Offering Circular, neither CR US nor any of its
subsidiaries has sustained any loss or interference with its respective
businesses or properties from fire, flood, windstorm, accident or other
calamity, whether or not covered by insurance, that would result in a Material
Adverse Effect.
(ee) CR US's Accounting System. CR US and each of its subsidiaries
maintain and will maintain a system of internal accounting controls sufficient
to provide reasonable assurances that (i) transactions are executed in
accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to financial and corporate
books and records is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(ff) Compliance with Vacation Ownership Laws. Each of CR US and each
of its subsidiaries are in compliance with all federal, state, local and foreign
laws and
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regulations applicable to such entity regarding the marketing, offers to sell
and sales of vacation intervals in each jurisdiction (domestic or foreign) in
which CR US or any of its subsidiaries is doing business, including, but not
limited to, the Federal Trade Commission Act, Regulation Z (the truth-in-lending
act), Equity Opportunity Credit Act and Regulation B, Interstate Land Sales Full
Disclosure Act, Telephone Consumer Protection Act, Telemarketing and Consumer
Fraud and Abuse Prevention Act, Fair Housing Act and Civil Rights Acts of 1964
and 1968 and all corresponding foreign laws (including without limitation, the
Mexican Federal Consumer Protection Law (Ley Federal de Proteccion al
Consumidor)), in each case as applicable to CR US or any of its subsidiaries and
in each case except as would not result in a Material Adverse Effect. Each of CR
US and each of its subsidiaries has filed all required documents and supporting
information in compliance with federal, state, local and foreign laws and
regulations and each of CR US and each of its subsidiaries is in compliance with
all licensure, anti-fraud, telemarketing, price, gift and sweepstakes and labor
laws to which it is or may become subject, in each case except as would not
result in a Material Adverse Effect. CR US and each of its subsidiaries have all
permits and licenses which are required to sell vacation intervals in each state
and foreign jurisdiction where they conduct business, in each case except as
would not result in a Material Adverse Effect.
(gg) No Finder's Fees. Neither Issuer nor any of their Affiliates
and Subsidiaries has incurred any liability for a fee, commission or other
compensation on account of the employment of a broker or finder in connection
with the transactions contemplated by this Agreement other than as disclosed in
the Offering Circular.
(hh) No First Refusals to Purchase Resorts. Except as set forth in
the Offering Circular, no person has an option or right of first refusal to
purchase all or part of any of the ▇▇▇▇▇▇ Resorts or the Cozumel Property or any
interest therein. Except as set forth in the Offering Circular, each of the
▇▇▇▇▇▇ Resorts complies with all applicable codes, laws and regulations
(including, without limitation, building and zoning codes and laws relating to
handicapped access), except for such non-compliance as will not result in a
Material Adverse Effect. Neither Issuer has knowledge of any pending or
threatened condemnation proceedings, zoning changes, or other proceedings or
actions that will in any manner affect the size of, number of vacation intervals
planned for, the use of any improvements on, or access to, the ▇▇▇▇▇▇ Resorts or
the Cozumel Property.
(ii) Company's Relationship with Starwood. Except as disclosed in
the Offering Circular, to the knowledge of the Issuers, no material dispute
exists or is imminent between either Issuer or Starwood.
(jj) Condition and Sufficiency of Assets. Except for such assets as
are not material singly or in the aggregate to the business of CR US and its
subsidiaries, the buildings, structures, equipment and other tangible assets of
CR US 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 CR US and its subsidiaries have available to them sufficient utilities to
conduct their business as currently conducted.
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(kk) The Trust Agreements. Each of the three trust agreements dated
August 18, 1997, entered into among Bancomer, as trustee, CR Resorts Remainder
Company, S. de ▇. ▇. de C. V. (the "Remainder Company"), and each of (i) CR
Resorts Cancun, S. de ▇. ▇. de C. V. (the "Cancun Operating Subsidiary") in
connection with the Cancun ▇▇▇▇▇▇ Resort, (ii) CR Resorts Los Cabos, S. de ▇. ▇.
