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more bs OCTOBER 1, 2008 MEETING MINUTES I.- Liquidation of GCI Since various months ago it was agree to liquidate GCI. Since that time CLS consulted with attorneys in Guadalajara, to execute this operation. Considering the characteristics and the fiscal liabilities of the company, the proposal fees of the attorneys is the amount of $600,000.00 Mexican pesos (30% advance payment, 35% at filing de documents before the fiscal authorities (Mexican IRS) and 35% at the end of the liquidation) this includes the legal liquidation of the company, the cancellation of the Tax Payers Identification number (“RFC”) (including al the compliance of the obligations regarding the declarations filed). The attorneys committed to deliver in no more than 4 months the complete and total liquidation proof. No withstanding the foregoing, FGP mentioned the necessity to check with other law firms the cost of this operation in order to obtain the less expensive proposal for the group. It was concluded that no later than this week FGP will inform CLS the amount of the other law firms proposal, for in its case look for the best offer in Guadalajara. In these effects, it is important to mention that the fiscal year closing it’s closed and the obligations of GCI are accumulating, for which is necessary to resolve on this matter as soon as possible. II.- Inter-companies Operations Since the beginning of this year and because of the restaurant opening and the purchase of the lot by RIF, an operating problem, consisting in that some payments are made by one company, but the fiscal receipts and invoices are issued in favor of another. Resulting that these payments and expenses an nondeductible for Income Tax Purposes (“ISR”) for the company that realize the expense, because it was not paid with its own capital, because of this, the tax authorities cannot probe that monies for that payment came from the company capital. This usually applies for the restaurant payments made by WR or FRI. The original instruction or initial scheme provided that the incomes and expenses, meaning the restaurant operation shall be carried out by FRI. This situations is also present in the expenses made in connection with the construction carried by WR, in a construction property of FIR (please remember that the property was conveyed). The tax laws in Mexico allow a company to pay the expenses in favor of another. For this a special proxy is mandatory, for example where FIR give faculties to WR to make such payments in his behalf. It was mentioned that is not the customary procedure to execute the operations. Likewise, it was mentioned that in its case, it is possible that we will need to explain to the authorities the business reasons why the operations were made under this terms. To this effect, it was required the cooperation of all the manager and directors of the companies, because by knowing them they shall help to find the reasons that allows us to explain such operations on behalf of third parties, for example: (i) the permits obtaining, (ii) while the share time agreement are authorized (iii) while all the operating licenses are obtained, etc.) III. - Pending information regarding the sale of the real estate lot. It was remembered the cash flow obtained from the operation: “….Member John Metzger gives monies to FIR, FIR pay the real estate lot to WR....WR “contracted” AST to pay for the commercial advice services…. AST and its affiliated companies, return monies to Member John Metzger….” FGP wanted to know the status of the pending information and documentation resulting from Juan José resignation. CLS mentioned and explained the following: 1. - That the three invoices corresponding for the payments made by WR to AST were delivered to FGP. Likewise, a copy of the agreement executed between WR and AST evidencing the operation was printed. FGP committed to obtain the signature from WR and to send the agreement to Guadalajara and CLS will get AST signature. 2. - It was mentioned to FGP that as per Member John Metzger request a loan agreement was made to be enter into AST and Member John Metzger, to evidence and justify the monies that AST gave to Member John Metzger. A copy of the agreement was handed to Juan Jose for him to deliver it to Member John Metzger. Member John Metzger commented that the translation was not accurate, and he will prepare the document. During the meeting at the lunch time the Director of the company have a telephone call with Member John Metzger to remember him this pending matter. Meanwhile we will wait for Member John Metzger’s proposal. 3. - CLS asked FGP that if the management of WR wanted to consider the amounts given by Member John Metzger as a contribution to or as a loan to FIR. FGP discussed this issue with the General Manager and he resolved that it shall be considered as a loan. It still pending to draft the agreement and the corresponding promissory note, in this regards the management of the company mentioned that Member John Metzger have no inconvenience that the note is prepared with a low interest rate and an interest long term expiration. IV.