As filed with the Securities and Exchange Commission
on January 31, 1997
Registration No. 33-13511
_____________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-11
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
____________________
CHARTHOUSE SUITES VACATION OWNERSHIP, INC.
(Exact name of registrant as specified in governing instrument)
250 PATRICK BOULEVARD
BROOKFIELD, WISCONSIN 53045
(414) 792-9201
(Address of principal executive offices)
Jeffrey L. Keierleber
c/o Charthouse Suites Vacation Ownership, Inc.
250 Patrick Boulevard
Brookfield, Wisconsin 53045
(414) 792-9201
(Name and address of agent for service)
Copy to:
Conrad G. Goodkind, Esq.
Quarles & Brady
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
(414) 277-5000
____________________
Approximate date of commencement of proposed sale of
the securities to the public:
As soon as practicable after this Registration Statement
becomes effective.
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check
the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same
offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. |_|
The registrant hereby amends this registration statement on such
date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states
that this registration statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
registration statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine. If
the filing fee is calculated pursuant to Rule 457(o) under the
Securities Act, only the title of the class of securities to be
registered, the proposed maximum aggregate offering price for that
class of securities and the amount of registration fee need to appear
in the Calculation of Registration Fee table. Any difference between
the dollar amount of securities registered for such offerings and the
dollar amount of securities sold may be carried forward on a future
registration statement pursuant to Rule 429 under the Securities Act.
______________________________________________________________________
<PAGE>
CHARTHOUSE SUITES VACATION OWNERSHIP, INC.
Cross Reference Sheet
Showing location in Prospectus of information required to be
included in Prospectus in response to items of Form S-11.
Item Number and Caption Heading in Prospectus
1. Forepart of Registration Cover Page of Prospectus
Statement and Outside Front
Cover Page of Prospectus
2. Inside Front and Outside Outside Back Cover of
Prospectus
Back Cover Pages of Prospectus
3. Summary Information, Risk Summary; Risk Factors
Factors and Ratio of Earnings
to Fixed Charges
4. Determination of Offering Price Determination of Offering
Price
5. Dilution Not Applicable
6. Selling Security Holders Not Applicable
7. Plan of Distribution Plan of Distribution
8. Use of Proceeds Use of Proceeds
9. Selected Financial Data Not Applicable
10. Management's Discussion and The Company
Analysis of Financial Condition
and Results of Operations
11. General Information as to The Company
Registrant
12. Policy with Respect to Certain The Company
Activities
13. Investment Policies of Registrant Not Applicable
14. Description of Real Estate Description of The Chart House
Suites Hotel
15. Operating Data Chart House Results
16. Tax Treatment of Registrant Certain Federal Income Tax
and its Security Holders Considerations; Certain
Florida
Tax Matters
17. Market Price of and Dividends Not Applicable
on the Registrant's Common
Equity and Related Stockholder
Matters
18. Description of Registrant's The Interests
Securities
19. Legal Proceedings Legal Matters
20. Security Ownership of Certain Management
Beneficial Owners and Management
21. Directors and Executive Officers Management
22. Executive Compensation Not Applicable
23. Certain Relationships and Conflicts of Interest of
Related Transactions Management and Affiliates
24. Selection, Management and Conflicts of Interest of
Custody of Registrant's Management and Affiliates
Investments
25. Policies with Respect to Conflicts of Interest of
Certain Transactions Management and Affiliates
26. Limitations of Liability The Interests
27. Financial Statements and Financial Statements and
Related
Information Information
28. Interest of Named Experts Experts
and Counsel
29. Disclosure of Commission Liability and Indemnification
of
Position on Indemnification Officers and Directors
for Securities Act Liabilities
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed
with the Securities and Exchange Commission. These securities may not
be sold nor may offers to buy be accepted prior to the time the
registration statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any State in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of such State.
PROSPECTUS Subject to Completion, dated January 31, 1997
_______________
Charthouse
Suites
Vacation
Investment and Ownership
Interests
_____________________________________________________________________
|_| 150 Charthouse Suites Vacation Investment and Ownership
Interests
_____________________________________________________________________
|_| Charthouse Suites Vacation Investment and Ownership
Interests Range In Cost From $17,000 to $61,000 per Interest
(Depending Upon Class of Interest) -- Minimum Purchase of
One Interest
_____________________________________________________________________
Holders of Charthouse Suites Vacation Investment and Ownership
Interests (the "Interests") have the rights and responsibilities set
forth in the Charthouse Suites Vacation License Plan, including the
right to rent or use a certain room category in the Chart House Suites
hotel in Clearwater Beach, Florida, for two weeks of every Spring,
Summer, Fall and Winter in each year until December 31, 2050. See
"The Interests."
The Interests are transferable although the sale, assignment, or
transfer of partial Interests is subject to certain restrictions and
the consent of the Company. See "The Interests--Transferability of
Interests." If fewer than 76 Interests are sold by December 31, 1997,
Charthouse Suites Vacation Ownership, Inc. (the "Company") has an
option to cancel the underlying licenses and return the entire paid
subscription amount, reduced by certain payments and benefits
received, to Investors. There is no minimum subscription amount. See
"Plan of Distribution." Funds will be escrowed for 10 days pursuant
to Chapter 721, Florida Statutes and available for refund upon
cancellation; otherwise there are no arrangements to place any
proceeds in escrow, trust or a similar arrangement.
_____________________________________________________________________
See "RISK FACTORS" at page 9 for a discussion of certain factors that
should be considered by prospective purchasers.
_____________________________________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
_____________________________________________________________________
There is no market for the Interests being offered hereunder and no
public market is expected to develop as a result of this Offering.
There can be no assurance that the Interests can be resold for the
Offering price, if at all. Accordingly, Interests should be purchased
only as a long-term investment since Holders may not be able to sell
the Interests in the event of an emergency or for any other reasons
and must also commit to pay certain annual dues and special
assessments, if any. See "Summary -- Annual Dues and Special
Assessments."
_____________________________________________________________________
<PAGE>
<TABLE>
<CAPTION>
Per Interest
Price to the Sales Proceeds to
Public Commissions(1) the Company(2)
<S> <C> <C> <C>
A Class - Standard Studio Suite $ 17,000 $ 1,700 $ 15,300
(36 Interests)
B Class - King Bed Studio Suite $ 20,000 $ 2,000 $ 18,000
(24 Interests)
C Class - Large Studio Suite $ 26,500 $ 2,650 $ 23,850
(36 Interests)
D Class - 1 Bedroom Suite $ 36,500 $ 3,650 $ 32,850
(36 Interests)
E Class - 1 Bedroom Suite (With $ 39,500 $ 3,950 $ 35,550
lanai) (12 Interests)
F Class - Penthouse $ 61,000 $ 6,100 $ 54,900
(6 Interests)
Total Maximum Offering $4,200,000 $420,000 $3,780,000
(150 Interests)
</TABLE>
<PAGE>
(1) The Company has agreed to indemnify the Underwriter and broker-
dealers who are selling the Interests on a best efforts basis
against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Plan of Distribution."
(2) Before deducting offering expenses payable by the Company
estimated at $231,000.
______________________________________________________________________
_
As of the date of this prospectus, Interests are only available
for offer and sale in the States of Florida and Wisconsin.
The date of this Prospectus is ___________ __, 1997.
Decade Securities Corporation
<PAGE>
Until ________ all dealers effecting transactions in the Investments,
whether or not participating in this distribution, may be required to
deliver a prospectus. This is in addition to the obligation of
dealers to deliver a prospectus when acting as Underwriter.
No dealer, salesperson or any other person has been authorized to
give any information or make any representations other than those
contained in this Prospectus and supplemental literature authorized by
the Company and referred to in this Prospectus, and, if given or made,
such information and representations must not be relied upon. This
Prospectus does not constitute an offer to sell or a solicitation of
an offer to buy any of the securities offered hereby in any state to
any person to whom it is unlawful to make such offer. Neither the
delivery of this Prospectus nor any sale made hereunder shall under
any circumstances create any implication that there has been no change
in the affairs of the Company since the respective dates at which
information is given herein, or the date hereof. However, if any
material change in the affairs of the Company shall occur during the
time when a copy of this Prospectus is required to be delivered, the
Company will amend or supplement this Prospectus to reflect such
change.
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . 9
THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . 14
DESCRIPTION OF THE CHART HOUSE SUITES HOTEL. . . . . . . . . . 15
DESCRIPTION OF MASTER LICENSE AGREEMENT. . . . . . . . . . . . 16
THE INTERESTS. . . . . . . . . . . . . . . . . . . . . . . . . 17
CHARTHOUSE RESULTS . . . . . . . . . . . . . . . . . . . . . . 22
ANNUAL DUES AND SPECIAL ASSESSMENTS. . . . . . . . . . . . . . 22
GUARANTEED RENTAL ARRANGEMENT. . . . . . . . . . . . . . . . . 24
LICENSE PAYMENT OPTIONS. . . . . . . . . . . . . . . . . . . . 26
DETERMINATION OF OFFERING PRICE. . . . . . . . . . . . . . . . 27
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . 27
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . 28
HOW TO SUBSCRIBE . . . . . . . . . . . . . . . . . . . . . . . 28
SUMMARY OF PROMOTIONAL AND SALES MATERIAL. . . . . . . . . . . 29
CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . 29
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 29
DECADE PROPERTIES, INC.. . . . . . . . . . . . . . . . . . . . 31
CONFLICTS OF INTERESTS OF MANAGEMENT AND AFFILIATES. . . . . . 31
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS. . . . . . . . . . . 32
CERTAIN FLORIDA TAX MATTERS. . . . . . . . . . . . . . . . . . 43
LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS. . . . 44
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . 45
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
FINANCIAL STATEMENTS AND RELATED INFORMATION . . . . . . . . .F-1
GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . .F-2
ANNEX A
CHARTHOUSE SUITES VACATION LICENSE PLAN. . . . . . . . .Annex A-1
ANNEX B
RULES AND REGULATIONS FOR CHART HOUSE
SUITES HOTEL SUITES . . . . . . . . . . . . . . . .Annex B-1
ANNEX C
TIME SHARE PUBLIC OFFERING STATEMENT . . . . . . . . . .Annex C-1
ANNEX D
SUBSCRIPTION AGREEMENT . . . . . . . . . . . . . . . . .Annex D-1
ANNEX E
SCHEDULE OF WEEKS. . . . . . . . . . . . . . . . . . . .Annex E-1
<PAGE>
SUMMARY
Charthouse Suites Vacation Investment and Ownership Interests
The following Summary is qualified in its entirety by
reference to the more detailed information contained elsewhere in
this Prospectus and the Annexes and Exhibits thereto.
Capitalized terms used, but not defined in this Summary, are
defined elsewhere in this Prospectus, including the Glossary.
Prospective purchasers are urged to read and evaluate this
Prospectus and the Annexes and Exhibits in their entirety.
Charthouse Suites Vacation Ownership, Inc., a Florida
corporation (the "Company" or "Charthouse"), hereby offers Class
A, Class B, Class C, Class D, Class E, and Class F Interests
(collectively hereafter the "Interests") for sale to investors.
The purchaser of an Interest (a "Holder") will have the right to
rent or use for two specific and consecutive weeks of every
Spring, Summer, Fall, and Winter Season in each year until
December 31, 2050, a category of hotel room or suite
(collectively referred to as suite) of a certain category in the
Chart House Suites hotel located in Clearwater Beach, Florida. A
Holder will receive rental income from the rental of the hotel
suite, if any, through the Charthouse Suites rental pool, or upon
30 days notice to the Company, have the right to use one or more
of the eight weeks ("Unit Weeks") each year, or join RCI Travel
and utilize the RCI Travel Vacation Exchange Program to exchange
Unit Weeks at the Chart House Suites hotel for vacation weeks at
approximately 2,800 RCI affiliated resorts located around the
world. No level of income from the rental is guaranteed.
The Interests The 150 Interests are sublicenses which
consist of 36 A Interests for $17,000
each, 24 B Interests for $20,000 each,
36 C Interests for $26,500 each, 36 D
Interests for $36,500 each, 12 E
Interests for $39,500 each, and six F
Interests for $61,000 each. Each class
of Interest entitles an owner thereof to
rental proceeds from the Charthouse
rental pool or, upon request, use of a
corresponding class of Unit Week in the
Chart House Suites hotel. In addition
to paying for the Interests, Holders
will be required to pay annual dues and,
if any, special assessments. See "The
Interests."
Chart House Suites Hotel The Chart House Suites hotel is a four
story hotel located on Clearwater Bay at
850 Bayway Boulevard, Clearwater Beach,
Florida. The Chart House Suites hotel
is owned by Decade Properties, Inc.,
which, will retain Unit Weeks in the
hotel for each suite, assuming all of
the Interests hereby are sold. The
hotel consists of 25 hotel rooms and
features a heated swimming pool,
attached marina (which will remain owned
and operated by Decade Properties,
Inc.), laundry room, and access to white
sand beaches, recreation, dining,
nightlife and shopping. See
"Description of the Chart House Suites
Hotel."
The Company The Company has been formed to
facilitate the sale of sublicenses to
use the Chart House Suites hotel and has
the right to sell Interests pursuant to
a Master License Agreement between the
Company and Decade Properties, Inc.,
owner of the Chart House Suites hotel.
Owners of the Interests will not acquire
an ownership or equity interest in the
Company or a property interest in the
Chart House Suites hotel, but pursuant
to the Charthouse Suites Vacation
License Plan will acquire a license
right to rent or use Unit Weeks
corresponding to a certain category
hotel suite. See "The Company." The
Company's offices are at 250 Patrick
Boulevard, Brookfield, Wisconsin 53045,
Telephone 414-792-9200. The Company is
owned by Jeffrey Keierleber. Affiliates
of the Company will provide management
and consulting services to the Company
and administer the Charthouse rental
pool pursuant to agreements with
Company. See "The Company."
A Interests Rights The ownership of A Interests allows a
Holder use of a standard studio hotel
suite (with bathroom)for two weeks in
each season until December 31, 2050.
The A Interests Suites are approximately
300 square feet and contains two queen
sized beds with room for up to four
adults.
B Interests Rights The ownership of B Interests allows a
Holder use of a king bed studio suite
(with bathroom) overlooking the marina
and Clearwater Bay for four weeks in
each season until December 31, 2050.
The B Interest suites are approximately
360 square feet and contain a king sized
bed with room for up to two adults. See
"The Interests."
C Interests Rights The ownership of C Interests allows a
Holder use of a large studio suite (with
bathroom) overlooking the marina and
Clearwater Bay or the southern exposure
for two weeks in each season until
December 31, 2050. The C Interest
suites vary and range from 430 to 436
square feet and contain two queen sized
beds with room for up to four adults.
See "The Interests."
D Interests Rights The ownership of D Interests allows a
Holder use of a large one bedroom suite
overlooking the marina and Clearwater
Bay or the swimming pool, or southern
exposure for two weeks in each season
until December 31, 2050. The D Interest
suites vary and are approximately 638 to
869 square feet and contain two queen
sized beds with room for up to four
adults. See "The Interests."
E Interests Rights The ownership of E Interests allows a
Holder use of a large one bedroom suite
(with a large lanai) with a view of the
marina and Clearwater Bay for two weeks
in each season until December 31, 2050.
The E Interest suites vary and are
approximately 815 to 982 square feet and
contain two queen sized beds with room
for up to four adults. See "The
Interests."
F Interests Rights The ownership of F Interests allows a
Holder use of a two bedroom penthouse
suite, with a fully equipped kitchen,
living room, den, dining room, two full
baths (one with a jacuzzi), and a large
balcony overlooking the Charthouse
marina and Clearwater Bay for two weeks
in each season until December 31, 2050.
The F Interest suite is approximately
1,875 square feet and has two queen
sized and one king sized bed, with room
for up to six adults. See "The
Interests."
Units Retained by Because each Interest has the right to
Company/Decade 8 Unit Weeks in each year, and there are
Properties, Inc. 52 or 53 weeks in a year, 4 Unit Weeks
(or 5 Unit Weeks in certain years where
there are 53 weeks in a year), of each
suite shall remain the property of
Decade Properties, Inc. Therefore,
Decade Properties, Inc. will have 100
(or in certain years 125) Unit Weeks
annually and be responsible for the
annual dues and special assessments, if
any, arising from those retained Unit
Weeks as well as a right to income from
the Charthouse rental pool or exchange
in the RCI Exchange Program. See "the
Interests."
License Rights The licensee's rights obtained by a
Holder upon purchase of the Interests
are set forth in the Charthouse Suites
Vacation License Plan, and the
Charthouse Suites Rules and Regulations
which are set forth as Annex A and B,
respectively. See "The Interests" for a
summary of the terms of the Charthouse
Suites Vacation License Plan. The
Company has acquired the rights to the
Chart House Suites hotel pursuant to the
Master License Agreement with Decade
Properties, Inc.
Licensing Payments Investors may pay for the Interests
either in cash upon subscription or in
installments over part of the license
term. If paying by installment, a
minimum of 25% of the purchase price is
due upon acceptance of a subscription
agreement (after any applicable cash
discounts). All initial subscription
payments will be placed in escrow for at
least 10 days, during which time the
money will be held and purchasers shall
have a right to rescind their
investment. Under the installment
payment program, the remaining balance
on the Interest will be payable in 360
monthly installments before the first
day of each month and the unpaid balance
on each license payment increases by 9%
annually (which has the effect of 9%
interest on the unpaid balance). See
"License Payment Options."
A Holder who chooses to make installment
payments must be current on all
licensing payments and annual dues and,
if any, special assessments, in order to
rent, use or exchange the Unit Week. If
not current on all payments, a Holder
will forfeit all rights to the Unit
Weeks and if such default continues for
more than six months or if there are
more than three defaults of any
duration, the Company may cancel the
Interest pursuant to the terms of the
Charthouse Suites Vacation License Plan.
Upon cancellation for failure to pay, a
Holder will have no further rights to
the hotel or refund for past amounts
paid. See "License Payment Options."
Charthouse Rental Pool Each Unit Week will automatically be
placed in the Charthouse rental pool but
upon 30 days written notice to
Charthouse, a Holder may withdraw any or
all of the Holder's allotted Unit Weeks
from the Charthouse rental pool. A
Holder may only withdraw entire Unit
Weeks from the Charthouse rental pool.
Under the Charthouse rental pool,
Charthouse will attempt to rent the
hotel suite to others on a daily or
weekly basis and the Holder will share
pro rata (utilizing the ratios used for
annual dues allocations for each Class
of Interest) in the rentals of all Unit
Weeks that are placed in the Charthouse
rental pool. There is a fee payable to
Decade Properties, Inc. equal to 5% of
the rental revenue, plus reimbursement
of its costs as part of annual dues
under the Charthouse Suites Vacation
License Plan for operating the rental
pool. Decade Properties, Inc. intends
to place its retained Unit Weeks in the
Charthouse rental pool, although it
reserves the right to use or exchange
the Unit Weeks in the RCI Travel
Vacation Exchange Program. See "The
Interests -- Use Options."
Guaranteed Rental As an incentive to early purchasers,
Arrangement or Cash Holders may elect to receive guaranteed
Discount Program rental payments, at varying rates, for
their Unit Weeks for a specified number
of weeks. Under this Guaranteed Rental
Arrangement, Investors who purchase by
[within six months of the Effective Date
of the Registration Statement] may
designate six Unit Weeks and receive a
guaranteed rental rate, which varies
depending upon the class of Interest.
Investors purchasing [between six months
and nine months of the Effective Date of
the Registration Statement] may
designate four Unit Weeks and receive a
guaranteed rental rate, which varies
depending upon the class of Interest.
Investors purchasing between [nine
months and one year of the Effective
Date of the Registration Statement] may
designate two Unit Weeks on the same
terms. Investors purchasing after one
year of the Effective Date of the
Registration Statement are not eligible
to participate in this Guaranteed Rental
Arrangement. The guaranteed rental rate
is a walk-in, off-season rate. See
"Guaranteed Rental Agreement" for a
description of the arrangement, the
guaranteed rates, and certain
conditions.