de C. V. (the "Los Cabos Operating Subsidiary") in connection with the Los Cabos
▇▇▇▇▇▇ Resort, and (iii) CR Resorts Puerto Vallarta, S. de ▇. ▇. de C. V. in
connection with the Puerto Vallarta ▇▇▇▇▇▇ Resort (collectively, the "Trust
Agreements"), has been duly executed and delivered and is in the process of
registration with the Public Registry of Property of Cancun, ▇▇▇▇▇▇▇▇ Roo,
Mexico (in the case of the Cancun Resort), Los Cabos, Baja California Sur (in
the case of the Los Cabos ▇▇▇▇▇▇) and Puerto Vallarta, Jalisco, Mexico (in the
case of the Puerto Vallarta ▇▇▇▇▇▇ Resort), and each Trust Agreement is legal,
valid, binding and enforceable in accordance with its terms. Bancomer, acting in
its capacity as trustee under each of the Trust Agreements, owns good, valid,
exclusive and marketable title to the ▇▇▇▇▇▇ Resorts for the benefit of the Los
Cabos Operating Subsidiary (in the case of the Los Cabos ▇▇▇▇▇▇ Resort), the
Cancun Operating Subsidiary (in the case of the Cancun ▇▇▇▇▇▇ Resort) and the
Puerto Vallarta Operating Subsidiary (in the case of the Puerto Vallarta ▇▇▇▇▇▇
Resort), in each case free and clear of any Liens. Each of the Los Cabos
Operating Subsidiary, the Cancun Operating Subsidiary and the Puerto Vallarta
Operating Subsidiary is a beneficiary (fideicomisario) under one of the Trust
Agreements, and has the right to use and exploit, without limitation or
restriction of any kind, the Los Cabos ▇▇▇▇▇▇ Resort (in the case of the Los
Cabos Operating Subsidiary), the Cancun ▇▇▇▇▇▇ Resort (in the case of the Cancun
Operating Subsidiary) and the Puerto Vallarta ▇▇▇▇▇▇ Resort (in the case of the
Puerto Vallarta Operating Subsidiary), in each case until August 18, 2027. The
beneficial rights of each of the Los Cabos Operating Subsidiary, the Cancun
Operating Subsidiary and the Puerto Vallarta Operating Subsidiary are, in each
case, free and clear of any Liens.
(ll) Operating Agreements. The Letter Agreement among CR US and
Starwood dated August 18, 1997, pursuant to which CR US and Starwood approved
the form of, and upon translation into Spanish have agreed to enter into, an
Operating Agreement (each an "Operating Agreement") for each of the Combined
Resorts (as defined in the Offering Circular), is legal, valid, binding and
enforceable against each of CR US and Starwood in accordance with its terms.
Upon (i) execution and delivery of an Operating Agreement, in the presence of,
and certified by a Mexican notary public, between (A) the Los Cabos Operating
Subsidiary and Starwood Los Cabos, S. de ▇. ▇. de C. V., (B) the Cancun
Operating Subsidiary and Starwood Cancun, S. de ▇. ▇. de C. V., and (C) the
Puerto Vallarta Operating Subsidiary and Starwood Puerto Vallarta, S. de ▇. ▇.
de C. V.; and (ii) the due registration of each Operating Agreement in the
relevant Public Registry of Property, the Operating Agreements will be legal,
valid, binding and enforceable against applicable subsidiaries of each of CR US
and Starwood in accordance with their terms, and will be binding on any future
owners of any Westin Resort (as defined in the Offering Circular).
(mm) Bancomer Agreements. Assuming that the agreements listed on
Schedule B hereto (the "Bancomer Agreements") have been duly authorized by all
necessary corporate action on the part of Bancomer and that the Bancomer
Agreements have been duly executed and delivered by Bancomer, the obligations of
Bancomer contained in the Bancomer
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Agreements are the legal, valid and binding obligations of Bancomer, enforceable
by CR US against Bancomer in accordance with their terms, subject to the effects
of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or providing relief to or affecting creditors'
rights and to general equitable principles (whether considered in a proceeding
in equity or at law).
(nn) Descriptions in the Offering Circular. The Indenture, the
Series A Notes, the Series B Notes, the Notes Registration Rights Agreement, the
Warrant Agreement, the Warrants and the Warrant Shares Registration Rights
Agreement will conform in all material respects to the descriptions thereof in
the Offering Circular.
(oo) No Investment Company. Neither Issuer is and, after giving
effect to the offering and sale of the Series A Notes and the application of the
net proceeds thereof as described in the Offering Circular, will be, an
"investment company," as such term is defined in the Investment Company Act of
1940, as amended.
(pp) No Agreement for Filing a Registration Statement. Except as
disclosed in the Offering Circular, there are no contracts, agreements or
understandings between either Issuer and any person granting such person the
right to require either Issuer to file a registration statement under the Act
with respect to any securities of either Issuer or to require either Issuer to
include such securities with the Notes or Warrant Shares registered pursuant to
any Registration Statement or Warrant Shares Shelf Registration Statement.
(qq) Compliance with Federal Reserve System Regulations. Neither CR
US nor any of its subsidiaries nor any agent thereof acting on the behalf of
them has taken, and none of them will take, any action that might cause this
Agreement or the issuance or sale of the Series A Notes to violate Regulation G
(12 C.F.R. Part 207), Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R.
Part 221) or Regulation X (12 C.F.R. Part 224) of the Board of Governors of the
Federal Reserve System.
(rr) No Change in Rating. No "nationally recognized statistical
rating organization" as such term is defined for purposes of Rule 436(g)(2)
under the Act (i) has imposed (or has informed either Issuer that it is
considering imposing) any condition (financial or otherwise) on either Issuer's
retaining any rating assigned to either Issuer or any securities of either
Issuer or (ii) has indicated to either Issuer that it is considering (a) the
downgrading, suspension, or withdrawal of, or any review for a possible change
that does not indicate the direction of the possible change in, any rating so
assigned or (b) any change in the outlook for any rating of either Issuer or any
securities of either Issuer.