- Fly and Buy Operations Regarding this point the accountants discussed their questions in connection with the record of these operations, because the parties involved in this operation are not well identified, for example, an agency is contacted, a different hotel provide de service, it is paid to a different person and furthermore the fiscal receipt cannot be obtained in order for WR or FIR prove such expense. It also important to point out that is an expense made abroad. It was concluded to ask the agency with which the negotiation were made and who also discount the resources from WR accounts to deliver a balance or in its case an invoice , in which its monthly or weekly described the discounted amounts, for this documents along with the agreement proves the corresponding expense. Neither FGP nor the accountants know the corresponding agreement and we believe that this document is important to prove the expense and to be deductible. V.- WR fiscal liabilities – 2008 provisional payments – Investor Agreement fiscal treatment WR paid all the accrued taxes in fiscal years 2006 and 2007 and all the monthly and annual tax revenues were filed. However, the taxes corresponding to this year have not been paid. The accountant of the company informed that as to August the outstanding amount for taxes is the amount of $3,500,000.00 pesos, these taxes are corresponding to the VAT and provisional payments for Income Tax. Furthermore, it was remembered that as part of the fiscal tax strategy for fiscal years 2006 and 2007, it was proposed to amend some of the agreements executed with the clients, hence, instead of being share time agreements they will be considered as investment agreements, meaning that, the amounts paid to WR will be considered as a loan to WR and in case during the following 2 year they are not paid, WR is bound to deliver share time units of fractional, pursuant to the corresponding agreements. This permitted deferring the income for two years following the execution of the initial agreement. Consequently, WR must recognize in 2008, the corresponding incomes from the investment agreements signed in year 2006, because two years have passed since the original execution. The accountants and WR personnel concluded to determine the pending incomes corresponding to year 2008 (please refer to paragraph VI below) VI.- Liquidation of WR – share time agreements assignment of rights Based on the actions adopted by the company management regarding transmitting WR operation to FIR (real estate sell, restaurant operation, filing new recordation of the share time agreement before the Federal Consumer Protection Agency – PROFECO, etc.) and taking into account the possible legal contingencies for DLR matter, is was analyzed the possibility to liquidate WR. CLS mentioned that the liquidation will as well have the effect to eliminate the current tax liabilities of WR including the deferred taxes triggered from the investment agreements referred to in paragraph V before. From a financial and tax point of view, it was concluded that is more viable this liquidation, however, all concluded that it is more important to analyze the legal effects of the share time agreements; even the General Manager pointed out that the undertakings assumed before the clients shall prevail, and that it shall be analyzed the possibility that FIR assume such obligations. Regarding the share time assignment of rights agreement to be entered into WR and FIR, no relevant problem is foreseen. The important issue is to analyze that WR has in these agreements the obligation to deliver units and provide share time services. CLS mentioned that he will discuss this matter with his Firm attorney, to get his preliminary opinion in connection to this matter (viable or not), as well as for him to propose a number of steps (prior to liquidation) and his attorney fee. FGP mentioned that she was going to ask for proposals with other attorneys, to analyze the more economic proposal for the group. VII.- Audited Financial Statements The auditors mentioned that even when their report and opinion on the financial statements for fiscal year 2007 was prepared from a time ago, they were not delivered because they have not have the meeting with the company managers to discuss the important point of their opinion. Gabriel Guadalupe Clavel Carmona committed to review the auditor’s report and the financial statements, to make his respective comments and suggested translating the auditor’s report into English in order for the CEO of the company to analyze them., The auditors handed to Gabriel Guadalupe Clavel Carmona the outstanding invoices corresponding to the auditing services provided to WR In addition, CLS mentioned as per Gabriel Guadalupe Clavel Carmona request mentioned the range of his services provided during years 2006 and 2007. In that regards, CLS mentioned that according to the written proposal accepted by the company, the implementation of the saving income tax and VAT strategies tasks in connection with tax regularizing the companies of the group were implemented, and based on the tax saving a percentage of his Firm fee was agreed. Furthermore, CLS clarify to Gabriel Guadalupe Clavel Carmona, that from the total amount of the corresponding fee, he diminish the amounts paid during his working period and the fee corresponding to the preparation of the report on the financial statements, which even though they are not related to the tax services, he absorbed them as a favor to the company, likewise, he reduces the fee percentage to be paid from the original services proposal. He also mentioned that his fee for the years 2006 and 2007 were paid in full. VIII.