In lieu of the Guaranteed Rental
Arrangement, early Investors may elect
to receive a cash discount to the
subscription price by surrendering
rights to the Guaranteed Rental
Arrangement. Investors purchasing by
[six months of the Effective Date of the
Registration Statement] may elect to
receive a 5% discount from the purchase
price of an Interest. Investors
purchasing between [six months and nine
months of the Effective Date of the
Registration Statement] may elect to
receive a 3% cash discount from the
purchase price of an Interest, Investors
between [nine months and one year of the
Effective Date of the Registration
Statement] may elect to receive a 1-1/2%
discount from the purchase price of an
Interest, and Investors purchasing after
one year of the Effective Date of the
Registration Statement may not
participate in this cash discount
program. See "Guaranteed Rental
Arrangement."
Annual Dues and Holders will be responsible for a
Special Assessments proportionate share of the annual
maintenance and other related costs,
expenses and reserves of the Chart House
Suites Hotel. For the year ended
December 31, 1997, the dues for each
Unit Week of the Interests (each
Interest has eight Unit Weeks) will be
$190 for Class A Interests, $190 for
Class B Interests, $205 for Class C
Interests, $285 for Class D Interests,
$305 for Class E Interests, and $365 for
Class F Interests. The amount of annual
dues will be set by the Company based
upon the expenses of operating the hotel
and the Charthouse rental pool and
providing services and will be
proportionately allocated to Holders as
set forth in the Charthouse Suites
Vacation License Plan and cannot
increase annually by more than 10% of
the prior year's dues (exclusive of the
allocable percentage of the property tax
and insurance) without an affirmative
vote of Unit Weeks representing a
majority of the Interests. The
Charthouse Suites Vacation License Plan
provides for special assessments under
limited circumstances. In connection
with a vote for increases in annual dues
or special assessments, Decade
Properties, Inc. will vote the Unit Week
for the unissued Interests or the Unit
Weeks for canceled Interests, unless
issued and reacquired Interests are
retained by the Company, in which case
Charthouse will vote the Unit Week and
be responsible for its proportionate
share of such costs. See "Annual Dues
and Special Assessments."
Failure to Pay The Charthouse Suites Vacation License
Annual Dues and Plan provides that a Holder must pay his
Special Assessments or her annual dues (or, if applicable,
special assessments) prior to renting,
using, or exchanging the Unit Week in
the RCI Exchange Program. If a Holder
has not paid his or her share of annual
dues or special assessments, if any, the
Company will have the right to use, rent
through the Charthouse rental pool, or
exchange the Unit Week and retain all of
the proceeds, if any, and such income
received by the Company, if any, will
not reduce the amount of annual dues
(including special assessments, if any)
owed by the Holder. See "Annual Dues
and Special Assessments."
RCI Membership and Holders may enroll in the RCI Exchange
Exchange Program Program, upon payment of membership fees
to RCI. Upon purchase of an Interest,
the Company intends to pay the costs of
a Holder's one year membership in RCI
and any initiation fees. The RCI
Exchange Program allows members to
deposit a Unit Week or more and request
an exchange for a week or weeks at
another participating resort located
around the world. Under the RCI
Exchange Program, a Holder deposits a
Unit Week, up to 24 months in advance,
and then requests an exchange to, as of
the date of this prospectus, one of the
approximately 3,000 RCI affiliated
resorts around the world. Under this
program a Holder may exchange Unit
Weeks, whether or not the deposited
Chart House Suites hotel Unit Week is
used by another RCI member. The RCI
Exchange Program provides the
opportunity to exchange and deposit the
banked Unit Weeks up to two years after
the scheduled start date or, if desired,
up to one year prior to the scheduled
start date. As of the date of this
Prospectus, the cost of membership in
RCI was $74 for one year, $135 for two
years, $199 for three years and $315 for
five years. In addition and as of the
date of this prospectus, RCI charges a
$103 exchange fee ($135 for
international exchanges) for each Unit
Week exchanged through the RCI Exchange
Program. Under the terms of the RCI
Exchange Program, a Holder must have
paid his or her annual dues (and special
assessments, if any) for the Unit Week
and, if paying for the Interest on an
installment basis, the Interest license
payment to Charthouse associated with
the deposited Unit Week in order to
utilize the RCI Exchange Program. The
RCI Exchange Program is not affiliated
with the Company or any affiliate of the
company (other than through an
affiliation agreement). The Company
assumes no liability or responsibility
to RCI's program or performance. RCI
has informed Charthouse that all of the
Unit Weeks will be considered "red"
weeks under the terms of its RCI
Exchange Program, the seasonal
designation indicating greatest member
demand. See "The Interests -- Use
Options."
Decade Properties, Inc. Decade Properties, Inc., an affiliate of
the Company, provides property
management and rental pool services
pursuant to an agreement with the
Company. See "Decade Properties, Inc."
If Decade Properties, Inc. is ever
removed, the property management
agreement provides for payments to it
equal to amounts that would have been
earned over the term of the contract,
which expires December 31, 2050. See "
Conflicts of Interest of Management and
Affiliates."
Management of The Company, subject to the terms of the
Charthouse Master License Agreement and the
Charthouse Suites Vacation License Plan,
will be responsible for management
decisions of the hotel and advertising
the hotel. An advisory committee,
composed of Holders and their
representatives, may be consulted for
advisory decisions as to the operation
of Chart House Suites hotel, although
their decisions will not be binding upon
the Company. See "Management."
Distributions The Company will not make annual or
other distributions to Holders nor does
the Interest give rise to a distribution
right, although Holders may derive
revenue from renting the Unit Week
through the Charthouse rental pool or
otherwise. There can be no assurance
that a Holder will realize any rental
revenue from the Charthouse rental pool
or otherwise. See "The Interests -- Use
Options."
Tax Considerations Tax consequences will vary depending
upon a Holder's use of the Interests,
and deductions for costs of the
Interests, annual dues, and special
assessments, if any, may be limited.
Upon subscription, certain Florida
documentary taxes will be due and
payable. See "Certain Federal Income
Tax Considerations" and "Certain Florida
Tax Considerations."
Lack of Market No market is expected to develop for
trading of the Interests as a result of
this Offering. Holders may sell,
transfer or assign Interests or may
sell, transfer or assign partial
Interests (i.e. Unit Weeks), subject to
certain conditions, including the
Company's consent. There can be no
assurances that Interests can be sold at
a profit or at all. The Interests
should be purchased as a long-term
investment since Holders may not be able
to sell the Interests to raise cash for
emergencies or for any other reason, and
Holders must commit to pay certain
annual dues and special assessments, if
any. See "The Interests--
Transferability of Interests."
Conflicts of Interest The Company will control the operations
of the Chart House hotel and has
retained Decade Properties, Inc. to
operate the Charthouse rental pool and
act as property manager. None of their
agreements were determined by arms-
length negotiations and Holders should
consider the conflicts of interest that
could arise over the terms of the
Interests. See "Interests of Management
and Affiliates."
Risk Factors An investment in the Interests involves
certain risks, including uncertainties
associated with the tax consequences,
which depend upon the Holder's
individual circumstances and uncertain
amounts of rental pool revenue. See
"Risk Factors."
Purchase Cancellation Under Chapter 721 of the Florida
Rights Statutes, a Holder may cancel a
purchase, without penalty or obligation,
within 10 days of signing the
subscription agreement. Under certain
limited conditions and under Chapter 721
F.S., a Holder may also cancel if the
accommodations or facilities, as
promised, are not available to Holders.
See "Cancellation Rights."
Minimum Subscriptions There is no requirement that any minimum
number of Interest be sold in the
offering. However, if less than 76
Interests are sold by December 31, 1997,
the Company has the right to cancel the
Interests upon the repayment of the paid
subscription amount to the Holder, less
amounts for certain payments or benefits
received by the Holder. Affiliates of
the Company may purchase Interests
without limitation as to amount. See
"Plan of Distribution."
Use of Proceeds The net proceeds of this Offering will
be used to pay offering costs, the costs
of the Guaranteed Rental Arrangement and
amounts owed to Decade Properties, Inc.
under the Master License Agreement with
the Company. See "Use of Proceeds."
Plan of Offering As of the date of the prospectus, the
Interests are only available for sale in
the states of Florida and Wisconsin.
Suitability Standards Potential purchasers should evaluate the
benefits of the Interests, including the
ability to use the Unit Weeks, and the
costs, including the costs of the
Interests and annual dues and special
assessments, if any. The Company does
not intend to establish minimum
suitability standards. Broker-dealers
participating in the offering may
implement suitability standards and
Decade Securities Corp. has informed the
Company that it does not intend to
solicit investments from purchasers with
either (1) a net worth of less than
$30,000 (exclusive of the value of home
and furnishings), or (2) annual income
of less than $30,000.
How to Subscribe In order to purchase Interests, a
subscription agreement (including
acceptance by the Holder of terms and
conditions of the Charthouse Suites
Vacation License Plan, the Charthouse
Suites Rules and Regulations and the
Charthouse Rental Pool Agreement) must
be executed. All subscriptions are
subject to acceptance by the Company.
See "How to Subscribe."
<PAGE>
RISK FACTORS
An investment in Interests involves certain risks and
prospective investors should consider the following factors,
including the material risks set forth below, in addition to the
factors set forth elsewhere in this Prospectus, before making an
investment decision.
Uncertainty of Deductibility of Expenses From Rental. If
the Holder of an Interest rents all or part of the Unit Weeks to
a third party, including rentals through the Charthouse rental
pool, the extent to which he may deduct expenses incurred in
connection with the renting of such Unit Weeks will depend upon
the particular factual circumstances of the Holder and:
(1) whether the rental activity is engaged in with the intent of
making a profit (Section 183 of the Internal Revenue Code of
1986, as amended ("Code")); (2) whether the expenses are incurred
in connection with the production of income or for the
management, conservation, or maintenance of property held for the
production of income (Code Section 212) or whether the expenses
are incurred in connection with a trade or business (Code Section
162); (3) whether an Interest is a "dwelling unit" (Code Section
280A); (4) whether the rental activity is a "passive activity"
(Code Section 469) and (5) whether the "at-risk" rules apply
(Code Section 465). If a Holder does not meet these tax
conditions, the rental expenses will not be deductible, even
though the rental income will be taxable. See "Certain Federal
Income Tax Considerations."
Uncertainty Concerning Entity Status of Charthouse Rental
Pool. In the opinion of the Company's tax counsel, it is more
likely than not that the Charthouse rental pool under the
Charthouse Suites Vacation License Plan will constitute a
partnership for federal income tax purposes consisting of those
Holders that utilize the pool and Decade Properties, Inc. and the
Company if it places unsold Unit Weeks that it owns in the pool.
Accordingly, Holders that participate in the Charthouse rental
pool and Decade Properties, Inc. and the Company will receive
appropriate tax forms showing their allocation of rental pool
income, gains, losses and deductions. This conclusion is not
binding upon the Internal Revenue Service ("IRS"), and, if the
IRS successfully challenges that the classification of the rental
pool as a partnership is incorrect and should be an association
taxable as a corporation, the Company, the Charthouse rental
pool, a Holder, or Decade Properties, Inc. could owe additional
taxes and a Holder's income or loss amounts could be subject to
adjustment or other limitations. See "Certain Federal Income Tax
Considerations."
Limited Deductibility of Expenses For Corporate Investors.
Corporations that purchase Interests, subject to limited
exceptions, may not be able to deduct payments for the Interests,
the annual dues or special assessments, if any. See "Certain
Federal Income Tax Considerations." A corporate Holder that
purchases an Interest solely in lieu of renting hotel rooms for
business (and not social) purposes may, under limited
circumstances, be able to deduct certain expenses but should seek
qualified tax counsel before investing in the Interest and
evaluate its particular factual circumstances. See "Certain
Federal Income Tax Considerations."
Tax Risks and Deductibility Limitations. The Interests are
subject to various tax risks and uncertainties, including but not
limited to the entity classification of the Charthouse rental
pool, the characterization of an Interest as a vacation license,
the treatment of personal use of Unit Weeks, and numerous
limitations on the deductibility of expenses. The expected tax
treatment of various items as subsequently discussed herein,
including Code Section 280A, is based on a private ruling letter
request submitted to the IRS on July 16, 1996. There can be no
assurances that the IRS will agree with all or any of the
requested rulings and thus the tax treatment of a Holder as
discussed herein could be materially different. Potential
purchasers are encouraged to seek qualified tax advice prior to
investing in the Interests. See "Certain Federal Income Tax
Considerations" and "Certain Florida Tax Considerations."
Right to Cancel Upon Incomplete Offering. If fewer than 76
Interests are sold by December 31, 1997, Charthouse has reserved
the right to cancel this Offering and repurchase all Interests
for their initial subscription price (exclusive of payments of
annual dues, special assessments and Florida documentary taxes)
less amounts received from the Guaranteed Rental Arrangement or
renting or use of the Unit Weeks or for benefits from using the
Unit Weeks, as set forth in the Charthouse Suites Vacation
License Plan. See "The Interests."
Lack of Tangible Assets. By the purchase of an Interest,
Holders will acquire a license to rent through the Charthouse
rental pool or, upon notice, use the Chart House Suites hotel on
the terms and conditions of the Charthouse Suites Vacation
License Plan. Holders will not acquire any real property or a
real estate interest in the Chart House Suites hotel. In the
event of a catastrophic destruction of the Chart House Suites
hotel, Holders have no independent security for their Interests
and no management or control over the Company or the Chart House
hotel, other than as set forth in the Charthouse Suites Vacation
License Plan and the Chapter 721, Florida Statutes, which allows
Holders to cancel their Interests if the hotel is destroyed and
cannot be rebuilt in a timely manner. The Company intends to
obtain insurance in an amount sufficient to rebuild the hotel, if
required. The Company intends to purchase insurance to cover the
loss or damage to the hotel although if it is impossible to
rebuild the hotel, only then will a Holder have a right to share
directly in the proceeds of insurance policy. See "The
Interests" and the Charthouse Suites Vacation License Plan
attached as Annex A.
Nature of the Hotel Market. The real estate market and the
hotel suite rates in Florida have historically been quite
volatile. Many factors, including the economy, interest rates,
competition, weather patterns and events, transportation costs,
regulation, and others, may affect the ultimate appreciation or
depreciation of the Interests and any income derived from a
Holder's participation in the Charthouse rental pool. The real
estate market, especially the market for seasonal rental
properties, is highly competitive and there can be no assurances
as to any level of rental income. Further, the value of improved
income producing real property may be affected by a variety of
factors, including the business and management ability of the
Company, state laws regulating the purchase and sale of time
share interests, changes in the real estate tax rates and/or
assessments, adverse changes in general or local economic or
market conditions or in the supply of or demand for properties of
the type owned by the Company, decreases in real personal income,
changes in real estate operating expenses, competitive factors,
fuel shortages, changing consumer habits, demographics or traffic
patterns, condemnation or uninsured losses, potential liabilities
under the Comprehensive Environmental Response Compensation and
Liability Act or other federal and state laws imposing liability
on property owners for environmental contamination, and other
factors that are beyond the control of the Company. Such factors
could effect the resale price and the amount that must be paid
for annual dues or special assessments, if any. See "Annual Dues
and Special Assessments." See "Description of the Chart House
Suites Hotel."
Absence of Market for Interests. There is not now, nor is
there ever expected to be, any organized market for the
Interests. There can be no assurance that Interests can be
resold for their original purchase price under this Offering, if
at all. Holders of Interests may not be able to sell the
Interests in the event of an emergency or for any other reasons
and the Interests may not be readily accepted as collateral for a
loan. Holders of Interests will also have to continue to pay
annual dues (and special assessments, if any) in order to derive
rental income, use or exchange of the Unit Weeks and such
continuing obligation could affect the resale price of Interests.
Risks Associated with the Rental Pool. The demand for
lodging in Clearwater, Florida, is typically seasonal in nature.
Therefore, certain Unit Weeks are not necessarily of equal value
as those in other seasons and certain Interest classes may have
higher demand and, therefore, higher rental revenue. The Company
believes that the months of November, December, and January will
have the lowest occupancy and lowest value, in the Charthouse
rental pool or otherwise. The months of February, March and
April tend to have nearly full occupancy, although the Company
cannot assure any level of rental income. If a Holder expects to
rent the Unit Week through the Charthouse rental pool, there can
be no assurance of any level of rental pool revenue. The costs
of the rental pool are a common expense covered by annual dues
and, therefore, a Holder will pay for the costs of the rental
pool even if not using the rental pool. A purchaser of a partial
Interest (i.e., Unit Week) will not have the right to
participation in the Charthouse rental pool, but must pay for the
costs of the Charthouse rental pool as part of the Annual Dues.
See "Interests."
Past Results. The Chart House Suites hotel has only been
in operation for the past three years and is, therefore, in the
start-up phase of operations. On a pro rata basis, and for the
year ending November 30, 1996, Charthouse's average Unit Week of
rental income was $331 (average of Class A through Class F
Units). Weather and seasonality could affect the results of the
Charthouse rental pool. While there can be no assurances, the
Company believes that the Unit Week rental income would increase
above $331 per Unit Week (on an average basis of all Class of
Interests) as Chart House is experiencing repeat business and its
marketing has increased demand. However, Holders should not
assume any level of rental income in deciding whether to purchase
an Interest.
No Distributions or Dividends. The Interests are not income
producing in that they do not provide for distributions or
dividends. Although a Holder may realize revenue through rental
of a Unit Week or sale of an Interest, the amount of such
revenue, if any, is entirely speculative and, therefore, Holders
should not assume any rate of rental income or resale of an
Interest for any amount. See "The Interests."
Chart House Hotel Not Affiliated With National Chain. The
Chart House hotel is not affiliated with a national chain and
competes with national hotels located in Clearwater Beach,
Florida, including hotels with more resources and amenities, such
as restaurants, tiki bars, and beach-related services. The main
Clearwater beach is approximately six blocks from the Chart House
hotel and another sand beach is located approximately two blocks
from the beach. See "Description of Chart House Suites Hotel."
Limited Resources. The Company has limited resources to
meet its obligations, but has received an oral commitment by its
sole shareholder to provide additional capital or financing, if
required to meet its obligations under the Guaranteed Rental
Arrangement. See "Financial Statements."
RCI Travel Exchange Program. The RCI Exchange Program is an
independent entity which has no connection or financial interest
in the Chart House Suites hotel or the Company. The RCI Program
is a vacation exchange program offered by RCI. The Company's
agreement with RCI is for a total of five years and provides for
additional extensions, however there can be no assurances that
RCI will continue to exist or renew the agreement with the
Company. Chart House Suites hotel cannot guarantee that RCI will
always accept weeks of vacation in the Chart House Suites hotel
for trade, nor can Chart House Suites hotel assure that RCI will
continue to exist for the entire life of Charthouse or the
existence of the Interests. For these reasons Holders utilizing
RCI's services and the RCI Exchange Program do so at their own
risk. See "The RCI Exchange Program."
Vote of Unit Weeks. Under the Charthouse Suites Vacation
License Plan, annual dues cannot increase by more than 10% of the
prior year's dues exclusive of the allocable percentage of
property tax and insurance without an affirmative vote of Unit
Weeks representing a majority of the Unit Weeks. Decade
Properties, Inc. will vote all Unit Weeks represented by unsold
Interests or the Unit Weeks retained by Decade Properties, Inc.
upon a default of an Interest. Until a majority of Units Weeks
are held by others, Decade Properties, Inc. and/or the Company
will be able to approve annual dues increases or special
assessments, provided, however, that such vote would not change
the guaranteed level of Annual Dues for the period through
December 31, 1997. See "Annual Dues."
Reliance on Management. Pursuant to the terms of the
Charthouse Suites Vacation License Plan, Holders have no
authority to control the management and operations of the Chart
House Suites hotel or the Company. Management and operation of
Chart House Suites hotel resides solely in the Company. In order
to protect the property and the operations, the Company has the
authority to amend Charthouse policies and the Rules and
Regulations governing the Chart House Suites hotel without a vote
of Holders, provided such amendment is consistent with the terms
of the Charthouse Suites Vacation License Plan. Accordingly,
Holders will have no control over changes in policies of
Charthouse and changes in Charthouse's policies may not serve the
interests of individual Holders, as the interests of all
constituents will be considered by the Company in selecting its
policies. The Company does intend to install an Advisory Board
composed of Holders, but ultimate responsibility for policies
will be the sole domain of Charthouse. See "The Company." See
Charthouse Suites Vacation License and Charthouse Suites Rules
and Regulations attached as Annex A and Annex B, respectively.
Absence of Independent Underwriter and Appraiser. No
appraisals or other independent valuations have been obtained for
purposes of determining the value of Interests. The value of the
Interests has been determined solely by the Company on the basis
of its subjective evaluation of marketing considerations. See
"Determination of Offering Price."