(ss) No Material Adverse Change. Since the respective dates as of
which information is given in the Offering Circular other than as set forth in
the Offering Circular (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement), (i) there has not occurred any
material adverse change or any development involving a prospective
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material adverse change in the condition, financial or otherwise, or the
earnings, business, management or operations of CR US and its subsidiaries,
taken as a whole, (ii) there has not been any material adverse change or any
development involving a prospective material adverse change in the capital stock
or in the long-term debt of CR US or any of its subsidiaries and (iii) neither
CR US nor any of its subsidiaries has incurred any material liability or
obligation, direct or contingent.
(tt) Compliance with Rule 144A. Each of the Preliminary Offering
Circular and the Offering Circular, as of its date, contains all the information
specified in, and meeting the requirements of, Rule 144A(d)(4) under the Act.
(uu) No Listing on Exchanges. When the Securities are issued and
delivered pursuant to this Agreement, the Securities will not be of the same
class (within the meaning of Rule 144A under the Act) as any security of either
Issuer that is listed on a national securities exchange registered under Section
6 of the Exchange Act or that is quoted in a United States automated
inter-dealer quotation system.
(vv) No Solicitation or Advertising. No form of general
solicitation or general advertising (as defined in Regulation D under the Act)
was used by either Issuer or any of their representatives (other than the
Initial Purchaser, as to whom the Issuers make no representation) in connection
with the offer and sale of the Securities contemplated hereby, including, but
not limited to, articles, notices or other communications published in any
newspaper, magazine, or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising. No securities of the same class as any of
the Securities have been issued and sold by either Issuer within the six-month
period immediately prior to the date hereof.
(ww) No Requirement for Qualification under TIA. Prior to the
effectiveness of any Registration Statement, the Indenture is not required to be
qualified under the TIA.
(xx) Regulation S. Neither CR US, CR Mexico nor any of their
respective affiliates or any person acting on its or their behalf (other than
the Initial Purchaser, as to whom the Issuers make no representation) has
engaged or will engage in any directed selling efforts within the meaning of
Regulation S under the Act ("Regulation S") with respect to the Series A Notes.
(yy) No Registration Requirement. No registration under the Act of
any of the Securities is required for the sale of the Units to the Initial
Purchaser as contemplated hereby or for the Exempt Resales assuming the accuracy
of the Initial Purchaser's representations and warranties and agreements set
forth in Section 7 hereof.
(zz) Officers' Certificates. Each certificate signed by any officer
of either Issuer and delivered to the Initial Purchaser or counsel for the
Initial Purchaser shall be deemed to be a representation and warranty by the
Issuers to the Initial Purchaser as to the matters covered thereby.
(aaa) Usury. Neither Issuer may successfully avail itself, by way of
defense or otherwise, of any provisions of Mexican constitutional, federal,
state or local law (or
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any rule or regulation thereunder) or of any Nevada, New York or Texas
constitutional or state law (or any rule or regulation promulgated thereunder)
relating to usury (or similar laws, rules or regulations) to avoid or defeat its
payment obligations pursuant to and in accordance with the terms of the Notes
and the Indenture.
The Issuers acknowledge that the Initial Purchaser and, for purposes of
the opinions to be delivered to the Initial Purchaser pursuant to Section 9
hereof, counsel to the Issuers and counsel to the Initial Purchaser will rely
upon the accuracy and truth of the foregoing representations and hereby consents
to such reliance.
7. INITIAL PURCHASER'S REPRESENTATIONS AND WARRANTIES. The Initial
Purchaser represents and warrants to, and agrees with, the Issuers:
(a) Qualifications of the Initial Purchaser. The Initial Purchaser
is either a QIB or an Accredited Institution, in either case, with such
knowledge and experience in financial and business matters as is necessary in
order to evaluate the merits and risks of an investment in the Units.
(b) Compliance with the Act. The Initial Purchaser (A) is not
acquiring the Units with a view to any distribution thereof or with any present
intention of offering or selling any of the Units in a transaction that would
violate the Act or the securities laws of any state of the United States or any
other applicable jurisdiction and (B) will be reoffering and reselling the Units
only to (y) QIBs in reliance on the exemption from the registration requirements
of the Act provided by Rule 144A, and (z) Accredited Institutions that execute
and deliver a letter containing certain representations and agreements in the
form attached as Annex A to the Offering Circular.
(c) No Solicitation or Advertising. The Initial Purchaser agrees
that no form of general solicitation or general advertising (within the meaning
of Regulation D under the Act) has been or will be used by the Initial Purchaser
or any of its representatives in connection with the offer and sale of the Units
pursuant hereto, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.