- State Treasury requirements – current situation on the fiscal addresses – assets transmission from WR to FIR The accountants mentioned that some compliance obligations requirements were received from the state and tax, authorities, in the addresses were the companies of the group were registered in the RFC. These addresses do not correspond to the real location of the companies. Also, the accountant mentions their concern about the process that shall be following up to transmit the assets (machinery, constructions, computers, cars, etc.) from WR to FIR. It was agrees that once the management of the company analyze and authorize the liquidation of WR, these matter will be analyzed to minimize the corresponding impact. [Q=rodrigoc5] The class action has been resolved in first instance by the judge. The defendants may still appeal the resolution, and therefore it will not be definitive until the corresponding term for appeal elapses without there being one. Nevertheless, the court ruled favorably for the plaintiffs in this case, as translated from the actual sentencing document. IT IS VERY IMPORTANT TO NOTE THAT ANY MONETARY SETTLEMENT WILL BE DETERMINED INDIVIDUALLY BY THE JUDGE FOR EACH MEMBER. EACH MEMBER WHO HAS NOT DONE SO, WILL STILL HAVE TO DOCUMENT THEIR CLAIM WITH SUPPORT EVIDENCE SUCH AS ORIGINAL CONTRACTS (OR ALTERNATIVELY DULY CERTIFIED COPIES WITH APOSTILLE OR LEGALIZATION WHEN REQUIRED BY LAW), TRANSLATIONS INTO SPANISH IF THESE ARE IN ENGLISH, PROOF OF PAYMENT (CREDIT CARD STATEMENTS, VOUCHERS OR WIRE TRANSFER CONFIRMATIONS), LETTER OF ADHESION. ADDITIONALLY OTHER INFORMATION MAY BE REQUIRED BY THE JUDGE IN EACH INDIVIDUAL CASE. DO NOT FALL FOR SCAMS CLAIMING TO HAVE A BALANCE FOR SETTLEMENT IN A MEXICAN BANK TO BE RELEASED UPON PAYMENT OF UP FRONT FEES !!!!!!! Resolution Section of the Sentence. FIRST.- The class action that was filed as an individual homogenous class action filed by Carlos Roman Hernandez, in his character as legal judicial representative of the Civil Association called “Defensa Colectiva A.C.” is favorable to the plaintiffs, who ascertained their actions in respect to the considerations contained in their initial complaint document against RESORT INTERNATIONAL FOUNDATION S DE R.L. DE C.V., as assignee of the rights of WORLD RESORT MARKETING ENTERPRISES, S. DE R.L. DE C.V., consequently: SECOND.- All agreements executed between the defendant RESORT INTERNATIONAL FOUNDATION S. DE R.L DE C.V. as assignee of the rights of WORLD RESORT MARKETING ENTERPRISES, S. DE R.L. DE C.V.; with the members of the plaintiff class, and those who adhered, as well as those consumers that further adhere to this sentence in the terms of the law; are hereby rescinded. THIRD.- RESORT INTERNATIONAL FOUNDATION S. DE R.L. DE C.V. as assignee of the rights of WORLD RESORTS MARKETING ENTERPRISES, is hereby sentenced to refund the amounts paid by each one of the members integrating the class and those who adhere. FOURTH.- The defendant RESORT INTERNATIONAL FOUNDATION S. DE R.L. DE C.V. as assignee of the rights of WORLD RESORTS MARKETING ENTERPRISES are condemned to the payment of damages and losses caused to the members of the plaintiff class, quantifiable and pending liquidation in by incidental means, upon the execution of the sentence. FIFTH.- RESORTS INTERNATIONAL FOUNDATION S. DE R.L. DE C.V., as assignee of the rights of WORLD RESORTS MARKETING ENTERPRISES, is hereby sentenced to the payment of delinquent interests, at the legal rate of nine percent per year on the amount that has to be returned individually to each member of the plaintiff class and those who adhere, that will generate from the moment that the refunds are legally collectable from the defendant, and in the case that the latter does not fulfill the sentence. SIXTH.- RESORTS INTERNATIONAL FOUNDATION is hereby sentenced, as assignee of the rights of WORLD RESORTS MARKETING ENTERPRISES, to the payment of expenses and costs in favor of the plaintiffs and the adhered, in the terms corresponding to this instance, which must be regulated incidentally. As resolved and undersigned by Mario Oscar Lugo Ramirez, First District Judge in Civil matters in the State of Jalisco, before Licentiate Rafael Martinez Garcia, the Secretary that authorizes and attests to the above.[/Q] here is the evidence that is all a big scam it was all planned back from 2008 they had the plot written out read..