Dependence on Key Personnel. The Chart House Suites hotel
will be controlled by the Company and Decade Properties, Inc.
The loss of the services of Jeffrey Keierleber, sole owner of the
Company and Decade Properties, Inc., could have serious adverse
effects on the operations of Chart House Suites hotel, and in
such case, the Company will be operated by some unknown person
elected by the Directors of the Company. The Company intends to
prepare a succession plan. See "Management."
Regulations. At the time of this Offering, the Company
believes that it is in compliance with all applicable Florida
regulations including the time share laws. However, there can be
no assurance that changes in Florida or local law will not
materially affect the operation of Chart House Suites hotel and
the Charthouse Suites Vacation License Plan and/or the rental
pool agreement. The Company's intended operations and the
Interests will be subject to numerous Florida laws and the
Company believes it has structured the Charthouse Suites Vacation
License Plan to comply with such requirements. Compliance with
the laws or regulations, of any sort, will be a common expense
recovered from Interest Holders as an annual due. See "Annual
Dues."
Americans with Disabilities Act. Under the Americans with
Disabilities Act ("ADA"), all public accommodations are required
to meet certain federal requirements related to physical access
and use by disabled persons. A determination that the Chart
House Suites hotel is not in compliance with the ADA could result
in imposition of fines, injunctive relief, damages and attorneys'
fees. If the Company was required to make modifications to
comply with the ADA, Charthouse's cash reserves could be depleted
and annual dues could increase significantly, adversely affecting
Holders. A finding of non-compliance could also endanger
Charthouse's ongoing ability to use the rental pool to rent
Interests to non-Holders.
Absence of Operating History of the Company. The Company is
a recently formed Florida corporation and has no operating
history, whereas Chart House Suites hotel has been operating for
approximately three years. See "Charthouse Results." The
Company's anticipated operations and business plan are subject to
all of the risks inherent in the establishment of a new
enterprise in a competitive and volatile industry such as the
Florida hotel operations. Holders should carefully consider
their rights and obligations under the Charthouse Suites Vacation
License Plan and Rental Pool Agreement. See "The Company" and
"The Interests."
Lack of Arm's Length Negotiation in the Property Management
and Other Agreements. None of the agreements, including the
Property Management Agreement, were determined by arm's length
negotiations and no independent approval will be sought. The
Property Management Agreement provides substantial liquidated
damages equal to the amount Decade Properties, Inc. would have
earned over the life of the Agreement, which expires on December
31, 2050, in the event Decade Properties, Inc. is removed as
property manager for the Company. See "Decade Properties, Inc."
The Charthouse Suites Vacation License Plan also provides that
Holders will reimburse, as a common expense covered by annual
dues, the costs and fees of the property manager for its
services. See "Conflicts of Interests of Management and
Affiliates."
Conflicts of Interests Arising From Benefits to Affiliates
of the Company. Affiliated parties will receive an immediate and
substantial financial benefit as a result of sales of the
Interests, principally for Decade Properties, Inc. which will
receive 50% or more of the net proceeds as payments for
obligations under the Master License Agreement. The Company
intends to use essentially all of the net proceeds from sale of
the Interests to pay offering expenses, amounts under the
Guaranteed Rental Arrangement and then amounts owed under the
Master License Agreement to Decade Properties, Inc.. See "Use of
Proceeds." Affiliates of the Company may also benefit from the
property management agreements, Charthouse rental pool fees, and
other fees. See "Interests of Management and Affiliates."
Company Control. The Company will control the operations of
the Chart House Suites hotel and the Charthouse rental pool and
has contracted with Decade Properties, Inc. to be the property
manager and rental pool operator. The property management
agreement provides that Decade Properties, Inc. can only be
removed for cause and upon payment of all amounts that would have
been received during the term of the agreement (discounted at
8%), which, by its terms, expires on December 31, 2050. The
effect of this provision is to make it unlikely that Decade
Properties, Inc. could be removed as property manager. See
"Decade Properties, Inc."
Conflicts of Interest. An affiliate of the Company manages
the Chart House Suites hotel, pursuant to a property management
agreement with the Company, and will make all operational
decisions. Such Holder will not have a right to change the
policies of the hotel or the Company or remove the property
manager. Holders will have the rights and obligations set forth
in the Charthouse Suites Vacation License Plan. See
"Management."
Quarterly Fluctuations in Rental Pool Results. The lodging
industry is seasonal in nature. Quarterly earnings in the rental
pool may be adversely affected by events beyond the Company's
control, such as poor weather conditions, economic factors and
other considerations affecting travel.
Risks Associated with the Lodging Industry. The Charthouse
rental pool business is subject to the operating risks inherent
in the lodging industry. These risks include changes in general
and local economic conditions, cyclical overbuilding in the
lodging industry, varying levels of demand for rooms and related
services, competition from other hotels, changes in travel
patterns, the recurring need for renovation, refurbishment and
improvement of hotel properties, changes in governmental
regulations that influence or determine wages, prices and
construction and maintenance costs, changes in interest rates,
the availability of financing for operating or capital needs and
changes in real estate taxes and other operating expenses. There
can be no assurance that regulatory compliance or downturns or
prolonged adverse conditions in real estate or capital markets or
national or local economies will not have a material adverse
effect on the Charthouse rental pool results.
Competition in the Lodging Industry. The lodging industry
is highly competitive. The Chart House Suites hotel competes
with other national limited and full service hotel companies, as
well as with various regional and local hotels. Some of the
larger hotel chains with which Chart House Suites hotel competes
include Marriott and Sheraton. The Company anticipates that
competition within the extended-stay industry segment will
increase substantially in the foreseeable future. A number of
the Company's competitors for both upscale and extended-stay
hotel properties are larger, operate more hotels and have
substantially greater financial and other resources than the
Company. In addition, some of the Company's competitors operate
hotel properties that have locations superior to those of the
Company's hotels. Competitive factors in the lodging industry
include room rates, quality of accommodations, name recognition,
service levels and convenience of location. Furthermore, there
can be no assurance that new or existing competitors will not
significantly lower rates or offer greater conveniences, services
or amenities or significantly expand or improve facilities,
thereby adversely affecting the Company's rental pool results.
Resale of Interests. A Holder selling partial Interests
(i.e., Unit Weeks) or their Interest will likely face competition
from the Company as it sells the Interests, including Interests
which have been reacquired. There can be no assurance that a
Holder will be able to sell his Interests at the offering price,
if at all. There could be difficulties in trying to find a real
estate broker to sell Interests or Unit Weeks. A Holder will
also have to pay the entire cost of the Unit Week and obtain the
consent of the Company, which will not be unreasonably withheld,
before being able to sell partial Interests and Unit Weeks.
Additionally, the future value is uncertain, and Holders may have
difficulties in selling the Interests. See "Plan of
Distribution."
THE COMPANY
Charthouse Suites Vacation Ownership, Inc. is a Florida
corporation formed on April 16, 1996, and solely owned by Jeffrey
Keierleber. The Company was organized to facilitate the sale and
distribution of the Interests and ultimately manage the Chart
House Suites hotel, subject to the terms of the Master License
Agreement. The Company has entered into a Master License
Agreement and nonexclusive easement with Decade Properties, Inc.,
which owns the Chart House Suites hotel and related property, to
acquire the right to use the Chart House Suites hotel, subject to
certain terms and conditions, for a period of approximately 54
years. The Company has limited financial resources. See
"Financial Statements" and "Risk Factors--Limited Resources."
The Company will be responsible for managing the License
Plan and the Charthouse rental pool as well as advertising the
hotel and overseeing its operations, although it will subcontract
the operational duties to Decade Properties, Inc.
The Company currently has not, and has no plans to, issue
senior securities. The Company plans to borrow money only to the
extent necessary to fund its portion of offering expenses and
fund the operation of the Company in the ordinary course of
business. The Company does not plan to make loans to other
persons, although it will allow Holders to pay licensing payments
on an installment basis over 360 months. See the "The
Interests." The Company does not plan to invest in securities of
other issuers for the purpose of exercising control. The Company
has no plans to engage in underwriting securities for other
issuers and has no plans to engage in the purchase and sale of
investments, except for those in the ordinary course of
maintaining its reserves and the common maintenance fund. The
Company has no plans to offer securities in exchange for property
and has no plans, except under the limited circumstances
described in the Master License Agreement or Charthouse Suites
Vacation License Plan, to repurchase or reacquire the Interests.
The Company owns no real property and has no plans to acquire
real property in the future. Except as set forth in the Master
License Agreement and in connection with the use of the Chart
House Suites hotel, the Company does not plan to make investments
in real estate or interests in real estate, real estate
mortgages, securities of or interests in persons primarily
engaged in real estate activities, or investments in other
securities. However, subject to the limitations described in the
license agreement underlying the Interests, the Company has sole
control over the policies and operations of Charthouse and may
from time to time consider expanding the operations and scope of
Chart House Suites hotel and sell additional Interests or
reacquired Interests.
Charthouse plans to provide Holders an annual report (which
may contain unaudited financial statements) which describes the
financial condition of Chart House Suites rental pool and the
source and use of annual dues and, if any, special assessments.
DESCRIPTION OF THE CHART HOUSE SUITES HOTEL
The Chart House Suites hotel is located in Clearwater Beach,
Florida and has been owned by Decade Properties, Inc. since 1992.
It is a four story hotel overlooking Clearwater Bay, Florida.
Attached to the Chart House Suites hotel grounds is a marina that
is also owned by Decade Properties, Inc. Holders will have no
rights to the Charthouse Marina, which remains the property of
Decade Properties, Inc. The Chart House Suites hotel contains on
its grounds a heated in-ground 20 by 25 foot pool and laundry
facilities, which may be used by Holders. As described below,
the hotel's location provides easy access to white sand public
beaches, recreational facilities, restaurants, entertainment and
shopping in Clearwater Beach. Tampa Bay, Florida's airport is
approximately 20 miles away and St. Petersburg's airport is
approximately 12 miles.
The Chart House Suites hotel is comprised of 25 rooms
located in one four-story building containing an approximate
20,000 enclosed square feet. In addition, the attached marina
has 27 boat slips. The building and most of its improvements
were built in 1971. In 1993, the building was converted to a
hotel and was completely updated and remodeled. The property is
rectangular, in shape contains approximately .66 acres, and is
located on the North side of Bayway Boulevard, Clearwater Beach,
Florida. In purchasing the hotel, no appraisal was ever obtained
by the Company or its affiliates of the hotel. The Chart House
Suites hotel is not subject to any liens. Each suite contains
sleeping accommodations, private bathroom facilities, and limited
cooking facilities (varying from room). The hotel has a parking
lot with 46 spaces, which Holders may use at no additional
charge. Each suite comes equipped with a bed, hotel-like
furniture, bathroom, and television, including access to cable
television. The Chart House Suites hotel has staff available 24
hours a day and provides maid service, which varies depending
upon the needs of residents.
The Chart House Suites hotel is conveniently located within
a short stroll of a beautiful Clearwater public beach (one beach
is located approximately two blocks away, and the main Clearwater
Beach is approximately six blocks away), quaint shops and
restaurants. The hotel is located on Bayway Boulevard, a central
street in Clearwater Beach and one block from the main (and busy)
street. The Chart House Suites hotel is located by other hotels
and shops and next to a yacht club and other condominiums. The
hotel is set up along the street. The hotel is approximately a
90 minute drive from Walt Disney World and Cypress Gardens and
approximately 35 miles from Busch Gardens, Florida.
As of the date of this prospectus, there are no known
environmental contaminations on the Chart House Suites hotel
properties which would materially affect the value of Interests
or the ability of Holders to rent or use their suites.
The Company intends to provide quality hotel services to
Holders of the Interests or the renters in the Charthouse rental
pool. The Company believes that its location in Clearwater
Beach, Florida and its competitive licensing payments and annual
dues rates will be attractive to Investors who desire to fix the
costs of vacations, pass a gift to future generations or retain
for possible appreciation, if any.
In order to ensure the comfort and enjoyment of the Chart
House Suites hotel and its amenities by all Holders, guests and
other allowed users, Charthouse has promulgated certain rules and
regulations. These rules and regulations will not only preserve
the quiet enjoyment of the Chart House Suites hotel for all
users, but also ensure that the aesthetical appearance of the
Chart House Suites hotel is generally uniform and in no way
detracting from the value of the user's vacation time or ability
to rent such in the Charthouse rental pool. Certain other
requirements are established in the subscription agreement and
the Charthouse Suites Rules and Regulations attached as Annex B.
Competition
Clearwater Beach, Florida contains numerous hotels and
motels, with various size facilities and with a total of
approximately 4,000 rooms and suites. The Company estimates that
the hotels in Clearwater Beach charge between $40 and $350 a
night, although rates will vary depending upon season and demand.
National hotel chains, such as Sheraton and Marriott compete with
the Chart House Suites hotel in Clearwater Beach. The Company
believes that the marina offers competitive advantages, as
boatsmen often stay at the Chart House Suites hotel. Lengths of
stay affect the results and the Company strives to rent the
penthouse (Class F Units) for a minimum of two nights. The
Company believes the Chart House hotel competes with its
competitors through the location, view, and room quality.
Seasonability has and will affect the occupancy of the hotel and
the rental pool results.
<PAGE>
DESCRIPTION OF MASTER LICENSE AGREEMENT
The Company will be entitled to sell Interests (and the
corresponding Unit Weeks) under a Master License Agreement with
Decade Properties, Inc., which owns the Chart House Suites hotel.
Until an Interest is sold, the Unit Weeks for the unissued
Interests will be voted by Decade Properties, Inc. for all
matters, including votes on increases in annual dues or special
assessments. Upon a default of an Interest, the Company may
elect to continue required payments to Decade Properties, Inc. or
may return the Interest in which case the Unit Weeks will become
the property of Decade Properties, Inc. If the Unit Weeks or the
Interests remain the property of the Company and upon compliance
with regulatory requirements, the Company may sell the Interests
to additional investors, if any. In addition, Decade Properties,
Inc. will retain at least one Unit Week in each season (and up to
five Unit Weeks in a year with 53 weeks) and will be entitled to
vote the Unit Weeks and retain the rental revenue from the Unit
Weeks or use or exchange such Weeks and pay the proportionate
share of annual dues and special assessments.
Under the Master License Agreement, the Company must make
license payments to Decade Properties, Inc. approximately equal
to the cash proceeds, net of all offering expenses, that the
Company receives from the sale of the Interests. Under the
Master License Agreement, Decade Properties, Inc. is to receive
___% of all sale proceeds if an Interest is paid in full or, if
paid on the installment basis, 50% of all sale proceeds received
in the first 12 months of a sale and 74% thereafter.
Under the Master License Agreement, the Company has the
right to notify Decade Properties, Inc. that it has or will sell
an Interest and reserve the corresponding Unit Weeks for that
category of an Interest. Under the Master License Agreement, the
Company has the right to the underlying property and services as
described in this prospectus. The license for an Interest
becomes effective upon notice by the Company to Decade
Properties, Inc. that it intends to sell an Interest.
THE INTERESTS
The following is a summary of the material terms of the
Charthouse Vacation License Plan and references to the Charthouse
Vacation License Plan is qualified in its entirety to the text of
the Plan, which is attached as Annex A.
Ownership of an Interest entitles purchasers to the right,
subject to the terms and conditions of the Vacation License
Agreement, to rent or use the Chart House Suites hotel for eight
weeks of each year until December 31, 2050. Holders are entitled
to two consecutive weeks of time for each season (e.g. Spring,
Summer, Fall, and Winter). The Unit Weeks will be assigned
pursuant to the schedule at Annex E and upon subscription a
potential Holder should submit his choices. All Unit Weeks
(including those owned by Decade Properties, Inc. or the Company)
will automatically be placed in the Charthouse rental pool. The
Company will attempt to rent the Unit Weeks and will remit net
rent proceeds, if any, to the Holder on a quarterly basis.
Holders will have the right upon 30 days written notice (unless
waived by the Company) to use the Unit Weeks or join the RCI
Exchange Program and exchange Unit Weeks in the Chart House
Suites hotel for another location in a participating RCI resort.
The Holders will not obtain title or any interest in the real
property or improvements thereon. No certificates will be issued
for the Interests.
The Company is offering Interests that in the aggregate will
provide the Holders the right to rental income from the
Charthouse rental pool, if any, or the right to use one of the 25
suites for 48 weeks out of every year. Neither the Company nor
Decade Properties, Inc. intends to offer the Chart House Suites
hotel for sale to third parties, although they reserve the right
to do so and such sale would be subject to the rights of Holders
under the Charthouse Vacation License Plan. Under the terms of
the Master License Agreement, Decade Properties, Inc. will
continue to have the right to use, rent or exchange the remaining
four Unit Weeks (one Unit Week in every season or five total Unit
Weeks in years with 53 weeks) or sell those Unit Weeks as partial
Interests, upon compliance with legal and regulatory
requirements. Decade Properties, Inc. intends to place the
unsold Unit Weeks it continues to hold in the Charthouse rental
pool, although, similar to all Holders' rights, it reserves the
right to use the Unit Weeks and exchange these weeks in RCI
Travel Exchange Bank, even if there is demand for these Unit
Weeks in the Charthouse rental pool, as well.
Types of Interests Available
Class A-F Interests are being offered by the Company. A
description of each Interest is as follows:
A Interest: Ownership of an A Interest allows a Holder use
of a standard studio (with bathroom) suite overlooking the marina
and Clearwater Bay for two consecutive weeks in each season until
December 31, 2050. There are 36 A Interests available in this
offering for a cost of $17,000 per Interest. The A Interest
suites are approximately 360 square feet in size.
B Interest: Ownership of a B Interest allows a Holder use
of a king bed studio hotel suite (with bathroom) overlooking the
marina and Clearwater Bay for consecutive two weeks in each
season until December 31, 2050. There are 24 B Interests
available in this offering for a cost of $20,000 per Interest.
The B Interest suites are approximately 360 square feet in size.
C Interest: Ownership of a C Interest allows a Holder use
of a large studio suite (with bathroom) overlooking the marina
and Clearwater Bay, or southern exposure (looking south over the
bay and other hotels) for two consecutive weeks in each season
until December 31, 2050. There are 36 C Interests available in
this offering for a cost of $26,500 per Interest. The C Interest
suites vary and are approximately 430-436 square feet.
D Interest: Ownership of a D Interest allows a Holder use
of a one bedroom, one bathroom suite overlooking the marina and
Clearwater Bay or the swimming pool or the southern exposure for
two consecutive weeks in each season until December 31, 2050.
There are 36 D Interests available in this offering for a cost of
$36,500 per Interest. The D Interest suites vary and are
approximately 638-869 square feet.
E Interest: Ownership of an E Interest allows a Holder use
of a one bedroom suite with one bathroom (with a lanai), and a
view of the marina and the Clearwater Bay for two consecutive
weeks in each season until December 31, 2050. There are 12 E
Interests available in this offering at a cost of $39,500 per
Interest. The E Interest suites vary and are approximately 815-
982 square feet.
F Interest: Ownership of an F Interest allows a Holder use
of the approximately 1,875 square foot, two bedroom penthouse
suite, with a fully equipped kitchen, living room, den, dining
room, two full baths (one with a jacuzzi), and a large private
balcony overlooking Clearwater Bay and marina for two consecutive
weeks in each season until December 31, 2050. There are 6 F
Interests in this offering at a cost of $61,000 per Interest.
At the time of subscription, the Holder will be assigned
eight specific Unit Weeks for the category of the suite
corresponding to the class of Interests purchased. Preferences
for rooms and weeks will be considered on a first come first
serve basis, but assignment of Unit Weeks and suites within a
class of Interest is in the sole discretion of the Company.
For purposes of the Charthouse Suites Vacation License Plan,
the Winter Season constitutes weeks 46-52 and 1-6, Spring is
weeks 7-19, Summer is weeks 20-32, and Fall is weeks 33-45.
Occupancy shall begin at 4:00 p.m. on the applicable date of the
week and end at 10:00 a.m. on the same day of the immediately
following week.
Use Options
The following summarizes the uses to which Holders, as of
the date of the Prospectus, may utilize their eight Unit Weeks:
Rental. If a Holder takes no action, Charthouse will seek
to rent their Unit Week through the Charthouse rental pool.