(d) Eligible Purchasers. The Initial Purchaser agrees that, in
connection with Exempt Resales, the Initial Purchaser will solicit offers to buy
the Units only from, and will offer to sell the Units only to, Eligible
Purchasers. The Initial Purchaser further agrees that it will offer to sell the
Units only to, and will solicit offers to buy the Units only from (A) Eligible
Purchasers that the Initial Purchaser reasonably believes are QIBs and (B)
Accredited Institutions who make the representations contained in, and execute
and return to the Initial Purchaser, a certificate in the form of Annex A
attached to the Offering Circular, in each case, that agree that (x) the Units
purchased by them may be resold, pledged or otherwise transferred within the
time period referred to under Rule 144(k) (taking into account the provisions of
Rule 144(d) under the Act, if applicable) under the Act, as in effect on the
date of the transfer of such Units, only (I) to CR US or any of its
subsidiaries, (II) to a person whom the
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seller reasonably believes is a QIB purchasing for its own account or for the
account of a QIB in a transaction meeting the requirements of Rule 144A under
the Act, (III) in a transaction meeting the requirements of Rule 144 under the
Act, (IV) to an Accredited Institution that, prior to such transfer, furnishes
the Trustee a signed letter containing certain representations and agreements
relating to the registration of transfer of such Securities (the form of which
is substantially the same as Annex A to the Offering Circular) and, if such
transfer is in respect of an aggregate principal amount of Securities less than
$250,000, an opinion of counsel acceptable to the Issuers that such transfer is
in compliance with the Act, (V) in accordance with another exemption from the
registration requirements of the Act (and based upon an opinion of counsel
acceptable to the Issuers) or (VI) pursuant to an effective registration
statement and, in each case, in accordance with the applicable securities laws
of any state of the United States or any other applicable jurisdiction and (y)
they will deliver to each person to whom such Securities or an interest therein
are transferred a notice substantially to the effect of the foregoing.
(e) Compliance with the Laws of the United Kingdom. The Initial
Purchaser further represents and agrees that (1) it has not offered or sold and
will not offer or sell any Securities to persons in the United Kingdom prior to
the expiration of the period of six months from the issue date of the Units,
except to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the purposes of
their business or otherwise in circumstances which have not resulted and will
not result in an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995, (ii) it has complied and will
comply with all applicable provisions of the Financial Services ▇▇▇ ▇▇▇▇ with
respect to anything done by it in relation to the Securities in, from or
otherwise involving the United Kingdom and (iii) it has only issued or passed on
and will only issue or pass on in the United Kingdom any document received by it
in connection with the issuance of the Securities to a person who is of a kind
described in Article 11(3) of the Financial Services Act of 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom the document may
otherwise lawfully be issued or passed on.
(f) Sales Outside the United States. The Initial Purchaser agrees
that it will not offer, sell or deliver any of the Units in any jurisdiction
outside the United States except under circumstances that will result in
compliance with the applicable laws thereof, and that it will take at its own
expense whatever action is required to permit its purchase and resale of the
Units in such jurisdictions. The Initial Purchaser understands that no action
has been taken to permit a public offering in any jurisdiction outside the
United States where action would be required for such purpose.
The Initial Purchaser acknowledges that the Issuers and, for purposes
of the opinions to be delivered to the Initial Purchaser pursuant to Section 9
hereof, counsel to the Issuers and counsel to the Initial Purchaser will rely
upon the accuracy and truth of the foregoing representations and the Initial
Purchaser hereby consents to such reliance.
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8. INDEMNIFICATION.
(a) The Issuers, jointly and severally, agree to indemnify and hold
harmless the Initial Purchaser, its directors, its officers and each person, if
any, who controls such Initial Purchaser within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, from and against any and all losses,
claims, damages, liabilities and judgments (including, without limitation, any
reasonable legal or other actual expenses incurred in connection with
investigating or defending any matter, including any action, that could give
rise to any such losses, claims, damages, liabilities or judgments)
(collectively, "Losses") caused by any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Offering Circular, the
Offering Circular (or any amendment or supplement thereto), or any Rule 144A
Information provided by either Issuer to any holder or prospective purchaser of
the Notes pursuant to Section 5(h) or caused by any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such Losses are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon the Initial Purchaser Information. Notwithstanding the
foregoing, the Issuers shall not be liable in any such case to the extent that
any such Loss arises out of, or is based upon, an untrue statement or alleged
untrue statement or omission or alleged omission made in any Preliminary
Offering Circular if (i) the Initial Purchaser failed to send or deliver a copy
of the Offering Circular with or prior to the delivery of written confirmation
of the sale of Securities to the person asserting such Loss or who purchased
such Securities which are the subject thereof and (ii) the Offering Circular
would have corrected such untrue statement or omission or alleged untrue
statement or alleged omission; and the Issuers shall not be liable in any such
case to the extent that any such Loss arises out of, or is based upon, an untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact in the Offering Circular, if such untrue
statement or alleged untrue statement or omission or alleged omission is
corrected in any amendment or supplement to the Offering Circular and if, having
been furnished by or on behalf of the Issuers with copies of the Offering
Circular as so amended or supplemented prior to the sale of Securities, the
Initial Purchaser thereafter fails to deliver such Offering Circular as so
amended or supplemented prior to or concurrently with the sale of the
Securities.