Holders may also withdraw their Unit Weeks from the Charthouse
rental pool and seek to rent the Unit Weeks to others, either
personally or through rental agents, or utilize the Charthouse
rental pool. Unless waived by the Company, holders must give the
Company at least 30 days notice prior to the start of the Unit
Week of the desire to remove their Unit Week from the Charthouse
rental pool. Rental pool proceeds will be allocated
proportionately among Holders of all classes of Interests that
have Unit Weeks in the Charthouse rental pool using the formula
used to allocate annual dues (shown at page 22). The ability of
the Charthouse rental pool to rent pooled Unit Weeks will depend
on many factors, among which are seasonal demand, weather
conditions, travel patterns and economic conditions. There is no
guarantee that all or any contributed Unit Weeks will be rented
or that rental proceeds will be received. An affiliate of the
Company will be paid a rental fee of 5% of all rental charges
collected and one of the common expenses for Holders is the
reimbursement for any costs incurred in providing services.
Alternatively, Holders can contract individually with an
affiliate of the Company, rental agent, for their individual
suite, although their share of annual dues will include costs of
operating the Charthouse rental pool.
Personal Use. A Holder may, upon 30 days written notice to
Charthouse (unless waived), withdraw entire Unit Weeks from the
Charthouse rental pool, and Holders are free to use, assign,
grant, gift or otherwise use their eight Unit Weeks of reserved
vacation suites and services at the Chart House Suites hotel.
Only entire Unit Weeks may be withdrawn for personal use.
Pursuant to the Charthouse Suites Vacation License Plan and the
Charthouse Suites Rules and Regulations, Holders are responsible
for the conduct and liable for any resulting damages or payments
due as a result of their use or the use by their permitted users,
including any rental arranged other than through the Charthouse
rental pool. The Holder need not be present at the Chart House
Suites hotel during the assigned weeks of use if prior written
notice has been received by the Company. See Charthouse Suites
Vacation License Plan and Charthouse Suites Rules and Regulations
attached as Annexes A and B, respectively.
RCI Exchange. Chart House Suites hotel has qualified as an
affiliated resort of the RCI Exchange Program. As long as the
Holder remains a member of RCI, such Holder may use the RCI
Exchange Program. Holders may join RCI for the cost and fees
determined by RCI and obtain the privileges attached to such
membership. RCI is not an affiliate of the Company or any of its
affiliates and has not reviewed or passed upon the validity of
this Offering. RCI is a independent entity that facilitates the
exchange of vacation time share interests. Nothing contained in
this summary should be construed as an endorsement or
advertisement for this Offering or the Chart House Suites hotel
by RCI or any of its affiliates. The Company and its affiliates
have no financial or other interest in RCI.
Under the terms of the agreement with RCI, the RCI Exchange
Program allows Holders to deposit one or more Unit Weeks of
vacation time at the Chart House Suites hotel into the RCI
Exchange Program. This Agreement expires [ ]. The deposit
may be made between two weeks and two years before the use of
your vacation week for the Interest. The Holder must pay all
annual fees associated with the deposited Unit Week (i.e. annual
dues, special assessments, if any, and, if paying on the
installment basis, the license payment directly to the Charthouse
before submitting an RCI request. Deposited Unit Weeks can be
withdrawn from RCI Exchange Program if the Holder has not made an
exchange against that week and no other RCI member has been
assigned the Holder's Unit Week of Chart House Suites hotel.
After depositing weeks in the RCI Exchange Program, members may
request use of weeks deposited at any of RCI's approximately
3,000 worldwide affiliated resorts (as of the date of the
prospectus). Requested weeks must be comparable to that
deposited. All the Charthouse's weeks have been designated "red"
or the seasonal designation indicating greater member demand,
although RCI has reserved the right to reconsider the designation
on or after [ ]. RCI members can request exchanges for only
that period in which their subscription to RCI Endless Vacation
is prepaid. As of the date of this prospectus, membership in RCI
costs $74 for one year, $135 for two years, $199 for three years
and $313 for five years. There is also a $200 initiation fee
which, if charged, will be paid for by the Company. The Company
will also pay the first year membership fee. As of the date of
this prospectus, RCI Travel charges $103 for each domestic
exchange and $133 for each international exchange, and rates are
subject to change. Other fees may apply and all fees are
determined solely by RCI Travel. Neither Charthouse nor any of
its affiliates will receive any remuneration from RCI.
In addition, RCI members can obtain RCI Guest Certificates
for non-members to use the exchanged weeks. Guest Certificates
currently cost an additional $40. RCI currently has
approximately 2,000,000 members. The terms and conditions of
membership are defined in the agreement that would be entered
between RCI and its members (such as Holders of the Interests).
Participation in RCI by a Holder is voluntary.
Transferability of Interests
A Holder may transfer his entire Interest without the prior
consent of the Company provided the Holder is current on all
payment of all dues, assessments and installment expenses. A
purchase of an entire Interest may automatically participate in
the Charthouse rental pool.
A Holder may also transfer partial Interests in increments
of one or more Unit Weeks with the consent of the Company (which
shall be granted in its reasonable discretion) provided the
Holder is current on all payment of all annual dues, special
assessments and license installment payments. The transferor of
a partial Interest must also make a prepayment of the estimated
annual dues (and special assessments, if any) of one year for the
specific Unit Week before the transfer is allowed.
A transferee of partial Interests (i.e., Unit Week) may not
automatically participate in the Charthouse rental pool.
However, the Holder of a partial interest may enter into a
contract with Decade Properties, Inc. to provide rental services
for its own rental program. The Company reserves the right to
specify other terms or conditions in connection with the transfer
of a partial Interest. See Charthouse Suites Vacation License
Plan attached as Annex A.
Cancellation
Each Holder is given the right, pursuant to Chapter 721,
Florida Statutes, to cancel their subscription without any
penalty or obligation within ten days from the date the
subscription agreement is signed or until ten days after receipt
of the Time-Share Public Offering Statement, whichever is later.
A Holder must notify Charthouse in writing of his/her intent to
cancel. The notice of cancellation shall be effective upon the
date sent and shall be sent to Charthouse at 250 Patrick
Boulevard, Brookfield, Wisconsin 53045. Any attempt to obtain a
waiver of the Holder's cancellation rights is unlawful. While
the Holder may execute all closing documents in advance,
Charthouse's use of the subscription amount by Charthouse before
the expiration of the ten day cancellation period is prohibited.
Each Holder may also cancel the License Agreement at any
time after the accommodations or facilities are no longer
available as provided in the Charthouse Suites Vacation License
Plan and the Offering Statement, attached as an Annex C. The
Charthouse Suites Vacation License Plan contemplates that Holders
may have the accommodation unavailable on a temporary basis in
order to facilitate repairs, maintenance or emergencies and the
Company will provide alternative accommodations. Such events
shall not give rise to a right to cancel the Interest. See
"Cancellation Right."
Under the Charthouse Suites Vacation License Plan, upon
cancellation a Holder will only have the right to receive the
amount of the purchase price actually paid less any benefits
received, rental revenue from the Charthouse rental pool, or
Guaranteed Rental Arrangement payments or discounts. In order to
avoid controversies, the Company will use the following rates for
calculating benefits on a per day basis:
Total for One
Assumed Benefit Unit Week
A Standard Studio $ 65.00 per night $455
B King Bed Studio $ 75.00 per night $525
C Studio $ 85.00 per night $595
D 1 Bedroom $ 20.00 per night $840
E 1 Bedroom $ 30.00 per night $910
F Penthouse $175.00 per night $1,225
Holder should not assume that the Charthouse rental pool
will return these rates.
<PAGE>
CHARTHOUSE RESULTS
For the Years Ended November 30
1996 1995 1994
Rental Income $452,981 $327,031 $ 72,687
Other Income 14,220 14,090 4,154
Total Operating Revenues $467,201 $341,121 $ 76,841
Total Salaries 127,377 93,648 38,243
Total Direct Expenses 150,287 141,411 111,056
Total Maintenance and 25,114 37,570 30,917
Repair Expenses
Total Expenses $302,778 $272,629 $180,216
Excess (Deficiency) of
Operating Revenues Over
Certain Expenses
$164,423 $ 68,492 $(103,375)
Average Unit Week Rental $ 331 $ 249 $ 56
Revenue of all Interests,
after subtracting 5%
rental pool fee (assuming
52 Unit Weeks in a Year)
Unit Weeks that remain in the Charthouse rental pool will
not be available for use or exchange in the RCI Exchange Program
by Holders.
ANNUAL DUES AND SPECIAL ASSESSMENTS
Each Holder will be responsible for a proportionate share of
the annual dues based upon a formula allocating fixed and
variable costs (collectively Common Expense see Glossary for
complete definition) to their category of suites. For the year
ended December 31, 1997, annual dues per Unit Week will be $190
for A and B Interests (or $1,520 annually for each Interest),
$205 for C Interests (or $1,640 annually for each Interest), $285
for D Interests (or $2,280 annually for each Interest), $305 for
E Interests (or $2,440 annually for each Interest), and $365 for
F Interests (or $2,920 annually for each Interest).
Under the Charthouse Suites Vacation License Plan, annual
dues and special assessments (unless assessed against a specific
or group of Holders as set forth in the Charthouse Suites
Vacation License Plan, if any) will be allocated based upon the
following formula:
Total Per
Total Interest*
Class A Interest (all Unit Weeks) 14.5716% .3736%
Class B Interest (all Unit Weeks) 11.4284% .4396%
Class C Interest (all Unit Weeks) 22.7142% .5824%
Class D Interest (all Unit Weeks) 31.2858% .8022%
Class E Interest (all Unit Weeks) 11.2858% .8681%
Class F Interest (all Unit Weeks) 8.7143% 1.3407%
Total 100%
* Decade Properties, Inc. will bear a proportionate share
of the annual dues and special assessments attributable to any
unissued Interests and the Unit Weeks retained by Decade
Properties, Inc.
Each Holder shall be responsible for a uniform portion of
the Annual Dues based upon the above formula.
The amount of annual dues will be set by the Company and
cannot increase annually more than 10% of the prior year's dues,
exclusive of property taxes and insurance, without an affirmative
vote of Holders representing ownership of a majority of Unit
Weeks (including weeks owned by the Company and Decade
Properties, Inc.). For purposes of such a vote, the Company and
Decade Properties, Inc. will vote Unit Weeks associated with
unissued Interests or Unit Weeks canceled by the Company. An
Advisory Committee composed primarily of Holders may be consulted
for advice regarding certain management decisions relevant to
establishing annual dues. The Company will consult the Advisory
Committee and advisory board for advice purposes only and is not
bound to follow the advice or recommendations offered therefrom.
The Company will maintain separate accounts for operating
and capital expenses. Annual dues shall be based upon the Chart
House Suites hotel's requirements for all expenses relating to
the operation of Chart House Suites hotel, such as accounting
costs, front desk costs, maid service and cleaning, maintenance,
repair and replacement of suites and furnishings and all other
costs of operating the vacation ownership program (including the
rental pool and reserves for capital expenses). Expenses may
also include, among other things, the following: expenses for
cleaning, maintaining, repairing and replacing furnishings in all
suites; any deficit from a previous period; creation of a
reasonable contingency reserve, surplus and/or sinking fund;
payment of real property taxes; and any other expenses or
liabilities which may be incurred in accordance with the
provision for the benefit of the Holders. See Charthouse Suites
Vacation License Plan attached to Annex A.
In addition, Charthouse may levy special assessments, but as
set forth in the Vacation License Plan and generally for the
purpose of defraying unexpected repairs, costs, expenses or
purchases or shortfalls in the collection of assessments from the
Holders. Special assessments must be approved by the vote or
written assent of a majority of Unit Weeks unless (a) the
assessment, other than a special assessment to restore or rebuild
because of damage or destruction to the Chart House Suites hotel,
(b) does not exceed 5% of the budgeted gross expenses of Chart
House Suites hotel for the calendar year; (c) the assessment is a
special assessment for the repair or rebuilding of the Chart
House Suites hotel which does not exceed 10% of the budgeted
gross expenses of the Company for the calendar year in which the
assessment is levied; or (d) the assessment is a special
assessment against a member for the purpose of reimbursing the
Company for costs incurred in bringing the Holder into compliance
with the provisions of the governing instruments for Chart House
Suites hotel. For voting purposes, Charthouse will vote the Unit
Weeks associated with unissued Interests or retained by the
Company.
A Holder will not be allowed to use or receive rental income
from the Charthouse rental pool if he fails to timely pay annual
dues. Under the Charthouse Suites Vacation License Plan,
Charthouse will be allowed to rent the suite and retain all
income. Under such circumstances, any income received will not
offset annual dues and a Holder will not be allowed to rent or
use the suite until the complete shortfall, with interest, is
paid to the Company.
GUARANTEED RENTAL ARRANGEMENT
The following is condensed information concerning the material
terms of the Guaranteed Rental Arrangement by Charthouse.
Reference to the provisions of the Guaranteed Rental Arrangement
are qualified in their entirety by reference to the text of the
Payment and Guarantee Agreement, a form of which has been filed
as an exhibit to the Registration Statement of which this
Prospectus forms a part.
General
As an incentive for early purchasers, Investors who purchase
an Interest by [6 months after the Effective Date of the
Registration Statement] will receive the right to exchange six
Unit Weeks of their Chart House Suites hotel use with the Company
and receive the applicable Guaranteed Rental Rate (hereafter
"Guaranteed Rates"). Investors who purchase between [6 months
and 1 day and 9 months after the Effective Date of the
Registration Statement] will receive the right to put four weeks
over the life of the Interests to the Company and receive the
Guaranteed Rates, subject to the terms and conditions of the
Guaranteed Rental Arrangement. Investors who purchase between [9
months and 1 day and one year after the Effective Date of the
Registration Statement] will have the right to put two weeks over
the life of the Interests to the Company and receive the
Guaranteed Rates. Under the terms of the Guaranteed Rental
Arrangement, the Investors put right must be exercised by [five
years after the Effective Date of the Registration Statement] and
is subject to certain terms and conditions. Payments under the
incentive agreement are subject to the terms and conditions of
the Guaranteed Rental Arrangement described below. Investors
purchasing after [one year of the Effective Date of the
Registration Statement] will not be able to participate in the
Guaranteed Rental Arrangement.
Guaranteed Rates
The Company agrees to pay the following rates under the
Guaranteed Rental Arrangement. These rates are the off-season
walk-in rates (as of the date of the Prospectus):
Total Total Total
(Assuming (Assuming (Assuming
Guaranteed Rate Six Weeks) Four Weeks) Two Weeks)
A Standard
Studio $ 65.00 per night $2,730 $1,820 $910
B King Bed
Studio $ 75.00 per night $3,150 $2,100 $1,050
C Large
Studio $ 85.00 per night $4,410 $2,380 $1,190
D 1 Bedroom $120.00 per night $5,040 $3,380 $1,680
E 1 Bedroom $130.00 per night $5,400 $3,640 $1,820
F Penthouse $175.00 per night $7,350 $4,900 $2,450
Holders should not assume that the rental pool will generate
such rates, as the rental pool could return higher or lower
rates, due to factors such as discounts, corporate rental rates,
the 5% rental agent charge, and seasonality.
Terms and Conditions of Guaranteed Rental Arrangement
The Guaranteed Rental Arrangement is subject to the
following terms and conditions:
(1) Holders must give the Company at least 30 days written
notice of their intent to put the weeks pursuant to the
Guaranteed Rental Arrangement. Thereafter, the Holder may not
withdraw the "put" weeks without the consent of the Company.
(2) The Holders must put entire weeks to the Company.
(3) The Company will have the exclusive right to use,
exchange, or rent the suite for the designated weeks and may
collect and retain all revenue arising therefrom.
(4) Unless waived by the Company, no more than five suites
may be put to the Company from all Investors in any one week. In
case more than five suites are put to the Company, the Company
will accept put requests in the order in which written requests
are received. Investors whose put rights are not accepted will
be notified within one week of receipt of a letter request.
(5) All puts must be exercised by [five years after
Effective Date of the Registration Statement].
(6) There must be no action threatened, pending or taken,
which makes the rental pool or the Guaranteed Rental Arrangement,
unlawful or otherwise restricts or prohibits the ability of
Charthouse to use the suite.
(7) Under the terms of the property management agreement,
the rental management fee of 5% will be waived for amounts
received and all amounts shown above are exclusive of the rental
management fee.
(8) Holders must elect whether to accept the Rental
Guarantee or the cash surrender value (described below) at the
time of subscription to purchase the Interests.
Cash Discount Value
The Guaranteed Rental Arrangement allows Investors to elect
to receive cash to be used as payment towards the subscription at
the time of subscription in lieu of the Guaranteed Rental
Arrangement. Under the terms of the Guaranteed Rental
Arrangement, Investors who purchase in the period between
[Effective Date] and [6 months after Effective Date] may elect to
receive a 5% discount on the Subscription Amount in lieu of the
Rental Guarantee Arrangement. Investors who purchase between [6
months & 1 day after the Effective Date and Nine Months after the
Effective Date] may elect to receive a 3% discount on the
Subscription Amount (less any other cash discounts) in lieu of
the Rental Guarantee Arrangement. Investors who purchase between
[9 months & 1 day after Effective Date and one year after
Effective Date] may elect to receive a 1-1/2% discount on the
Subscription Amount (less any other cash discounts) in lieu of
the Rental Guarantee Arrangement.
Cash Discount
Class 5% 3% 1-1/2%
A Standard Studio $ 850 $ 510 $255.00
B King Bed Studio $1,000 $ 600 $300.00
C Large Studio $1,325 $ 795 $397.50
D 1 Bedroom $1,825 $1,095 $547.50
E 1 Bedroom $1,925 $1,185 $592.50
F Penthouse $3,050 $1,830 $915.00
Right to Amend
The Company reserves the right to amend the Guaranteed
Rental Arrangement, provided that any amendment does not reduce
the cash benefit to a Holder.
LICENSE PAYMENT OPTIONS
Holders have the option to pay for their Interests either
by:
Payment in Full. Holders may pay for their Interests in
full at the time of subscription by check or by wire transfer,
which will be placed in escrow for the 10 day statutory period.
Installment Payments. Holders may also pay in installments
over 360 months. Holders utilizing this option must pay at least
25% of the net subscription price (after any discounts) at the
time of acceptance of the subscription and agree that installment
license payments will be paid before the first day of each month
with an increased license payment of 9% per year on the unpaid
balance owing for the Interest (which has the affect of 9%
interest on the unpaid balance). If a Holder fails to make any
payment when due, then such Holder will be in default and to the
extent such default continues will forfeit all rights, use or
otherwise, in the Chart House Suites hotel suite and the
Interest. If a Holder is in default on any license payment for a
cumulative period of more than six months or has more than three
events of default (of any duration), the Company may cancel the
Interest pursuant to the terms of the Charthouse Suites Vacation
License Plan. Because the payments will vary depending upon the
amount invested, a schedule of required payments will be provided
upon acceptance of subscriptions and after the ten (10) day
cancellation period has been completed.
Example of Installment Payments
Cost Less
of Cash Cash Monthly
Class of Interest Interest Discount* Downpayment Payment
(25% of Cost)
A $17,000 $ 850 $ 4,037.50 $97.46
B $20,000 $1,000 $ 4,750.00 114.70
C $26,500 $1,325 $ 6,293.75 151.92
D $36,500 $1,825 $ 8,668.75 209.30
E $39,500 $1,925 $ 9,393.75 226.75
F $61,000 $3,050 $14,487.50 349.71
* Assume that all Holders purchase the Interest within
the first 6 months and elect to receive the cash
discount.
The Company does not intend to pledge the amounts owed on
the Interests to any lender. A Holder who despite the obligation
to pay discontinues payment for the Interest will forfeit rights
to use the Unit Weeks and all amounts previously paid as provided
above. Upon such event, Charthouse will notify Holders if their
Interest has been canceled and terminated.
DETERMINATION OF OFFERING PRICE
The offering price per Interest has been determined solely
by the Company on the basis of its belief of the price at which
it believes the Interests will be marketable. It has not been
calculated based upon any method considering net worth, earnings,
appraisals or other established investment criteria of value.
Accordingly, there can be no assurance that the Interests offered
hereby can be resold at or in excess of the offering price, if at
all. There is no organized market for the trading of the
Interests offered herein and none is expected to develop.
USE OF PROCEEDS
Assuming that the maximum number of Interests offered hereby
are sold, the gross proceeds from the sale will be approximately
$4,200,000 (exclusive of Offering expenses estimated at $231,000,
and sales commissions of $420,000). Guaranteed rental
arrangement payments are estimated to be a maximum of $620,000
(assuming everyone purchases in the first six weeks and does not
select the cash discount). The Company intends to pay this
obligation from rental income generated from the Charthouse
Rental Pool. The Company believes it has sufficient funds to
meet its obligations. Its sole shareholder intends to invest
additional funds in order to pay offering costs or to fund the
Guaranteed Rental Arrangement, if necessary. Charthouse plans to
use all of the remaining net proceeds of this Offering to pay for
the license right pursuant to the Master License Agreement from
Decade Properties, Inc.
PLAN OF DISTRIBUTION
As of the date of this Prospectus, the Interests are
available only for purchase in the States of Florida and
Wisconsin. Retirement plans and individual retirement accounts
may not purchase the Interests.
The Interests are being offered by the Company through
Decade Securities Corporation, an affiliate of the Company, on a
best-efforts basis. The minimum subscription is one Interest,
although the Company reserves the right to issue fractional
Interests. Decade Securities Corporation will receive a
commission of 10% of the gross proceeds on all sales. Decade
Securities Corporation may authorize certain other broker-dealers
("Soliciting Dealers") who are members of the National
Association of Securities Dealers, Inc. ("NASD") to sell
Interests. In the event of sale by such Soliciting Dealers,
Decade Securities Corporation will pay them from its own
commission a negotiated commission, not to exceed 10% of the
gross proceeds of such sales plus .5% for bonafide due diligence.
These arrangements are set forth more fully in the Soliciting
Dealer Agreement filed as an exhibit to the Registration
Statement of which this Prospectus is a part. All subscriptions
are subject to approval by the Company and the Company does not
intend to impose any minimum suitability standards although
Decade Securities Corporation has informed the Company that it
will accept purchasers from Holders with (1) a net worth in
excess of $30,000 or (2) an annual income in excess of $30,000.
All funds received by Decade Securities Corporation shall be held
in escrow with Associated Bank, N.A. until the ten-day
cancellation period ends. During this ten-day period, a
purchaser will have the right to rescind the transaction and
receive a return of all monies (less amounts for any benefits).
No wholesaling fees will be paid. The Company is offering sales
representative bonus Unit Weeks for the sale of 3 Interests or
more.
The Company has reserved the right to repurchase all
Interests if at least 76 or more Interests are not sold by
December 31, 1997. The Company is not obligated to exercise this
right, and the number 76 is an arbitrary amount selected by the
Company. If the Company exercises this right, Holders will be
refunded all of their licensing payments paid to the Company less
any amounts received under the Guaranteed Rental Arrangement
(described below) and amounts received from renting the suite.
Holders will also be refunded any prepayments for annual dues for
periods after December 31, 1997. If the Company exercises the
right, it will send written notice to the Holders and forward any
amounts owing.
The Company has agreed to indemnify Decade Securities Corpo-
ration and the Soliciting Dealers against certain liabilities,
including liabilities under the Securities Act of 1933, provided,
however, that any indemnification by the Company of affiliated
Soliciting Dealers shall be limited to expenses incurred in a
successful adjudication on the merits of each count involving
alleged securities laws violations or in defense of a claim
dismissed with prejudice on the merits by a court of competent
jurisdiction and the court approves indemnification of such
expenses. The Soliciting Dealers have severally agreed to
indemnify the Company against certain such liabilities.
HOW TO SUBSCRIBE
The Interests are being offered by Decade Securities Corpo-
ration, an affiliate of the Company, and by certain Soliciting
Dealers. Decade Securities Corporation and certain Soliciting
Dealers may be compensated with up to 10% commission for each
Interest sold. See "Plan of Distribution."
In order to acquire an Interest, interested parties must
execute a subscription agreement and agree to be bound thereunder
to its terms, the Charthouse Suites Vacation License Plan and the
Charthouse Suites Rules and Regulations adopted by the Company.
All subscribers are subject to the review, approval and
acceptance by the Company, whose decision shall be final. Upon
subscription, a potential purchaser must pay at least 25% of the
net subscription for the Interests, after consideration of all
discounts.
SUMMARY OF PROMOTIONAL AND SALES MATERIAL
Sales materials may be used in connection with this Offering
only when accompanied or preceded by the delivery of this
prospectus. Such sales materials may include a booklet, slides,
films, "fact" sheets, articles, publications, and brochures
describing the Offering, the Company and the Chart House Suites
hotel. The Company may also provide information, which has been
provided by RCI. The Offering is made only by means of the
Prospectus and the Time-Share Public Offering Statement (attached
as an Annex).
CAPITALIZATION
The following table sets forth the capitalization of the
Company, as of December 31, 1996. The table should be read in
conjunction with the financial statements, including the related
notes thereto, appearing elsewhere in this Prospectus.
Long-Term Debt $ 0
Shareholder's Equity:
Common Stock 100
Paid In Capital 99,900
Retained Earnings 0
$100,000
The Company believes that it will have sufficient funds to
provide the services through the receipt of annual dues and
special assessments, if any. Upon defaults of installment
payments for the Interests, the costs would be paid by Decade
Properties, Inc.
MANAGEMENT
Directors and Executive Officers
The following table sets forth certain information with
respect to directors and executive officers of the Company.
Name Age Position with the Company
Jeffrey Keierleber 43 President, Treasurer and Sole Director
Michael G. Sweet 46 Secretary
The following provides additional information on officers
and others who may provide services to the Company pursuant to
agreements.
Jeffrey Keierleber, (age 43) President, Treasurer and sole
Director of the Company, graduated with a BBA in 1975 and an MBA
in 1977 from the University of Wisconsin system. Since that
time, Mr. Keierleber has worked exclusively in the real estate
field, and has been actively involved in property management,
real estate syndication, investment, acquisitions, liquidations,
limited partnership management and broker/dealer relations. Mr.
Keierleber holds a Series 22 and 63 securities licenses. Over
the past 20 years, Mr. Keierleber has been involved in
acquisitions of investment property having a market value of over
$150,000,000, and has assisted in the structuring of more than 35
limited partnerships, both private placements and registered
offerings. These partnerships have invested in real estate
located in the midwest and the southeast of the United States.
Mr. Keierleber is a licensed real estate broker and securities
agent. He is on the board of directors of the corporate general
partner for various limited partnerships and serves as general
partner in limited partnerships sponsored by affiliates of Decade
Companies. Mr. Keierleber is the sole owner of the Company and
is the president and treasurer of Decade Properties, Inc. He is
the principal and managing general partner of Decade Companies, a
partnership that manages other limited partnerships.
Michael G. Sweet, (age 46) Secretary of the Company, is a
Certified Public Accountant and is the Secretary of Decade
corporate entities. Mr. Sweet has a BS degree with an accounting
major from Marquette University in Milwaukee. Prior to joining
Decade in 1982, Mr. Sweet spent ten years in public accounting.
Among other certifications, Mr. Sweet holds a Series 27 and 39
licenses with Decade Securities Corp. He is a member of both the
American Institute of Certified Public Accountants and the
Wisconsin Institute of Certified Public Accountants.
Steven Cooper (age 52), is a Certified Property Manager and
has served as Vice-President of Decade Properties, Inc. Mr.
Cooper has over 18 years of property management experience and
has had responsibility for over 100 multi-family properties
containing over 22,000 units located in 14 states. During the
seven years prior to joining Decade (in 1989), he served as Vice-
President of Jacques-Miller, Inc. in Nashville, Tennessee from
July 1986 to December 1988, including serving as President of
Harvey Freeman and Sons, Inc. from January 1987 to December 1988;
he was Vice-President of New Homes Management Services Inc. of
Tampa, Florida from September 1982 to May 1986. He received a BS
Degree from Purdue University in Lafayette, Indiana.
Joseph Lawlor (age 31), is the General Manager of Hamlin's
Landing Hotel/Marina in Indian Rocks Beach, Florida and
Charthouse Suites/marina in Clearwater Beach, Florida. He
supervises and manages the day-to-day operations of both Hamlin's
Landing and Charthouse (located approximately 6 miles apart or
approximately 15 minutes apart). Mr. Lawlor joined Decade
Properties, Inc. in January 1995 and has more than eight years
experience in the hotel management and operations field.
R. Wayne Shaw (age 48) is Regional Manager of the Florida
properties for Decade Properties, Inc. In this capacity, he is
responsible for income and expense budgeting and implementation,
supervision and training of on-site management staffs and
inspection of residential acquisitions in the area. Before
joining Decade in November 1988, Mr. Shaw served as
President/Operations Manager of Home America Property Services,
Inc. in Tampa, Florida from 1983 to 1987 where he supervised
operation of 1,500 residential apartment units. He is a member
of the Institute of Real Estate Management (IREM) and he recently
held the position of Director of the Tampa Apartment Association.
Mr. Shaw received an Associates Degree in Business Management
from Lake City Junior College in 1967. He also holds a Florida
real estate license.
Executive Compensation
None of the Company's officers or directors receive any
compensation from the Company. They are compensated by Decade
Companies and Decade Properties, Inc. They will devote such time
to Company matters as necessary, but will also be engaged in a
variety of other real estate projects and businesses.
Shareholder
Jeffrey Keierleber is the sole shareholder of the Company.
Advisory Committee
The Company will establish an Advisory Committee composed of
five to nine Holders which will review the Company's annual dues
and advise on hotel operations. Such advise is solely for the
benefit of the Company and is not binding upon it. Costs of
operating the Advisory Committee will be part of the annual dues.
As of the date of this Prospectus, no members of the committee,
which will be selected by the Company, have been selected. It is
intended that all members will be Interest Holders and will serve
for one year terms, without compensation.
DECADE PROPERTIES, INC.
Decade Properties, Inc. a Wisconsin corporation, was formed
in 1980 and is solely owned by Jeffrey Keierleber. Mr.
Keierleber is also the sole director and President of Decade
Properties, Inc. Michael G. Sweet, Secretary of the Company, is
also secretary of Decade Properties, Inc. See " Management."
Decade Properties, Inc. will be property manager for the Company
and operate the Charthouse rental pool, pursuant to agreements
with the Company.
Decade Properties, Inc. is property manager to 17 apartment
complexes, consisting of approximately 2,600 apartment units,
located in Florida and Wisconsin. Decade Properties, Inc.
currently manages two hotels located in Florida, Chart House
Suites hotel, located in Clearwater, Florida and Hamlin's
Landing, located in Indian Rocks Beach, Florida. The Company has
entered into an agreement with Decade Properties, Inc. for the
management of the Chart House Suites hotel until December 31,
2050 for a fee of $2,500 a month (such fee to increase by the CPI
index increase on the first of each year beginning January 1,
1998) plus reimbursement of expenses. Decade Properties, Inc.
will also manage the rental pool for a fee equal to 5% of the
rental revenue plus, as part of the annual dues, reimbursement of
its expenses. See "The Interests." Decade Properties, Inc. may
also enter into individual property management agreements with
Holder of partial Interests. The property management agreement
provides for a payment to Decade Properties, Inc. equal to the
present value rate (using an 8% discount rate) of the property
management fees that would have been owed through December 31,
2050 in the event Decade Properties, Inc. is removed as the
property manager.
CONFLICTS OF INTERESTS OF MANAGEMENT AND AFFILIATES
Services To Be Provided by Decade Properties Inc.
Decade Properties Inc., an affiliate of Decade Companies, is
a licensed real estate broker and is engaged in real estate
management.
Services Which May be Provided by DPI Construction Corp.
DPI Construction Corp. ("DPIC"), an affiliate of the
Company, is engaged in the general contracting business. The
Company may enter into Agreements with DPIC whereby DPIC will
provide services in connection with renovation and remodeling
work on the Chart House Suites hotel. Any such services will be
at rates comparable to those charged for comparable services by
unaffiliated contractors in the same geographic area.
Reimbursable Expenses
All expenses of the Company and Chart House Suites hotel
will be billed directly to and paid by the Company to the extent
practicable. Decade Properties, Inc. and affiliates will be
reimbursed for the cost of goods and materials used by or for the
Company and Chart House Suites hotel including the following
general functions of the Company: Company operations and
accounting, investor communications, and documentation, legal and
tax services, computer services, risk management (insurance), and
other expenses, and other operational and administrative expenses
necessary for the prudent operation of the Company. The
reimbursed costs will be at actual prices, including allocations
of overhead of Decade Properties, Inc. and its affiliates. The
Company intends to have an annual audit of the annual dues and
reimbursed expenses, as required by Chapter 721, F.S. and
believes that these services will be at rates comparable to those
charged by others for similar services.
Charthouse
The Company will only receive revenue or income from
payments for its Interests, including installment payments for
Holders that decide to pay over 360 months. Under the Master
License Agreement, most of Charthouse's funds will go to Decade
Properties Inc. as payment for rights to use the hotel suites.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
Set forth below is a summary of certain federal income tax
considerations related to the offering. The discussion is based
on the Internal Revenue Code of 1986, as amended (the "Code"),
and on judicial decisions, U.S. Treasury regulations
("Regulations"), and IRS rulings and other administrative
materials interpreting the Code, all of which are subject to
change.
The discussion below is general and does not address tax
considerations that may be relevant to certain types of
investors. Moreover, taxes other than federal income taxes, such
as foreign, state and local taxes, and federal estate and gift
taxes, may affect a Holder's investment in an Interest. In
addition, controversy and uncertainty exist in many areas of the
federal income tax law which may affect the structure and
operation of the Company and a Holder acquiring and holding an
Interest. Accordingly, there can be no assurance that some of
the views expressed herein will not be challenged by the IRS.
PROSPECTIVE INVESTORS ARE URGED TO CONSULT, AND MUST DEPEND UPON,
THEIR OWN TAX ADVISERS WITH SPECIFIC REFERENCE TO THEIR OWN TAX
SITUATIONS AND POTENTIAL CHANGES IN APPLICABLE LAW, INCLUDING THE
APPLICATION OF STATE AND LOCAL, FOREIGN AND OTHER TAX
CONSIDERATIONS.
Entity Status of Charthouse Suites Vacation License Plan
Subject to the discussion below of "Entity Status of
Charthouse Rental Pool," in the opinion of tax counsel, it is
more likely than not that the license that a Holder will acquire
from the Charthouse Suites Vacation License Plan (the "License")
creates a separate contractual relationship between the Company
and each Holder, and the sum of such separate relationships does
not create either a partnership or an association taxable as a
corporation.
In order for either a partnership or an association taxable
as a corporation to exist for tax purposes, Section 301.7701-2 of
the Regulations, requires that there be both (1) associates, and
(2) an organization to engage in business for joint profit.
Holders may keep their Unit Weeks in the Charthouse rental pool,
withdraw their Unit Weeks and use them personally, withdraw their
Unit Weeks and directly rent them to others, or withdraw their
Unit Weeks and rent them to others through a rental agent. In
addition, some Holders may elect the Guaranteed Rental
Arrangement. Annual maintenance and other related costs,
expenses and reserves incurred in connection with Chart House
Suites hotel will be charged proportionately to all Holders,
regardless of how their Unit Weeks are utilized. Therefore, tax
counsel does not believe that the License results in an
organization engaged in business for joint profit.
Entity Status of Charthouse Rental Pool
The Charthouse rental pool involves a sharing of gross
revenues (less the 5% rental fee) among various Holders. The
Internal Revenue Service may contend that the Charthouse rental
pool constitutes an organization to engage in business for joint
profit whose associates consist of those Holders that utilize the
pool and Decade Properties, Inc. if it places unsold Unit Weeks
that it owns in the rental pool. Tax counsel believes that it is
more likely than not that the Internal Revenue Service could
successfully make such a contention.
If an organization is created by the Charthouse rental pool,
the federal income tax consequences to a Holder of an Interest
will depend on whether the deemed organization is treated as a
partnership or an association taxable as a corporation. If the
organization is classified as a partnership for federal income
tax purposes and is not a "publicly traded partnership," it will
not be subject to any federal income tax. Instead such a Holder
will be subject to tax on his or her allocable share of the
organization's income and gain. However, deduction of expenses
related to a Holder's Interest is subject to many important
limitations, discussed below.
Under Section 301.7701-2 of the Regulations, the
determination of whether an organization is treated as an
association taxable as a corporation or as a partnership depends
on whether the organization possesses the following
characteristics: (1) centralization of management, (2)
continuity of life, (3) free transferability of interests, and
(4) limited liability. An organization that possesses three or
more of these characteristics is treated as an association
taxable as a corporation. An organization that possesses fewer
than three of the characteristics is treated as a partnership
unless there are significant other factors that indicate that the
organization should be treated as an association taxable as a
corporation. Although the classification of the Charthouse
rental pool is not without doubt, tax counsel believes that the
relationships created by the Charthouse rental pool will more
likely than not be characterized as a partnership for federal
income tax purposes because the deemed organization will likely
lack the corporate characteristics of limited liability and
continuity of life. In addition, tax counsel does not believe
that there are significant other factors to indicate that the
organization should be treated as an association taxable as a
corporation.
If, contrary to tax counsel's opinion, the deemed
organization is classified as an association taxable as a
corporation or as a "publicly traded partnership," such Holders
will be treated as shareholders of a corporation and (1) the
taxable income of the organization will not be subject to the
federal income tax imposed on corporations, (2) items of income,
gain, loss and deduction will not flow through to the Holders to
be accounted for on their individual federal income tax returns,
and (3) distributions, if any, will be treated as corporate
distributions to Holders, some or all of which might be taxable
as dividends.
Certain "publicly traded partnerships" are taxable as
corporations. A publicly traded partnership for these purposes
is a partnership whose interests are traded on an established
securities market or are readily tradeable on a secondary market
or its economic equivalent. No Interests, including Interests
held by Holders that participate in the Charthouse rental pool,
will be traded on an established securities market. Furthermore,
it is not expected that any Interests will be readily tradeable
on a secondary market or its economic equivalent. However, due
to the factual nature of such a determination, no assurances can
be given that such a market will not develop.
The Company does not intend to seek a ruling from the IRS
that the relationships created by the Charthouse rental pool
create a partnership rather than an association taxable as a
corporation for federal income tax purposes. No assurance can be
given that the IRS will not successfully challenge the tax status
of the relationships in connection with an audit of the returns
of the Company, any of the Holders or the Charthouse rental pool,
or that changes in the tax laws will not significantly modify the
statements expressed herein. Prospective Holders should consult,
and must depend on, their own tax advisor's advice concerning
detailed application of partnership tax rules to their specific
tax situations.
Returns of Charthouse Rental Pool
The Charthouse rental pool will file annually a partnership
information return on IRS Form 1065 and provide to each Holder
that participates in the pool a Schedule K-1 indicating such
Holder's allocable share of the rental pool's income, gains,
losses, and deductions as determined for federal income tax
purposes. If the information returns filed by the Charthouse
rental pool are audited, any adjustments to items will be made at
the pool level in unified proceedings before the I.R.S. and the
courts, rather than in separate proceedings involving each
Holder. There can be no assurance that the pool will not be
audited and that adjustments will not be made.
Characterization of Interests
The Company has requested a ruling from the IRS that an
Interest will not be characterized as a conveyance of real
property. In a previous, nonbinding administrative ruling, the
IRS has characterized a vacation license as a contract to provide
future services much like that of a hotel reservation, but for a
much longer period of time. In distinguishing a vacation license
from a lease or conveyance of real property, the IRS noted that a
vacation license holder has the right to receive future hotel-
like services and that a vacation license holder generally does
not have a right to occupy specific premises during a
determinable period of time. In contrast, the IRS noted that a
conveyance and a lease both grant a right to occupy a defined
physical area or specific premises for a fixed or determinable
time.
Taxation of Holders
Each Holder will be liable for federal and applicable state
and local income taxes on any income earned by his or her
Interest, including any allocable share of income from the
Charthouse rental pool, and any gain realized on the sale or
other disposition of his or her Interest. If the Interest is
disposed of after a one-year holding period, any resulting gain
will be taxed at capital gain rates, provided the Interest is a
capital asset in the hands of the Holder.
A Holder's right to deduct, and the extent to which he or
she may deduct, expenses associated with ownership of an Interest
will depend on how the Interest is used by the Holder.
Personal Use of Interest
If the Holder makes personal use of his or her Interest, any
expenses incurred in connection with the acquisition and
ownership of the Interest will not be deductible for federal
income tax purposes. In certain circumstances, however, a Holder
may be allowed a deduction for interest expense incurred in
connection with the acquisition of an Interest.