(b) The Initial Purchaser agrees to indemnify and hold harmless the
Issuers, and their directors and officers and each person, if any, who controls
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act)
either of the Issuers, to the same extent as the foregoing indemnity from the
Issuers to the Initial Purchaser but only with reference to the Initial
Purchaser Information.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"indemnified party"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in writing,
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all reasonable fees and actual expenses of such counsel, as
incurred (except that in the case of any action in respect of which indemnity
may be sought
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pursuant to both Sections 8(a) and 8(b), the Initial Purchaser shall not be
required to assume the defense of such action pursuant to this Section 8(c), but
may employ separate counsel and participate in the defense thereof, but the fees
and expenses of such counsel, except as provided below, shall be at the expense
of the Initial Purchaser). Any indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the indemnified
party unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and actual expenses of more than one separate
firm of attorneys (in addition to any local counsel) for all indemnified parties
and all such fees and expenses shall be reimbursed as they are incurred. Such
firm shall be designated in writing by ▇▇▇▇▇▇▇▇▇ & Company, Inc., in the case of
the parties indemnified pursuant to Section 8(a), and by the Issuers, in the
case of parties indemnified pursuant to Section 8(b). The indemnifying party
shall indemnify and hold harmless the indemnified party from and against any and
all losses, claims, damages, liabilities and judgments by reason of any
settlement of any action (i) effected with its written consent or (ii) effected
without its written consent if the settlement is entered into more than twenty
business days after the indemnifying party shall have received a request from
the indemnified party for reimbursement for the fees and expenses of counsel (in
any case where such fees and expenses are at the expense of the indemnifying
party) and, prior to the date of such settlement, the indemnifying party shall
have failed to comply with such reimbursement request. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement or compromise of, or consent to the entry of judgment with respect
to, any pending or threatened action in respect of which the indemnified party
is or could have been a party and indemnity or contribution may be or could have
been sought hereunder by the indemnified party, unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability on claims that are or could have been the subject
matter of such action and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party.
(d) To the extent the indemnification provided for in this Section 8
is unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Issuers, on the one hand, and the Initial Purchaser, on the other hand, from the
offering of the Series A Notes or (ii) if the allocation provided by clause
8(d)(i) above is not permitted by applicable law, in such proportion as is
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appropriate to reflect not only the relative benefits referred to in clause
8(d)(i) above but also the relative fault of the Issuers, on the one hand, and
the Initial Purchaser, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments, as well as any other relevant equitable considerations. The relative
benefits received by the Issuers, on the one hand and the Initial Purchaser, on
the other hand, shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Series A Notes (before deducting expenses)
received by the Issuers, and the total discounts and commissions received by the
Initial Purchaser bear to the total price to investors of the Series A Notes, in
each case as set forth in the table on the cover page of the Offering Circular.
The relative fault of the Issuers, on the one hand, and the Initial Purchaser,
on the other hand, shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Issuers, on the one hand, or the Initial Purchaser, on the other
hand, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Issuers and the Initial Purchaser agree that it would not be
just and equitable if contribution pursuant to this Section 8(d) were determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any reasonable legal or other actual expenses incurred by such
indemnified party in connection with investigating or defending any matter,
including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 8, the Initial Purchaser shall not be required to contribute any amount
in excess of the amount by which the total discounts and commissions received by
such Initial Purchasers exceeds the amount of any damages which the Initial
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The remedies provided for in this Section 8 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
9. CONDITIONS OF INITIAL PURCHASER'S OBLIGATIONS. The obligations of
the Initial Purchaser to purchase the Series A Notes under this Agreement are
subject to the satisfaction of each of the following conditions:
(a) Representations and Warranties. All the representations and
warranties of the Issuers contained in this Agreement shall be true and correct
on the Closing Date with the same force and effect as if made on and as of the
Closing Date. The Issuers shall
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have performed or complied with all of the agreements herein contained and
required to be performed and complied with by it at or prior to the Closing
Date.
(b) No Stop Order. No stop order suspending the qualification or
exemption from qualification of any of the Securities for sale in any
jurisdiction shall have been issued and no proceeding for that purpose shall
have been commenced or be pending, or, to the knowledge of the Issuers, be
contemplated.
(c) Governmental Action. No action shall have been taken and no
statute, rule, regulation or order shall have been enacted, adopted or issued by
any governmental agency which would, as of the Closing Date, prevent the
issuance of any of the Securities; no action, suit or proceeding shall be
pending or, to the knowledge of the Issuers, threatened against, CR US or any of
its subsidiaries before any court or arbitrator or any governmental body, agency
or official that, if adversely determined, would have a Material Adverse Effect;
and no stop order preventing the use of the Offering Circular, or any amendment
or supplement thereto, or any order asserting that any of the transactions
contemplated by this Agreement are subject to the registration requirements of
the Securities Act shall have been issued.