Generally, a Holder who finances the acquisition of an
Interest that will be used for personal purposes will not be
entitled to deduct the interest expense associated with the debt
because such interest will be characterized as "personal
interest" under Section 163(h) of the Code. The interest expense
will not be deductible as "qualified residence interest" under
Section 163(h) of the Code unless an Interest is treated as a
"qualified residence." If an Interest is a vacation license for
income tax purposes, it will not be treated as a "qualified
residence."
If a Holder finances the acquisition of an Interest with
debt qualifying as "home equity indebtedness" under Section
163(h) of the Code, the interest expense associated with such
debt will be deductible for tax purposes. Holders should consult
their own tax advisors in determining whether any debt used to
acquire an Interest is "home equity indebtedness" under the Code.
Rental Arising From Unit Weeks
If the Holder rents all or part of his Unit Weeks, including
rentals through the Charthouse rental pool, to a third party, the
extent to which he or she may deduct expenses incurred in
connection with the renting of such Unit Weeks will depend upon:
(1) whether the rental activity is engaged in with the intent of
making a profit (Section 183); (2) whether the expenses are
incurred in connection with the production of income or for the
management, conservation, or maintenance of property held for the
production of income (Section 212) or whether the expenses are
incurred in connection with a trade or business (Section 162);
(3) whether the rights obtained under an Interest constitutes a
"dwelling unit" (Section 280A); (4) whether the rental activity
is a "passive activity" (Section 469); and whether the "at-risk"
rules apply (Section 465).
Section 183
Code Section 183 will allow a Holder to deduct losses
incurred in connection with the renting of his or her Unit Week,
including rentals through the Charthouse rental pool, only if the
renting of the Unit Weeks is engaged in with the intent and
reasonable expectation that the activity will produce a taxable
profit within a reasonable period of time. If the rental
activity is not engaged in for profit (so-called "hobby losses"),
expenses associated with the activity are deductible only to the
extent of income produced by the activity.
Those expenses, if any, that are deductible even if an
Interest is used for personal use are deductible regardless of
whether they exceed the revenue produced by renting an Interest.
These expenses, however, reduce the amount of hobby income
against which other hobby expenses can be offset. To the extent
there is remaining hobby income after reduction for these
expenses, other expenses may be deducted to the extent of
remaining hobby income. These deductions must be adjusted for
personal use, however, and are subject to the two-percent
limitation on miscellaneous itemized deductions under Code
Section 67(a). The Regulations under Code Section 183 provide
rules for allocation of expenses to the specific categories of
expenses described in this paragraph and adjustment of certain
expenses for personal use.
In determining whether an activity is engaged in for profit,
Section 1.183-2 of the Regulations provides that all facts and
circumstances are to be taken into account and no one factor or
adding up of factors is to be determinative. The Regulations
list nine factors that should normally be taken into account, but
caution that other factors may also be considered. The nine
factors listed in the Regulations are:
1. The manner in which the taxpayer carries on the
activity, i.e., whether it is businesslike, whether complete and
accurate books and records are maintained, and whether it is
carried on in a manner that is substantially similar to
activities of the same nature carried on by others at a profit.
2. The expertise of the taxpayer or his advisors.
3. The time and effort expended by the taxpayer. The fact
that the taxpayer devotes a limited amount of time to an activity
does not necessarily indicate a lack of profit motive where the
taxpayer employs competent and qualified persons to carry on the
activity.
4. The expectation that assets used in the activity may
appreciate in value. If the taxpayer seeks to rely on asset
appreciation as a basis for determining that renting is engaged
in for profit, the holding of an Interest for appreciation and
the renting of it may well be deemed two separate activities,
thereby disallowing any deductions for maintenance and operating
expenses, but allowing deduction of expenses directly
attributable to holding an Interest. However, if the rental
income exceeds the operating, maintenance, and other costs not
directly attributable to the holding of an Interest so as to
reduce the net costs of holding the Interest for appreciation, a
single activity of owning and operating the Interest should be
recognized. The Regulations under Code Section 183 provide rules
for allocating expenses between activities in circumstances in
which such allocation is required.
5. The success of the taxpayer in carrying on other
similar or dissimilar activities.
6. The taxpayer's history of income or losses with respect
to the activity. A series of losses during the initial or
start-up stage of an activity may not necessarily be an
indication that the activity is not engaged in for profit,
particularly where the realization of profit within a reasonable
time occurs.
7. The amount of occasional profits, if any, which are
earned.
8. The financial status of taxpayer, i.e., whether or not
he or she has substantial income against which operating losses
can be offset, generating a tax benefit, which factor normally
will be adverse to the taxpayer, especially if there are personal
or recreational elements involved.
9. Elements of personal pleasure or recreation. The
presence of personal motives in carrying on of an activity may
indicate that the activity is not engaged in for profit,
especially where there are recreational or personal elements
involved. On the other hand, a profit motivation may be
indicated where an activity lacks any appeal other than profit.
It is not, however, necessary that an activity be engaged in with
the exclusive intention of deriving a profit or with the
intention of maximizing profits. An activity will not fail the
profit motive test merely because the taxpayer has purposes or
motivations other than solely to make a profit. Also, the fact
that the taxpayer derives personal pleasure from engaging in the
activity is not sufficient to cause the activity to be classified
as not engaged in for profit if the activity is in fact engaged
in for profit as evidenced by other factors.
Code Section 183 creates a presumption in favor of the
determination that the activity is engaged in for profit if a
profit (without regard to operating loss carry forwards) is
realized in three out of five consecutive years. On the other
hand, failure to meet this test apparently does not create a
converse presumption. In order to allow the presumption to work,
a Holder is given an election to postpone the determination of
whether the presumption applies until the end of the fourth
taxable year following the taxable year in which he or she first
purchased his or her Interest and engaged in rental activity. A
Holder should make an election as prescribed in the Regulations
under Code Section 183 to preserve the ability to take advantage
of this presumption and the delay in determining its application.
However, a Holder should note that the Company makes no
assurances or representations concerning whether a Holder can
expect a profit for renting an Interest within four years.
Tax counsel is unable to opine as to whether the renting of
an Interest is an activity engaged in for profit. The
activities, operation and usage of a particular Holder determine
whether an Interest is held for profit or whether the renting of
an Interest is an activity engaged in for profit.
Sections 162 and 212.
If a Holder establishes that his or her Interest is held
with the intent of making a profit, thereby avoiding the
disallowance rules of Code Section 183, a Holder will be able to
deduct from income, subject to the limitations discussed below,
the expenses incurred in connection with acquiring, holding and
renting an Interest. Expenses, other than those which are
deductible even if the Interest is used for personal use, must be
reduced proportionately to the extent of the personal use of the
Interest by the Holder.
Under Code Section 162(a), expenses attributable to a trade
or business carried on by a taxpayer may be deducted in computing
adjusted gross income. Similarly, under Code Section 162(a)(4),
a taxpayer may deduct from adjusted gross income expenses
relating to the production of income under Code Section 212,
where such expenses are attributable to property held for the
production of rents or royalties. Thus, if an Interest is
characterized as property held for the production of rents or
royalties, a Holder is entitled to deduct expenses incurred in
connection with acquiring, holding and renting an Interest from
his or her adjusted gross income whether the Holder uses the
Interest in a trade or business or holds the Interest for the
production of income.
There is no judicial or administrative guidance available
concerning what constitutes "property held for the production of
rents and royalties." However, in general legal terms, "rents"
are payments for the use of property and "royalties" are payments
for the use of intangible property. Because of the uncertainty
in this area, there can be no assurance that an Interest will be
characterized as property held for the production of rents and
royalties and that the IRS will not be able successfully to
challenge a Holder's characterization of an Interest as such and
consequently disallow the deduction of certain expenses.
If an Interest is not characterized as property held for the
production of rents or royalties, the deductions of a Holder who
holds an Interest for the production of income under Code Section
212 will be limited. Although Code Section 212 allows a
deduction for all expenses incurred in connection with the
production or collection of income and for the management and
maintenance of property held for the production of income, Code
Section 67(b) characterizes such expenses as miscellaneous
itemized deductions. Under Code Section 67(a), miscellaneous
itemized deductions are deductible only to the extent that all of
an individual taxpayer's miscellaneous deductions exceed two
percent of his or her adjusted gross income.
This two percent limitation applies only if a Holder
acquires and holds an Interest for the production of income. If
a Holder acquires and holds an Interest for use in a trade or
business, expenses incurred in connection therewith (except to
the extent such expenses are allocated to personal use of the
Holder) are not subject to the two percent limitation. Thus, the
determination of whether an Interest is held for the production
of income under Code Section 212 or for use in a trade or
business has significant tax consequences. Unfortunately, no
bright light test has been used by the IRS or the courts in
making this determination. Rather, the particular factual
situation of a taxpayer is determinative. Tax counsel is
therefore unable to render an opinion concerning the
characterization of a Holder's Interest. Holders are advised to
consult their individual tax advisors for assistance in making
this determination.
Section 280A.
Code Section 280A, which applies to a "dwelling unit" used
by a taxpayer as a residence, limits the deduction of expenses
(other than those expenses that are otherwise deductible even if
an Interest is used for personal use) to rental income from the
"dwelling unit." If a "dwelling unit" is not used as a
residence, the taxpayer may use his or her deductions to offset
other income to the extent such expenses exceed rental income.
Code Section 280A applies to individuals, partnerships, trust,
estates, and S corporations. Code Section 280A does not apply to
a regular corporation, except in its capacity as a member of a
partnership or S corporation or as a beneficiary of a trust or
estate.
Code Section 280A also establishes an expense allocation
fraction to be used in apportioning deductions between personal
and business use of a property to which Code Section 280A
applies. The expense allocation formula permits deduction of the
fraction of the expenses associated with the property (other than
those that are otherwise deductible even if a property is used
for personal use) of which the numerator is the days the property
is actually used for business and the denominator of which is the
total of the days the property is actually used (either for
business or personal use). With respect to time sharing
arrangements, all owners usage is aggregated in determining the
numerator and denominator of the fraction. This allocation
formula applies if a property is used for personal use on even
one day. If an Interest is a "dwelling unit," it is possible
that Interests held by other Holders could be aggregated with the
Interest held by a particular Holder, with the result that even a
Holder that never used an Interest for personal purposes could,
nevertheless, have otherwise deductible expenses reduced pursuant
to Code Section 280A.
Code Section 280A only applies to "dwelling units." A
"dwelling unit" is defined by the Code and related Regulations as
a house, apartment, condominium, mobile home, boat or similar
property, that provides basic living accommodations such as
sleeping space, toilet and cooking facilities. The Code Section
280A definition of "dwelling unit" is broad and characterization
of property for purposes of Code Section 280A is not affected by
local law which classifies property as other than a "dwelling
unit." Although tax counsel believes an Interest is an
intangible asset, namely a vacation license, the language of Code
Section 280A may be broad enough to include an Interest within
the term "dwelling unit." Because of the uncertainty in this
area, the Company has requested a ruling from the IRS that an
Interest and the rights afforded a Holder under a License do not
constitute a "dwelling unit" under Code Section 280A. However,
no assurances can be given that the IRS will find that an
Interest and related License are not a "dwelling unit," or that
the IRS will rule on the question at all.
Passive Activity Income and Loss
The Code further limits the deductibility of losses in
certain circumstances by providing that passive activity losses
incurred by an individual, estate, trust, or personal service
corporation or, with modifications, certain closely held
corporations may not be used to offset non-passive activity
income. In general, passive activity losses can be used only to
offset passive activity income, not wages or portfolio income
(such as dividends, interest, annuities and royalties). Any
passive activity losses in excess of passive activity income in
one year may be used to offset passive activity income in future
years. Upon disposition of the investor's entire interest in the
passive activity, all suspended losses from such activity are
specially allowable by reason of the disposition.
In general, a passive activity is one which: (1) is a trade
or business activity in which the taxpayer does not materially
participate; or (2) is a rental activity.
For purposes of the passive loss rules, a taxpayer may have
a trade or business activity even if the taxpayer does not meet
the general standard under Code Section 162 (discussed
previously). Under Code Section 1.469-1T(e)(2)(ii) of the
Regulations, a trade or business activity includes an activity
that is engaged in for the production of income. Thus, expenses
that are otherwise deductible under Code Section 212 may be
subject to disallowance under the passive activity loss rules.
Trade or business activities are treated as passive unless
the taxpayer materially participates in the activity. Under Code
Section 469, a taxpayer is not treated as materially
participating in an activity unless his or her involvement in the
operation of the activity is regular, continuous, and
substantial. The Regulations interpret this standard by
providing that a taxpayer materially participates in an activity
if and only if the taxpayer meets any one of seven tests. The
first six tests are quantitative, whereas the seventh test
involves a consideration of the facts and circumstances of a
taxpayer's involvement in an activity.
Tax counsel believes that it is very unlikely that a Holder
will be treated as materially participating under any of these
seven tests in any activity associated with a business use of his
or her Interest because, under the terms of the Charthouse Suites
Vacation License Plan, sole authority for the management and
operation of Chart House Suites hotel resides in the Company.
Therefore, income or loss generated by a Holder's use of his or
her Interest will probably be passive income or loss.
Under the passive loss rules, rental activities are treated
as passive without regard to whether they involve the conduct of
a trade of business or whether the taxpayer has materially
participated. Rental activity is any activity where payments are
principally for the use of tangible property. If an Interest is
a vacation license rather than a real property conveyance, it
initially appears that the renting of an Interest should not be
considered a rental activity because the Interest is not tangible
personal property, but rather an intangible asset. However, the
Regulations provide that where the actual or prospective
customers' payments are principally for the use of tangible
property, the activity is a rental activity, even if payments are
made pursuant to a service contract or other arrangement that is
not denominated as a lease.
There are several exceptions provided by the Regulations to
treatment as a rental activity. They include:
1. The average customer use for such taxable year is
seven days or less.
2. The average period of customer use is 30 days or
less, and significant personal services are
provided by or on behalf of the owner of the
property in connection with making the property
available for use by customers.
3. Extraordinary personal services are provided by or
on behalf of the owner of the property in
connection with making the property available to
customers (i.e. hospitals).
4. The rental activity is incidental to nonrental
activities of the taxpayer.
5. The activity involves customarily making property
available during defined business hours for
nonexclusive use by customers (i.e. golf courses
and health clubs).
6. The activity involves the provision of property to
a pass-through entity or joint venture in which
the taxpayer owns an interest.
7. An activity that involves the rental of a dwelling
unit used by the taxpayer as residence, as
determined under Code Section 280A, is not a
rental activity.
Under certain of the exceptions, it appears that, if renting of a
Holder's rights under a License were within the meaning of a
rental activity, that it would nevertheless be excluded under the
exceptions. For example, average customer use might be 30 days
or less and significant personal services are provided. It is
unclear, however, how to apply these tests in the context of
time-sharing arrangements as no administrative or judicial
guidance is available.
In the final analysis, it probably does not matter if the
activity is a rental activity or not. In any event, it will be
passive. If it is a rental activity, it is per se passive. If
it is not a rental activity, it will be a passive activity if a
Holder does not materially participate. As previously indicated,
tax counsel believes that it is unlikely that any Holder will
materially participate in any activity connected to his or her
Interest.
"At Risk" Rules
In addition to the above limitations imposed upon the
deductibility of losses Section 465 of the Code further limits
the deductibility of losses by individual taxpayers from a given
activity to the amount which the taxpayer is "at risk" in the
activity. Losses which cannot be deducted by a taxpayer because
of the "at risk" rules may be carried over to subsequent years
until such time as they are allowable. In determining the amount
of loss, if any, disallowed under Code Section 465, Code Sections
183 and 280A are applied prior to the application of Code Section
465 and Code Section 469 is applied after any limitation under
Code Section 465 is determined.
A taxpayer will initially be considered to be "at risk" in
an activity to the extent of (1) the amount of money and the
adjusted basis of other property contributed to the activity by
the taxpayer; (2) amounts borrowed by the taxpayer for use in the
activity, except as described below, provided the taxpayer is
personally liable for the repayment of such borrowed amounts or
has pledged property (other than property used in the activity)
as security for the repayment of such borrowed amounts; and
(3) the taxpayer's share of any "qualified nonrecourse financing"
which is secured by real property used in the activity. A
taxpayer is not considered to be "at risk" to the extent he or
she is protected against loss through nonrecourse financing,
guarantees, stop loss agreements, or similar agreements.
If, as tax counsel concludes, an Interest is characterized
as a vacation license, the at-risk rules of Code Section 465 will
not apply to any activity engaged in by a Holder in connection
with the ownership of an Interest. A vacation license is an
intangible asset. Code Section 465 applies only to the renting
of Code Section 1245 property, which generally is limited to
tangible personal property. If an Interest is found to be a
conveyance of real property or a lease, contrary to tax counsel's
opinion, Code Section 465 would apply and could further limit
deduction of losses by a Holder.
Depreciation/Amortization
Code Section 167 allows a depreciation deduction for
property used in a taxpayer's trade or business or for property
held by the taxpayer for the production of income. Under Section
1.167(a)-3 of the Regulations, an intangible asset may be the
subject of a depreciation deduction if the intangible asset has a
limited and ascertainable useful life. Code Section 197 provides
that the acquisition cost of certain intangible assets is
amortized over a 15 year period. An Interest is not a "section
197 intangible."
If an Interest is characterized as a vacation license, an
intangible asset, a Holder who uses his or her Interest in a
trade or business or for the production of income, will be
entitled to a depreciation deduction equal to the acquisition
cost of the Interest. A ratable portion of the acquisition cost
will be deductible each tax year as depreciation, over the life
of the Interest, adjusted each year for any personal use of the
Interest by the Holder. Because the Holder has the right to
terminate the License, the acquisition cost will not include any
amount that has not been paid (or, in the case of an accrual
basis taxpayer, is not yet due and payable).
Code Section 179 allows a taxpayer (other than trusts,
estates, and certain noncorporate lessors) to expense certain
depreciable business assets in the year of acquisition by
electing to treat the cost of new property as an expense rather
than as a capital expenditure subject to depreciation. The
deductions for which the election is made are allowed for the tax
year in which the Code Section 179 property is placed in service
and are in lieu of a depreciation deduction. Generally, a
taxpayer may elect to expense only tangible personal property
under Code Section 179. Therefore, regardless of whether an
Interest is an intangible vacation license, a conveyance of real
property or a lease, a Holder will not be able to expense
acquisition costs under Code Section 179.
Alternative Minimum Tax
Taxpayers are subject to an alternative minimum tax ("AMT")
if the AMT exceeds the income tax otherwise payable by the
taxpayer for the year. Due to the complexity of the AMT
calculations, investors should consult with their tax advisers as
to whether the purchase of an Interest might create or increase
their potential AMT liability.
Corporate Investors
Code Section 183 does not apply to corporate Holders. Code
Section 280A does not apply to corporations not electing
Subchapter S treatment. Code Section 469 applies only to certain
closely held C corporations and personal service corporations.
However, deduction of expenses associated with the acquisition
and ownership of an Interest by a corporation may be completely
disallowed or substantially restricted.
Code Section 274(a)(1) specifically disallows any deduction
relating to an "entertainment facility." Judicial decisions
indicate that any expenses attributable to the upkeep of such
property, or for the continuing enjoyment of the property (i.e.
depreciation, maintenance, insurance, etc.) are nondeductible,
regardless of whether they are attributable to the business use
of the property. In other words, the cases emphasize that no
deduction really means no deduction, even where facilities are
used both for business and entertainment. The term
"entertainment facility" has been broadly interpreted and tax
counsel has advised that it is likely that an Interest will be
held to be an "entertainment facility" within the meaning of Code
Section 274.
Code Section 274(e) does provide for certain exceptions to
the entertainment facility disallowance rule. Expenses incurred
in connection with an entertainment facility, but that are
treated as compensation to an employee, are not disallowed.
Similarly, expenses incurred by a taxpayer that are directly
related to business meetings of the taxpayer's employees,
stockholders, agents or directors are not disallowed. While this
exception will apply to bona fide business meetings even though
some social activities are provided, it will not apply to
meetings which are primarily for social or nonbusiness purposes
rather than for the transaction of the taxpayer's business.
There are other exceptions to the general rule of
disallowance as well. The discussion contained herein is not a
complete treatise on the ownership of an Interest by a
corporation. There are numerous issues involved in corporate
ownership and corporations should obtain tax advice from their
own counsel before purchasing an Interest.
Future Developments
The President and Congress and various states continue to
discuss and propose additional changes to the tax laws which
could impact the tax consequences to Holders. Holders are urged
to consult with their own tax advisers and counsel.
State and Local Taxes
In addition to the federal income tax considerations
described above, investors should consider potential state and
local tax consequences of the purchase of an Interest.
Prospective investors should consult with, and must depend upon
their own tax advisors for a complete evaluation of the state and
local tax considerations relating to the purchase of an Interest.
CERTAIN FLORIDA TAX MATTERS
The discussion below is limited to the material provisions
of the state and local taxes specifically enumerated and is not
intended to be a comprehensive discussion of all state and local
tax consequences of the purchase of an Interest.
Excise Taxes on Documents.
Excise Tax on Transfers of Real Estate. Under Florida law,
an excise tax is imposed at the rate of 70 cents for each $100 of
consideration paid on deeds and other instruments that transfer
interests in real property. Although the Company has been
advised by the Florida Department of Revenue (the "Department")
that an Interest is not a transfer of an interest in real
property under Florida law, the Department has informally advised
tax counsel that this excise tax will apply at the time of the
sale of an Interest and will be imposed on the subscription price
of an Interest (less any sales discounts). The Company will be
required to collect the tax at the time an Interest is sold. The
purchaser of an Interest will be liable for this excise tax as
follows:
Tax Payable
Subscription Price (Exclusive of
Any Discounts)
Class A Interest $17,000 $119.00
Class B Interest 20,000 140.00
Class C Interest 26,500 185.50
Class D Interest 36,500 255.50
Class E Interest 39,500 276.50
Class F Interest 61,000 427.00
Excise Tax on Stock Certificates. Under Florida law, an
excise tax is imposed at the rate of 35 cents on each $100 of
face value on certificates of stock or shares evidencing an
ownership interest in any corporation. The Department has
informally advised tax counsel that this excise tax will be
imposed on the subscription price of an Interest only if the
subscription agreement for the Interest is accepted by the
Company in Florida. The Company has advised tax counsel that it
intends to accept all subscription agreements for the purchase of
Interests in Wisconsin and therefore, under these circumstances,
the sale of an Interest will not be subject to this excise tax.
Excise Tax on Promissory Notes. Florida also imposes an
excise tax on promissory notes at the rate of 35 cents per $100
of indebtedness evidenced by the promissory note. Therefore, to
the extent the Holder of an Interest elects to pay on an
installment basis for an Interest, this excise tax will be
imposed on the principal amount of the obligation owed by a
Holder. However, the Department has advised tax counsel that
this excise tax will be imposed only if the subscription
agreement is executed or delivered in Florida.
Because of the complexity and uncertainty in this area, the
Company has received a ruling from the Department concerning the
application of the excise taxes described in this section to the
purchase of an Interest by a Holder which has been received.
Sales Taxes.
Under state and local law in Florida, a combined sales tax
of eleven percent is imposed on the rental, leasing, letting or
granting of a license for the use of real property or transient
living accommodations located in Pinellas County. The eleven
percent tax is comprised of the following: (1) a Florida state
sales tax of six percent, (2) a local county sales tax of one
percent, and (3) a tourist development tax of four percent.
Because an Interest is treated as a security for state excise tax
purposes and is subject to the excise taxes described above, the
Department has informally advised tax counsel that the purchase
of an Interest will not be subject to the combined sales tax.
For similar reasons, the Department has advised tax counsel that
the receipt of annual dues paid to the Company by the Holder of
an Interest, which will be utilized by the Company to cover the
maintenance and other expenses of the hotel and for the
administration and management of property associated with the
security, are also not subject to the combined sales tax.
The Department has also advised tax counsel that the rental
of a Holder's allotted Unit Weeks under the Charthouse rental
pool will be the rental of transient accommodations subject to
the combined sales tax. Suites, as agent for the Holder of an
Interest, will register as a dealer and remit the applicable
combined sales tax due on receipts from the rental of suites in
the Charthouse rental pool.
Because of the complexity and uncertainty in this area, the
Company has received a ruling from the Department (1) that the
sale of an Interest and the payment of annual dues will not be
subject to the combined sales tax, and (2) that the Company,
acting as rental agent, may collect and remit the combined sales
tax on payments collected in connection with the rental of
Holders' suites under the Charthouse rental pool.
Upon proper notice, a Holder may use one or more of his or
her allotted Unit Weeks for personal use. In the opinion of tax
counsel, because the Interests are treated as securities, the
personal use of a suite by a Holder will not be subject to the
combined sales tax. However, the law is uncertain in this area
and no assurance can be given that the Department could not
successfully assert that a Holder is liable for the combined
sales tax on the personal use of a suite. Holders must consult
with, and must depend upon the advice of their own tax advisors.
The Company does not intend to seek a ruling from the Department
that the personal use of a suite for one or more weeks by the
Holder is not subject to the combined sales tax.
Upon proper notice, a Holder may also rent one or more of
his or her allotted Unit Weeks to a third party. Tax counsel has
advised that the rental of one or more of a Holder's allotted
Unit Weeks will be the rental of transient accommodations subject
to the combined sales tax. The Holder will be required to
collect and remit the combined sales tax on the gross rental
proceeds.
LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
Certain indemnification agreements to be entered into with
Charthouse, and the Company's Articles of Incorporation and
Bylaws require the Company to indemnify the director and
officers, among others, against claims and liabilities and
reasonable expenses actually incurred by them in connection with
any such claim or liability by reason of their services in those
or other capacities unless it is established that the act or
omission of the director or officer was material to the matter
giving rise to the proceeding and was committed in bad faith or
was the result of active and deliberate dishonesty, or the
director or officer actually received an improper personal
benefit, or in the case of any criminal proceeding, the director
or officer had reasonable cause to believe that the act or
omission was unlawful.
The Company will enter into indemnification agreements with
each of its officers and directors. The indemnification
agreements will require, among other things, that the Company
indemnify its directors and officers to the fullest extent
permitted by law and advance to the officers and directors all
related expenses, subject to reimbursement if it is subsequently
determined that indemnification is not permitted. Under these
agreements, Charthouse also must indemnify and advance all
expenses incurred by officers and directors seeking to enforce
their rights under the indemnification agreement, and cover
officers and the directors under Charthouse's liability
insurance. Although the form of indemnification agreement offers
substantially the same scope of coverage afforded by provisions
in the Articles and Bylaws, it provides greater assurance to the
director and officers that indemnification will be available
because, as a contract, it cannot be modified unilaterally in the
future by the director or by the Holders to eliminate the rights
it provides.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to director, officers or persons
controlling Charthouse pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the Commission
such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable. Prior to seeking
court approval for indemnification, Charthouse will cause the
party seeking indemnification to apprise court of the position of
state administrators and the Securities and Exchange Commission
with respect to indemnification for securities laws violations
and to submit to such court the question whether such
indemnification is or is not against public policy as expressed
in the Securities Act (in light of the position of the state
administrators and the Securities and Exchange Commission).
LEGAL MATTERS
Quarles & Brady, Milwaukee, Wisconsin, has passed upon the
validity of the issuance of the Interests offered pursuant to
this Prospectus and on certain tax matters as described under
"Federal Income Tax Considerations." Quarles & Brady has in the
past represented and is presently representing the Company and
Decade Properties, Inc. in certain other matters. Holders should
not consider Quarles & Brady to be their legal counsel with
respect to this Offering or any other related matter, and are
strongly encouraged to seek the advice of qualified and
independent legal counsel with respect to entering any of the
agreements or contracts contemplated by this Offering and any
other related matters, including counsel for the tax
considerations of a purchase of an Interest.
There are currently no pending legal proceedings which would
have a material adverse affect on the Company, nor are there any
proceedings in process or known to be contemplated by any
governmental authority which would have a material effect on the
Company.
<PAGE>
EXPERTS
The balance sheet of Charthouse dated as of December 31,
1996 appearing in this Prospectus and Registration Statement has
been audited by Ernst & Young LLP, independent auditors, as set
forth in their report appearing elsewhere herein, and is included
in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.
The audited income statements of Chart House Suites for the
fiscal years ending November 30, 1994 through 1996 have been
audited by Virchow Krause & Company, independent auditor, and is
included in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
<PAGE>
FINANCIAL STATEMENTS AND RELATED INFORMATION
Balance Sheet
Charthouse Suites Vacation
Ownership, Inc.
December 31, 1996
Charthouse Suites Vacation Ownership, Inc.
Balance Sheet
December 31, 1996
<PAGE>
Contents
Report of Independent Auditors 1
Balance Sheet at December 31, 1996 2
Notes to Balance Sheet 3
<PAGE>
Report of Independent Auditors
The Board of Directors
Charthouse Suites Vacation Ownership, Inc.
We have audited the accompanying balance sheet of
Charthouse Suites Vacation Ownership, Inc. (the
Company) as of December 31, 1996. This balance sheet
is the responsibility of the Company's management.
Our responsibility is to express an opinion on this
balance sheet based on our audit.
We conducted our audit in accordance with generally
accepted auditing standards. Those standards require
that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet
is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the
amounts and disclosures in the balance sheet. An
audit also includes assessing the accounting
principles used and significant estimates made by
management, as well as evaluating the overall
balance sheet presentation. We believe that our
audit of the balance sheet provides a reasonable
basis for our opinion.
In our opinion, the balance sheet referred to above
presents fairly, in all material respects, the
financial position of the Company at December 31,
1996, in conformity with generally accepted
accounting principles.
Milwaukee, Wisconsin
January 24, 1997
<PAGE>
Charthouse Suites Vacation Ownership, Inc.
Balance Sheet
December 31, 1996
Assets
Cash $ 1,979
Prepaid expenses 8,021
$ 10,000
Shareholder's equity
Common stock, par value $.01 per share,
authorized 100,000 shares,
issued 1,000 shares $ 10
Paid-in capital 99,990
100,000
Less stock subscription receivable 90,000
Total Shareholder's equity $ 10,000
<PAGE>
Charthouse Suites Vacation Ownership, Inc.
Notes to Balance Sheet
December 31, 1996
1. Organization, Description of Business and Planned
Offering
Charthouse Suites Vacation Ownership, Inc., a
Florida Corporation (the Company) was formed on
April 16, 1996, to facilitate the sale of interests
to rent or use the Chart House Suites Hotel (the
Hotel). The Company has the right to sell A, B, C,
D, E and F Class Interests (the Interests) pursuant
to a Master License Agreement with Decade
Properties, Inc. (Decade, an affiliate of the
Company and owner of the Hotel). Under the Master
License Agreement, the Company must pay Decade
license payments equal to cash proceeds, net of
offering expenses, that the Company receives upon
the sale of the Interests as defined in the Master
License Agreement. Purchasers of the Interests will
have the right to use for two specific consecutive
weeks of every Spring, Summer, Fall and Winter
season until December 31, 2050, a hotel suite of a
certain category in the Hotel. Owners of the
Interests do not acquire an ownership or equity
interest in the Company, but pursuant to the
Charthouse Suites Vacation License Plan will acquire
a license right to utilize a suite in the Hotel.
The Company plans to offer for sale the following
Interests:
Class of Interest Number of Price per
Interests Interest
A Interest 36 $17,000
B Interest 24 20,000
C Interest 36 26,500
D Interest 36 36,500
E Interest 12 39,500
F Interest 6 61,000
<PAGE>
Charthouse Suites Vacation Ownership, Inc.
Notes to Balance Sheet
December 31, 1996
1. Organization, Description of Business and Planned
Offering (continued)
Assuming the maximum number of Interests are sold,
the gross proceeds from the sale will be
approximately $4,200,000 exclusive of offering
expenses. The proceeds raised from the sales of
Interests will be remitted to Decade as payment for
amounts owed under the Master License Agreement with
the Company (discussed above). If fewer than 76
Interests are sold by December 31, 1997, the Company
has an option to cancel the underlying licenses and
return the entire subscription amount, reduced by
certain payments or benefits received, to investors.
Holders of Interests will be required to share in
the annual maintenance and other related costs,
expenses and reserves of providing the Hotel
services and property and equipment for their suite
in the Hotel. Holders will be assigned a
proportionate share of such expenses based upon a
defined formula pursuant to a Property Management
Agreement with Decade allocating fixed and variable
costs to their respective class of Interests.
An investor may finance the purchase of an Interest
through the Company by paying at least 25% of the
subscription price and entering into a subscription
agreement for the remainder of the subscription
price to be payable in 360 monthly installments with
increased licensing payments of 9% per year which
have the effect of an interest charge on the amounts
outstanding.
Under a Guaranteed Rental Arrangement, developed as
an incentive to early purchasers of Interests, the
Company has guaranteed that investors, purchasing
Interests within one year of the effective date of
the planned offering, will receive guaranteed rental
payments, as defined, at varying rates, in exchange
for the use of Hotel suites. All rights exchanged
for the use of the Hotel suites must be exercised no
later than five years after the effective date of
the offering. Alternatively, investors purchasing
Interests within one year of the effective date of
the offering may elect to receive a cash discount
ranging from 1.5% to 5% applicable to the
subscription price (depending on the date an
Interest is purchased) in lieu of the Guaranteed
Rental Arrangement.
<PAGE>
Charthouse Suites Vacation Ownership, Inc.
Notes to Balance Sheet
December 31, 1996
2. Shareholder's Equity
On April 16, 1996, the Company's sole shareholder
entered into a subscription agreement to purchase
100 shares of the Company's common stock for $1,000
per share or an aggregate subscription price of
$100,000. As of December 31, 1996, the sole
shareholder had paid $10,000 of the subscribed
amount.
3. Transactions with Related Parties
In addition to the related-party transactions
summarized above, affiliates of the Company will
provide management and consulting services to the
Company including the rental services pursuant to
agreements with the Hotel.
Decade will be employed by the Company to provide
property management services to the Hotel. The
Company has entered into a Property Management
Agreement with Decade whereby Decade will manage the
Hotel until December 31, 2050, for a fee of $2,500
a month (such fee to increase by the CPI index
increase on the first of each year beginning January
1, 1997) plus reimbursement of defined expenses. The
Property Management Agreement provides for a payment
to Decade equal to the present value (using a 3%
discount rate) of the remaining future payments to
be received in the event Decade is removed in part
or whole, as the property manager.
Holders of the Interests may utilize the Company's
rental services if they do not want to or cannot use
one or more of their allotted weeks of each year.
Decade will provide rental services for a fee equal
to 5% of the rental revenue. Interest holders may
also seek to have Decade enter into individual
property management agreements.
DPI Construction and Engineering Corp. (DPIC), an
affiliate of the Company, is engaged in the general
contracting business. The Company may enter into
agreements with DPIC whereby DPIC will provide
services in connection with renovation and
remodeling work on the Hotel.
Decade and affiliates will be reimbursed for the
actual cost of goods and materials used by or for
the Company, including the following general
functions of the Company: Company operations,
Company accounting, investor communications,
investor documentation, legal services, tax
services, computer services, risk management,
Company
<PAGE>
Charthouse Suites Vacation Ownership, Inc.
Notes to Balance Sheet
December 31, 1996
3. Transactions with Related Parties (continued)
organizational and offering expenses, and any other
related operational and administrative expenses
necessary for the organization and operation of the
Company.
4. Offering Costs
As of December 31, 1996, $133,906 of legal and
accounting fees had been incurred by Decade related
to the planned offering discussed in Note 1. The
Company has agreed to indemnify and reimburse Decade
for such costs only if the planned offering occurs
and sufficient funds become available. At that
time, the Company will record such amounts in its
financial statements.
5. Income Taxes
The Company is taxed on its income for federal and
state income taxes under the laws of subsection "C"
of the Internal Revenue Code. No provision for
income taxes was recorded as of December 31, 1996,
and the Company has not commenced operations.
6. Use of Estimates
The preparation of the financial statements in
conformity with generally accepted accounting
principles requires management to make estimates and
assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual
results could differ from those estimates.
<PAGE>
<PAGE>
CHART HOUSE SUITES
Clearwater, Florida
STATEMENTS OF OPERATING REVENUES
AND CERTAIN EXPENSES
Including Independent Accountants' Report
November 30, 1996, 1995 and 1994
<PAGE>
<PAGE>
CHART HOUSE SUITES
TABLE OF CONTENTS
November 30 1996, 1995 and 1994
Independent Accountants' Report 1
Statements of Operating Revenues and Certain Expenses 2
Note to Financial Statements 3
<PAGE>
<PAGE>
Virchow, Krause & Company, LLP
Certified Public Accountants & Consultants
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors
Decade Properties, Inc.
Brookfield, Wisconsin
We have audited the accompanying statements of operating revenues
and certain expenses of Chart House Suites for the years ended
November 30, 1996, 1995 and 1994. The financial statements are
the responsibility of the Partnership's management. Our
responsibility to express an opinion on the accompanying
statements of revenues and certain expenses based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statement is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the accompanying revenues and certain expenses
for the years ended November 30, 1996, 1995 and 1994, presents
fairly, in all material respects, the operating revenues and
certain expenses, exclusive of those described in Note 1, of
Chart House Suites for the years ended November 30, 1996, 1995
and 1994, in conformity with the basis of accounting described in
Note 1 to the accompanying schedules.
This report is intended solely for purposes of compliance with
form S-11, Registration Statement under the Securities Act of
1933, and should not be used for any other purposes.
VIRCHOW, KRAUSE & COMPANY, LLP
Waukesha, Wisconsin
January 9, 1997
<PAGE>
<PAGE>
CHART HOUSE SUITES
STATEMENTS OF OPERATING REVENUES AND CERTAIN EXPENSES
For the Years Ended November 30, 1996, 1995 and 1994
1996 1995 1994
OPERATING REVENUES
Total rental income $452,981 $327,031 $72,687
OTHER INCOME
Telephone 10,412 9,840 3,328
Miscellaneous/other 1,663 2,901 349
Sales tax income 650 582 152
Interest income 1,495 767 325
Total Other Income 14,220 14,090 4,154
Total Operating Revenues 467,201 341,121 76,841
CERTAIN EXPENSES
Salaries
Salaries-administration 6,221 5,161 -
Salaries-housekeeping 27,361 24,698 7,620
Manager on-site 24,056 17,226 8,321
Operations/front desk 27,386 17,226 8,321
Salaries-maintenance/grounds 15,174 13,026 13,981
Payroll taxes (included above) - - -
Management fee 27,179 16,311 -
Total Salaries 127,377 93,648 38,243
Direct Expenses
Insurance 12,492 11,048 12,488
Maintenance services/supplies 11,922 8,352 5,108
Electric-units 15,868 14,613 9,115
Propane gas 4,020 1,272 -
Water/sewer 9,432 8,287 7,286
Trash removal 2,067 1,681 1,004
Cable television 3,741 3,084 1,870
Grounds 2,575 1,238 1,725
Sales and marketing 19,659 24,246 21,858
Telephone 10,201 9,646 5,218
Laundry/cleaning supplies 8,976 8,641 12,820
Real estate tax 27,595 24,867 15,114
Administrative miscellaneous 21,739 24,436 17,450
Total Direct Expenses $150,287 $141,411 $111,056
<PAGE>
<PAGE>
1996 1995 1994
REPAIR AND MAINTENANCE EXPENSES
Roof $ - $ - $ -
Painting 1,943 470 510
Furniture/equipment/interior 18,219 31,744 10,949
Pool maintenance 758 3,554 -
Pavement - - 13,792
Reserved for others 4,194 1,802 5,666
Total Repair and 25,114 37,570 30,917
Maintenance Expenses
Total Expenses 302,778 272,629 180,216
EXCESS OF OPERATING REVENUES
OVER CERTAIN EXPENSES $ 164,423 $ 68,492 $(103,375)
See Accountants' Report.
Page 2
<PAGE>
<PAGE>
CHART HOUSE SUITES
NOTE TO FINANCIAL STATEMENT
November 30, 1996, 1995 and 1994
NOTE 1 - Nature of Business and Significant Accounting Policies
Nature of Business
Chart House Suites is a 25 unit hotel complex located in
Clearwater, Florida. While the hotel was owned for the whole
year in 1994, it opened for business on April 21, 1994.
Basis of Accounting
The accompanying statements of operating revenues and certain
expenses reflect income and expenses that are directly
attributable to the operations of the hotel complex, and that are
not dependent upon a particular owner of the property. As a
result, certain expenses which are included in the accounting
records of the property are not included in the accompanying
financial statements. These expenses are depreciation,
amortization, mortgage interest, and certain office and
administrative expenses.