(d) No Material Adverse Change. Since the respective dates as of
which information is given in the Offering Circular other than as set forth in
the Offering Circular (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement), (i) there shall not have occurred any
change or any development involving a prospective change in the condition,
financial or otherwise, or the earnings, business, management or operations of
CR US and its subsidiaries, taken as a whole, (ii) there shall not have been any
change or any development involving a prospective change in the capital stock or
in the long-term debt of CR US or any of its subsidiaries and (iii) neither CR
US nor any of its subsidiaries shall have incurred any liability or obligation,
direct or contingent, the effect of which, in any such case described in clause
9(d)(i), 9(d)(ii) or 9(d)(iii), in your judgment, is material and adverse and,
in your judgment, makes it impracticable to market the Units on the terms and in
the manner contemplated in the Offering Circular.
(e) No Ratings Agency Change. On or after the date hereof, (i) there
shall not have occurred any downgrading, suspension or withdrawal of, nor shall
any notice have been given of any potential or intended downgrading, suspension
or withdrawal of, or of any review (or of any potential or intended review) for
a possible change that does not indicate the direction of the possible change
in, any rating of either Issuer or any securities of either Issuer (including,
without limitation, the placing of any of the foregoing ratings on credit watch
with negative or developing implications or under review with an uncertain
direction) by any "nationally recognized statistical rating organization" as
such term is defined for purposes of Rule 436(g)(2) under the Act, (ii) there
shall not have occurred any change, nor shall any notice have been given of any
potential or intended change, in the outlook for any rating of either Issuer or
any securities of either Issuer by any such rating organization and (iii) no
such rating organization shall have given notice that it has assigned (or is
considering assigning) a lower rating to any of the Securities than that on
which the Securities were marketed.
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(f) No Adverse Market Events. Subsequent to the execution and
delivery of this Agreement there shall not have occurred any of the following:
(i) trading in securities generally on the New York Stock Exchange or The Nasdaq
Stock Market's National Market or in the over-the-counter market shall have been
suspended or materially limited, or minimum prices shall have been established
on such exchange by the Commission, or by such exchange or by any other
regulatory body or governmental authority having jurisdiction, (ii) a banking
moratorium shall have been declared by federal or state authorities, (iii) the
United States shall have become engaged in hostilities, there shall have been an
escalation in hostilities involving the United States or there shall have been a
declaration of a national emergency or war by the United States or (iv) there
shall have occurred such a material adverse change in general economic,
political or financial conditions (or the effect of international conditions on
the financial markets in the United States shall be such) as to make it, in the
reasonable judgment of the Initial Purchaser, impracticable or inadvisable to
proceed with the offering or delivery of the Series A Notes being delivered on
the Closing Date on the terms and in the manner contemplated herein and in the
Offering Circular.
(g) Officers' Certificate. You shall have received on the Closing
Date a certificate dated the Closing Date, signed by the President and the Chief
Financial Officer of each Issuer, confirming the matters set forth in Sections
6(rr), 9(a), 9(b), 9(c) and 9(d) and stating that (i) each Issuer has complied
with all the agreements and satisfied all of the conditions herein contained and
required to be complied with or satisfied on or prior to the Closing Date and
(ii) the Issuers have the right to use, at any and all times, the real
properties of the ▇▇▇▇▇▇ Resorts held by the Trusts.
(h) Opinions of Counsel for the Issuers. You shall have received on
the Closing Date opinions (satisfactory to you and counsel for the Initial
Purchaser), dated the Closing Date, of Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇,
L.L.P., of ▇▇▇▇▇▇▇▇▇▇▇ y Steta and of Ernst & Young LLP, each acting as counsel
for the Issuers, in the forms attached hereto as Exhibits B, C and D,
respectively. The opinions of Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P., of
▇▇▇▇▇▇▇▇▇▇▇ y Steta and of Ernst & Young LLP shall be rendered to you at the
request of the Issuers and shall so state therein.
(i) Opinions of Counsel for the Initial Purchaser. The Initial
Purchaser shall have received on the Closing Date opinions, dated the Closing
Date, of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ and of ▇▇▇▇▇, ▇▇▇▇▇▇-▇▇▇▇▇▇▇ y ▇▇▇▇▇▇▇▇▇▇, each
acting as counsel for the Initial Purchaser, in form and substance reasonably
satisfactory to the Initial Purchaser.
(j) Comfort Letter of the Independent Accountants. The Initial
Purchaser shall have received, at the time this Agreement is executed, letters
dated the date hereof in form and substance satisfactory to the Initial
Purchaser from Ernst & Young LLP, independent public accountants, containing the
information and statements of the type ordinarily included in accountants'
"comfort letters" to the Initial Purchaser with respect to the financial
statements and certain financial information contained in the Offering Circular.
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(k) Bring-Down Comfort Letter. On the Closing Date, the Initial
Purchaser shall have received from Ernst & Young LLP, independent public
accountants for the Issuers, a letter dated such date, in form and substance
satisfactory to the Initial Purchaser, to the effect that (i) they confirm that
they are independent public accountants under the guidelines of the American
Institute of Certified Public Accountants and (ii) they reaffirm, as of the
Closing Date, the statements made in the respective letters furnished by them
pursuant to subsection (g) of this Section 9.
(l) PORTAL Designation. The Securities shall have been approved by
the NASD for trading and duly listed in PORTAL.
(m) The Operative Documents. The Issuers, the Trustee and the
Warrant Agent, as applicable, shall have entered into each of the Operative
Documents, the Initial Purchaser shall have received counterparts, conformed as
executed, of each Operative Document, and each Operative Document shall be in
full force and effect.
(n) Compliance with Agreements. Neither Issuer shall have failed at
or prior to the Closing Date to perform or comply with any of the agreements
herein contained and required to be performed or complied with by either Issuer,
as the case may be, at or prior to the Closing Date.
(o) Trust Documents. On or before the Closing Date, (i) the Trust
Agreements shall have been duly registered with the Public Registry of Property
of Cancun, ▇▇▇▇▇▇▇▇ Roo, Mexico (in the case of the Cancun ▇▇▇▇▇▇ Resort), Los
Cabos, Baja California Sur, Mexico (in the case of the Los Cabos ▇▇▇▇▇▇ Resort),
and Puerto Vallarta, Jalisco, Mexico (in the case of the Puerto Vallarta ▇▇▇▇▇▇
Resort); and (ii) each of the Operating Subsidiaries shall have entered into an
agreement with Bancomer and the Remainder Company (the "Formalization
Agreement"), in the presence of, and certified by a Mexican Notary Public, and
in form and substance satisfactory to the Initial Purchaser, pursuant to which
(A) each Operating Subsidiary shall agree to the terms and conditions of the
Trust Agreements, (B) Bancomer and the Remainder Company shall have consented to
the participation of the Operating Subsidiaries as beneficiaries
(fideicomisarios) under the Trust Agreements, and (C) the Formalization
Agreement shall have been duly registered in the Public Registry of Property of
Cancun, ▇▇▇▇▇▇▇▇ Roo, Mexico (in the case of the Cancun ▇▇▇▇▇▇ Resort), Los
Cabos, Baja California Sur, Mexico (in the case of the Los Cabos ▇▇▇▇▇▇ Resort),
and Puerto Vallarta, Jalisco, Mexico (in the case of the Puerto Vallarta ▇▇▇▇▇▇
Resort).
(p) CNBV Approval. On or before the Closing Date, the Mexican
Banking and Securities Commission (Comision Nacional Bancaria y de Valores)
shall have authorized the registration of the Securities, and the Securities
shall have been duly registered, in the Special Section (Seccion Especial) of
the Mexican National Registry of Securities and Intermediaries (Registro
Nacional de Valores e Intermediarios), and the Issuers shall have obtained any
other permits, authorizations or registrations that may be required for the
issuance and sale of the Securities as contemplated herein.
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(q) Repayment of Bancomer Loan. CR Mexico shall have entered into an
agreement with Bancomer, the Mexican subsidiaries of CR US, and Fianzas
Monterrey Aetna, S.A., in the presence of, and certified by a Mexican Notary
Public, and in form and substance satisfactory to the Initial Purchaser,
pursuant to which, upon repayment in full of all outstanding indebtedness under
the Bancomer Loan (as defined in the Offering Circular) (i) the Bancomer Loan
shall terminate and obligations of CR Mexico shall be released, and (ii) all
Liens securing the Bancomer Loan shall be released, and the Initial Purchaser
shall have received assurances satisfactory to it that the Issuers will,
contemporaneously with the Closing, repay in full the Bancomer Loan and receive
all mortgage releases and other release documents (in each case originally
executed and properly notarized and in form for registration) necessary to
evidence the repayment in full of the Bancomer Loan and the release of all Liens
thereunder.
(r) Mirror Notes. One or more Operating Subsidiaries of CR US shall
have issued a promissory note (or promissory notes) in the amount of $86.7
million in favor of CR Mexico in form and substance satisfactory to the Initial
Purchaser.
(s) Power of Attorney. CR Mexico shall have executed and delivered
an irrevocable power of attorney in the presence of, and certified by a Mexican
notary public, in the form of Exhibit E hereto, relating to the appointment of
CR US as agent for service of process.
(t) The Issuers shall have complied with their obligations in
Section 2(b) hereof.
(u) Additional Documents. On or before the Closing Date, the Initial
Purchaser and counsel for the Initial Purchaser shall have received such
information, documents and opinions as they may reasonably require for the
purposes of enabling them to pass upon the issuance and sale of the Securities
as contemplated herein, or in order to evidence the accuracy of any of the
representations and warranties, or the satisfaction of any of the conditions or
agreements, herein contained.
10. EFFECTIVENESS OF AGREEMENT AND TERMINATION. This Agreement shall
become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time on or prior to the Closing
Date by the Initial Purchaser by written notice to the Issuers if any of the
following has occurred: (i) any outbreak or escalation of hostilities or other
national or international calamity or crisis or change in economic conditions or
in the financial markets of the United States or elsewhere that, in the Initial
Purchaser's judgment, is material and adverse and, in the Initial Purchaser's
judgment, makes it impracticable to market the Units on the terms and in the
manner contemplated in the Offering Circular, (ii) the suspension or material
limitation of trading in securities or other instruments on the New York Stock
Exchange, the American Stock Exchange, the Chicago Board of Options Exchange,
the Chicago Mercantile Exchange, the Chicago Board of Trade or the Nasdaq
National Market or limitation on prices for securities or other instruments on
any such exchange or the Nasdaq National Market, (iii) the suspension of trading
of any securities of the Issuers on any exchange or in the over-the-counter
market, (iv) the enactment, publication,
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decree or other promulgation of any federal or state statute, regulation, rule
or order of any court or other governmental authority which in your opinion
materially and adversely affects, or will materially and adversely affect, the
business, prospects, financial condition or results of operations of CR US and
its subsidiaries, taken as a whole, (v) the declaration of a banking moratorium
by either federal or New York State authorities or (vi) the taking of any action
by any federal, state or local government or agency in respect of its monetary
or fiscal affairs which in your opinion has a material adverse effect on the
financial markets in the United States.
11. MISCELLANEOUS. (a) Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (i) if to the Issuers, to Club ▇▇▇▇▇▇
Resorts, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attn: Secretary, and
(ii) if to the Initial Purchaser, ▇▇▇▇▇▇▇▇▇ & Company, Inc., ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel, or in any
case to such other address as the person to be notified may have requested in
writing. For such purpose, CR Mexico hereby (and pursuant to the irrevocable
power of attorney referred to in Section 9(s) hereof) designates and appoints CR
US as its authorized agent upon which process may be served in any legal suit,
action or proceeding relating to the validity, or seeking enforcement, of CR
Mexico's obligations under the Operative Documents, and agrees that service of
process upon CR Mexico in any such suit, action or proceeding and further
designates the domicile of CR US specified above and any domicile CR US may have
in the future as its domicile to receive service of process hereunder.
(b) The respective indemnities, contribution agreements,
representations, warranties and other statements of the Issuers and the Initial
Purchaser set forth in or made pursuant to this Agreement shall remain operative
and in full force and effect, and will survive delivery of and payment for the
Units, regardless of (i) any investigation, or statement as to the results
thereof, made by or on behalf of the Initial Purchaser, the officers or
directors of the Initial Purchaser, any person controlling the Initial
Purchaser, either Issuer, the officers or directors of either Issuer, or any
person controlling either Issuer, (ii) acceptance of the Units and payment for
them hereunder and (iii) termination of this Agreement.
(c) If for any reason the Units are not delivered by or on behalf of
the Issuers as provided herein (other than as a result of any termination of
this Agreement pursuant to Section 10), the Issuers agree to reimburse the
Initial Purchaser for all out-of-pocket expenses (including the fees and
disbursements of counsel) incurred by them. Notwithstanding any termination of
this Agreement, the Issuers shall be liable for all expenses which they have
agreed to pay pursuant to Section 5(i) hereof. The Issuers also agree to
reimburse the Initial Purchaser and its officers, directors and each person, if
any, who controls such Initial Purchaser within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act for any and all fees and expenses
(including without limitation the fees and expenses of counsel) incurred by them
in connection with enforcing their rights under this Agreement (including
without limitation its rights under this Section 8).
(d) Except as otherwise provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon each Issuer, the
Initial Purchaser, the Initial Purchaser's directors and officers, any
controlling persons referred to herein, the directors
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of each Issuer and their respective successors and assigns, all as and to the
extent provided in this Agreement, and no other person shall acquire or have any
right under or by virtue of this Agreement. The term "successors and assigns"
shall not include a purchaser of any of the Notes from the Initial Purchaser
merely because of such purchase.
(e) THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAW PROVISIONS THEREOF.
(f) This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
(g) Each Issuer and, with respect to clause (i) below, the Initial
Purchaser hereby irrevocably and unconditionally:
(i) submits itself and its property to any legal action or
proceeding relating to this Agreement and the other Operative Documents to which
it is a party, or for recognition and enforcement of any judgment in respect of
this Agreement or any other Operative Documents, to the non-exclusive general
jurisdiction of the courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and appellate courts
for such state and federal courts;
(ii) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(iii) agrees that service of process in any such action or
proceeding may be effected by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to CR US at its address set below its
signature to this Agreement or at such other address as CR US shall have
notified the Initial Purchaser; provided that for any notice or service of
process to be effective under Mexican law, such notice or service shall be
deemed to have been given or made when delivered either (i) personally, return
receipt requested or (ii) by certified mail, return receipt requested; and
(iv) agrees that nothing in this Agreement shall affect the
right to effect service of process in any other manner permitted by law or shall
limit the right to ▇▇▇ in any other jurisdiction.
(Signature page follows)
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Please confirm that the foregoing correctly sets forth the agreement
among the Issuers and the Initial Purchaser.
Very truly yours,
CLUB ▇▇▇▇▇▇ RESORTS, INC.
By:
-------------------------------------
Name:
Title:
CR RESORTS CAPITAL, S. de ▇. ▇. de C. V.
By:
-------------------------------------
Name:
Title:
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Agreed and accepted by as of November 26, 1997:
▇▇▇▇▇▇▇▇▇ & COMPANY, INC.
By:
--------------------------------
Name:
Title:
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