Repairs and Maintenance
Ordinary maintenance and repairs are charged to operations when
incurred, while expenditures which significantly increase asset
lives or values are capitalized.
Page 3
<PAGE>
<PAGE>
GLOSSARY
A. "Annual Assessment" means the share of funds required
for the payment of Common Expenses which is assessed annually
against a Licensee by Charthouse Suites Vacation Ownership, Inc.
B. "Articles" means the Articles of Incorporation of
Charthouse Suites Vacation Ownership, Inc.
C. "Assigned Unit" means the Unit of a certain category of
hotel suite assigned to a Licensee by the Company at the time of
conveyance of a Time Share License which such Licensee shall
occupy during the Licensee's "Assigned Unit Week" (as hereinafter
defined).
D. "Assigned Unit Week" means the Unit Week assigned to a
Licensee by the Developer at the time of conveyance of a Time
Share License.
E. "Board" means the Board of Directors of Charthouse
Suites Vacation Ownership, Inc.
F. "By-Laws" means the By-Laws of Charthouse Suites
Vacation Ownership, Inc.
G. "Common Amenities" means those areas not included as
part of the Resort Facility which are to be used by Licensees of
the Resort Facility and other hotel guests. The Common Amenities
shall consist of a swimming pool, administrative office and
laundry facilities. The Common Amenities may be expanded from
time to time in the sole discretion of the Developer in the
manner provided for in the Plan. Licensees of the Resort
Facility shall not acquire any direct ownership in the Common
Amenities, however, the Common Amenities initially provided for
by the Company, as described herein, shall be leased by
Charthouse Suites Vacation Ownership, Inc. pursuant to the
provisions set forth in the Master License Agreement and
available for reasonable use by Licensees.
H. "Common Areas" means those portions of the Resort
Facility which are not included in the Units and specifically
excludes any portion of the Common Amenities.
I. "Common Expenses" means costs incurred in the operation
of the Resort Facility, the Common Amenities, and Common Areas
and includes:
1. Costs relating to or incurred in the operation,
maintenance, repair or replacement of the Units, the Common
Areas, the Common Amenities, including, but not limited to,
real estate taxes, costs of carrying out the powers and
duties of Charthouse Suites Vacation Ownership, Inc., costs
of fire and extended coverage insurance; and
2. Any other expenses designated as "Common Expenses"
in accordance with applicable law by Charthouse Suites
Vacation Ownership, Inc. in its sole discretion or as set
forth in the Vacation License Plan.
J. "Charthouse rental pool" means the income generated
from the rental of Unit Weeks placed in pool the plus
miscellaneous income from operating the Charthouse hotel such as
telephone income.
K. "Developer" or the "Company" means Charthouse Suites
Vacation Ownership Inc., a Florida corporation, its grantees,
successors and assigns.
L. "License" means a right to occupy a time share unit,
terminating on December 31, 2050, which right is neither coupled
with a freehold interest nor coupled with an estate for years
with a future interest in a time share property, as described in
the Plan.
M. "Interests" means Class A, B, C, D, E, and/or F
Charthouse Suites Vacation Investment and Ownership Interests
described in the prospectus and the Charthouse Suites Vacation
License Plan and are a sublicense of the Master License Agreement
between the Company and Decade Properties, Inc.
N. "License" means the ownership of a time share license
which is an estate for years, terminating on December 31, 2050.
O. "Licensee" means a person to whom the Company has
conveyed of record a Time Share License, his heirs, successors
and assigns.
P. "Plan" or "Vacation License Plan" or "Time Sharing
Plan" means the Charthouse Suites Vacation License Plan, as
amended from time to time.
Q. "Resort Facility" means the property described on
Exhibit "A" attached to the Vacation License Plan, and all
improvements thereon (including the Units and the Common Areas
and all furniture, furnishings and fixtures therein) and all
easements and rights appurtenant thereto intended for use in
connection therewith, but shall not include the attached marina
which shall remain the sole and exclusive property of Decade
Properties, Inc., or its grantees, successors, and assigns.
R. "Rules and Regulations" means the Rules and Regulations
of Charthouse Suites Vacation Ownership, Inc.
S. "Service Period" means that period of time designated
by Charthouse Suites Vacation Ownership, Inc. in its sole
discretion, commencing at the end of each Unit Week and ending at
the beginning of the next Unit Week or as necessary to be used by
Charthouse Suites Vacation Ownership, Inc. to clean, service and
maintain a Unit and the Common Areas. The Service Period shall
initially run for six hours from 10:00 a.m. until 4:00 p.m.
However, it may be changed by Charthouse Suites Vacation
Ownership, Inc. in its sole discretion provided however that the
Service Period shall not be less than three hours nor more than
seven hours, unless needed for an emergency.
T. "Special Assessment" means a share of funds required
for the payment of Common Expenses which from time to time is
assessed against a Licensee in addition to the Annual Assessment.
U. "Suite" means a room or suite at the Chart House Suites
Hotel as described in detail in the Charthouse Suites Vacation
Ownership Plan.
V. "Unit" means a part of the Resort Facility which is
subject to exclusive possession of a licensee.
W. "Unit Week" means a period of use of a Unit which shall
consist of seven days. Unit Weeks are computed as follows:
Unit Week No. 1 is the seven days commencing on the
first Friday, Saturday or Sunday in each year.
Unit Week No. 2 is the seven days succeeding.
Additional Unit Weeks, up to and including Unit Week
No. 51, are computed in a like manner.
Unit Week No. 52 contains the seven days succeeding the
end of Unit Week No. 51, without regard to the month or
year. Unit Weeks run from 12:00 p.m. on the first
Sunday of the Unit Week to 12:00 p.m. on the last
Saturday of the Unit Week, and include the service
period as defined in Article I (V) hereof. Any excess
days not otherwise assigned shall remain the property
of Decade Properties, Inc.
<PAGE>
<PAGE>
ANNEX A
CHARTHOUSE SUITES VACATION LICENSE PLAN
THIS INSTRUMENT PREPARED BY:
Mary Neese Fertl, Esq.
Quarles & Brady
411 East Wisconsin Avenue
Suite 2900
Milwaukee, WI 53202
VACATION LICENSE PLAN
FOR
CHARTHOUSE SUITES
This Vacation License Plan (the "Plan") for Charthouse
Suites is made this ____ day of __________, 1997, by CHARTHOUSE
SUITES VACATION OWNERSHIP, INC., a Florida corporation
("Developer").
WHEREAS, Decade Properties, Inc., (the "Owner") a Wisconsin
corporation, is the owner in fee simple of the real property
described on Exhibit "A" attached hereto (the "Property") and has
entered into a certain Master License Agreement and Non-exclusive
Easement Agreement with the Developer which granted to the
Developer certain rights to use the hotel suites, facilities and
common areas of the Property; and
WHEREAS, the Developer desires to sell Vacation Investment
and Ownership Interests (the "Interests") which shall entitle the
holder to the income arising from rental or, upon the proper
notice, the right to use for eight weeks in each calendar year
(two weeks in each season), a hotel suite of a certain category
in Charthouse Suites located upon the Property, until
December 31, 2050, pursuant to the terms of a Subscription and
Purchase Agreement for Charthouse Suites Vacation Investment and
Ownership Interests between the Developer and the purchaser; and
WHEREAS, the Developer desires to provide for the
preservation of the values and the amenities which are available
for use by the purchasers of Interests, and to this end does
hereby establish this Vacation License Plan as hereinafter set
forth.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the Developer hereby declares that
the Property shall be owned, held, used, transferred, sold,
conveyed, demised and occupied subject to the conditions,
covenants, restrictions, easements, reservations, regulations and
burdens hereinafter set forth, until this Plan is terminated as
provided herein.
ARTICLE I
DEFINITIONS
The following words and phrases when used in the Plan
(unless the context should clearly reflect another meaning) shall
have the following meanings:
A. "Advisory Committee" means the board of Licensees
selected by the Developer pursuant to the terms of this Plan.
B "Annual Assessment" means the share of funds required
for the payment of Common Expenses which is assessed annually
against a Licensee.
C "Assigned Unit Weeks" means the Unit Weeks assigned to
a Licensee by the Developer pursuant to the Subscription
Agreement executed by such Licensee and the Developer or assigned
by the Managing Entity.
D. "Common Elements" means the hotel suites, the four
story hotel structure, including without limitation the hallways,
elevators, mechanical equipment, heated swimming pool, the
parking areas, and the laundry room.
E. "Common Expenses" means the costs incurred in the
operation of the Resort Facility as more particularly set forth
in this Plan.
F. "Developer" means Charthouse Suites Vacation Ownership,
Inc., its grantees, successors and assigns. A "Licensee" (as
hereinafter defined) shall not by reason of the purchase of a
"License" (as hereinafter defined) be deemed a grantee, successor
or assign of the Developer's rights or obligations under the Plan
unless such Licensee acquires the interests for purposes of
resale or is specifically so designated as a successor or assign
of the Developer's rights or obligations in the respective
instrument of conveyance or other instruments executed by the
Developer. Nothing herein shall be deemed to contradict the
definition of Developer in the Act with regard to the sale of
licenses.
G. "Interest" or "License" means a right to collect
revenues, if any, arising from rental or, upon proper notice, the
right to occupy a certain category of hotel suite in Charthouse
Suites for the Weeks assigned to the Licensee under a
Subscription Agreement, which License if not sooner terminated
shall terminate on December 31, 2050, which right is neither
coupled with a freehold interest nor coupled with an estate for
years with a future interest in a time share property, as
described in the Plan.
H. "Licensee" means a person to whom the Developer has
entered into a Subscription Agreement, his heirs, successors or
assigns.
I. "Managing Entity" means Charthouse Suites Vacation
Ownership, Inc., its grantees, successors or assigns, or such
other entity designated by the Developer from time to time to
serve as such Managing Entity, which party has acknowledged in
writing it has accepted the duties and obligations of serving as
Managing Entity.
J. "Plan" or "Vacation License Plan" means this Vacation
License Plan, as amended from time to time.
K. "Resort Facility" means the property described on
attached Exhibit A, all improvements thereon (including the hotel
suites, the Common Elements and all furniture, furnishings and
fixtures therein) and all easements and rights appurtenant
thereto intended for use in connection therewith. The Resort
Facility does not include the Marina.
L. "Rules and Regulations" means the Rules and Regulations
established and promulgated from time to time by the Managing
Entity with respect to the use of the Resort Facility.
M. "Service Period" means that period of time commencing
at the end of each Unit Week and ending at the beginning of the
next Unit Week to be used by the Managing Entity to clean,
service and maintain a Unit.
N. "Special Assessment" means a share of funds required
for the payment of Common Expenses which from time to time is
assessed against a Licensee in addition to the Annual Assessment.
O. "Unit" means one of the 25 suites in the Resort Facility.
"Units" means more than one Unit.
P. "Unit Week" or "Week" means a period of use of a Unit
which shall consist of seven (7) days. Unit Weeks are computed
as follows:
Unit Week No. 1 is the Seven (7) Days
commencing on the first Friday, Saturday or
Sunday in each calendar year.
Unit Week No. 2 is the Seven (7) Days
succeeding.
Additional Unit Weeks, up to and including
Unit Week No. 52, are computed in a like
manner.
Occupancy shall begin at 4:00 P.M. on the
Start Day and end at 10:00 A.M. on the same
day of the immediately following week. Any
excess days not otherwise assigned shall
remain the property of the Developer.
ARTICLE II
DESCRIPTION OF IMPROVEMENTS AND TIME SHARING PLAN
A. Description of Resort Facility.
The Resort Facility includes a four story hotel
containing 25 suites located at 850 Bayway Boulevard, Clearwater
Beach, Florida, together with certain common amenities, as exist
from time to time, including the heated swimming pool, parking
areas, laundry room and administrative office. The Resort
Facility is owned in fee simple by Decade Properties, Inc. The
Developer is the holder of a Master License and Non-exclusive
Easement which granted to the Developer certain rights to use the
suites and common areas of the Resort Facility. The Developer
has been formed to facilitate the sale of Interests to use the
Resort Facility. The Resort Facility does not include the
Marina.
B. Vacation License Plan.
The Developer shall enter into a License with each
Licensee, whereby such Licensee is granted the right to receive
rental revenue arising from rental of the Units, if any, or, upon
written request, to occupy a particular category of suite for
eight weeks each calendar year (two weeks in each season)
terminating on December 31, 2050. Winter is Weeks 46-52 and 1-6,
Spring is Weeks 7-19, Summer is Weeks 20-32 and Fall is Weeks 33-
45. The Developer and/or Managing Entity shall establish the
annual Schedule in its sole discretion, whose decision as to the
Weeks assigned to a Licensee each calendar year shall be final.
The particular Unit to which the Licensee's Weeks shall be
applicable shall be assigned by the Developer and/or the Managing
Entity in the category of the Class of Interest purchased by the
Licensee. The category of suite that may be used by a Licensee
shall be determined by the Class of Interest purchased by the
Licensee. The Classes of Interests are as follows:
Class A The ownership of A Interests allows the
Interests--Standard Licensee use of a standard studio suite with
Studio Suite: 2 queen sized beds overlooking the marina
and Clearwater Bay, for two weeks in each
season until December 31, 2050. Units 201,
202, 301, 302, 401 and 402 in Charthouse
Suites Hotel are the suites applicable to
the Class A Interests.
Class B The ownership of B Interests allows the
Interest--King Licensee use of a spacious King Studio suite
Studio Suite: with 1 king sized bed overlooking the marina
and Clearwater Bay, for two weeks in each
season until December 31, 2050. Units 103,
104, 105 and 106 in Charthouse Suites Hotel
are the suites applicable to the Class B
Interests.
Class C The ownership of C Interests allows the
Interests--Large Licensee use of a large studio suite with 2
Studio Suite: queen sized beds overlooking Clearwater Bay,
the marina or southern exposure, for two
weeks in each season until December 31,
2050. Units 101, 102, 206, 207, 305 and 306
in Charthouse Suites Hotel are the suites
applicable to the Class C Interests.
Class D Interests-- The ownership of D Interests allows the
1 Bedroom Suite: Licensee use of a one bedroom suite
overlooking the marina, Clearwater Bay, the
swimming pool or southern exposure for two
weeks in each season until December 31,
2050. Units 204, 303, 304, 307, 403 and 404
in Charthouse Suites Hotel are the suites
applicable to the Class D Interests.
Class E Interests-- The ownership of E Interests allows the
1 Bedroom Suite Licensee use of a one bedroom suite with
(with lanai): lanai with a view of Clearwater Bay, for two
weeks in each season until December 31,
2050. Units 203 and 205 in Charthouse
Suites Hotel are the suites applicable to
the Class E Interests.
Class F Interest-- The ownership of F Interests allows the
Penthouse: Licensee use of a two bedroom penthouse
suite, with a fully equipped kitchen, living
room, den, dining room, two full baths (one
with a jacuzzi), and a large private balcony
overlooking Clearwater Bay, for two weeks in
each season until December 31, 2050. Unit
405 in Charthouse Suites Hotel is the suite
applicable to the Class F Interest.
The remainder interest shall be vested in the Developer and the
Owner and their heirs, successors and assigns, as their interests
may appear. A Licensee may be the Licensee of more than one (1)
License or more than one (1) Interest. The Licensee shall be
entitled to the exclusive use of a Unit in the Class of Interest
purchased, the specific Unit to be designated by the Managing
Entity, which use shall only be during the Assigned Unit Weeks
and to no other Unit or during any other Unit Weeks. A Licensee
should expect to occupy different suites available within the
Class of Interest purchased for each of the Licensee's Unit
Weeks. During the Assigned Unit Weeks, the Licensee shall also
have the right to the non-exclusive use of the common areas of
the Resort Facility. A Licensee shall not have the right to the
use of the Resort Facility, except during such Licensee's
Assigned Unit Weeks.
ARTICLE III
MANAGEMENT OF THE RESORT FACILITY
A. Maintenance and Management of the Resort Facility. The
Managing Entity shall manage and operate the Resort Facility.
The Managing Entity shall be responsible for supervising the
maintenance, repair and replacement of the entire Resort
Facility, the costs of which to be a Common Expense. The
Managing Entity may enter into an agreement(s) with such firms or
companies as it may determine to provide certain management,
services and maintenance with respect to the Resort Facility as
the Managing Entity deems advisable and for such period of time
and on such basis as it determines. The fee for such services
shall be deemed a Common Expense and included in the regular
maintenance assessment.
B. Duties of the Managing Entity. The Managing Entity
shall have the following duties:
1. Repair and Maintenance of Resort Facility: The
Managing Entity shall be responsible for supervising the
maintenance, repair and replacement of all of the Resort
Facility.
2. Color Schemes: The Managing Entity shall
determine the interior color scheme, decor and furnishings of
each Unit in the Resort Facility, as well as the proper times for
redecorating and replacements thereof. In addition the Managing
Entity shall determine the color scheme of the buildings and all
exteriors and the interiors thereof and shall be responsible for
the maintenance thereof. The Managing Entity shall maintain and
keep all portions of the Resort Facility managed in a condition
substantially similar to the architectural design or such change
in design as the Developer and Owner may determine from time to
time, unless the Developer and Owner consent in writing to such
structural changes or improvements.
3. Utilities: The Managing Entity shall acquire
water, sewer, garbage disposal, electrical, telephone, gas and
other necessary utility services for the Resort Facility.
4. Insurance: The Managing Entity shall obtain,
maintain and enforce the policies of insurance as obtained by the
Managing Entity from time to time.
5. Rules and Regulations: The Managing Entity shall
make, establish, promulgate, amend and repeal rules and
regulations with respect to the use of Units and the Resort
Facility.
6. Enforcement of Restrictions and Rules: The
Managing Agent shall perform such other acts, whether or not
expressly authorized by the Plan, as may be reasonably necessary
to enforce any of the provisions of the Plan and the Rules and
Regulations, subject to its reasonable discretion.
7. Compliance with Act: The Managing Entity shall
perform all duties of a managing entity to the extent required by
the Laws. In addition to such requirements, the Managing Entity
shall:
(a) Provide, each year, to all Licensees an
itemized Annual Budget which shall include all estimated revenues
and expenses;
(b) Maintain all books and records concerning the
Resort Facility. The books and records, with respect to the
Resort Facility shall be kept separately from any other project
of the Managing Entity. All such books and records shall be
reasonably available for inspection by any Licensee or the
authorized agent of any Licensee.
(c) Maintain among its records and provide to the
Division upon request a complete list of the names and addresses
of all Licensees in the Vacation License Plan. The Managing
Entity shall update this list no less frequently than quarterly;
(d) Make available for inspection by the
Division, the books and records of the Plan upon request of the
Division;
(e) Schedule the occupancy of Units and assign
the Unit Weeks in the Resort Facility to the Licensees in
accordance with their Licenses; and
(f) Perform any and all other functions and
duties which are necessary and proper to maintain, operate and
manage the Resort Facility.
C. Powers and Authority of the Managing Entity.
In addition to such other powers as may be set forth in
the Plan, the Managing Entity shall have the power to do and
perform any and all lawful things which may be authorized,
required or permitted to be done by the Managing Entity under
this Plan or by law and to do and perform any and all acts which
are necessary or proper for or incidental to the operation of the
Resort Facility (the costs of which shall be Common Expenses),
including without limitation:
1. Assessments: To levy assessments on the Licensees
and to enforce payments of such assessments.
2. Right of Entry and Enforcement: To enter upon any
portion of the Resort Facility for the purpose of enforcing by
peaceful means any provisions of this Plan or for the purpose of
maintaining, replacing or repairing any such area if, for any
reason whatsoever, maintenance, replacement or repair is required
thereto.
3. Employment of Agents: To employ the services of
any person or corporation as Manager, or other employees, to, as
may be directed by the Managing Entity, manage, conduct and
perform the business, obligations and duties of the Managing
Entity, and to enter into contracts for such purpose. Such agent
shall have the right to ingress and egress over such portions of
the Resort Facility as is necessary for the performance of such
business, duties and obligations.
4. Employment of Professional Advisors: To employ
professional council and advisors from persons, firms or
corporations as determined by the Managing Entity, such as, but
not limited to, landscape architects, recreation experts,
planners, lawyers and accountants.
5. Miscellaneous: To make and enter into contracts,
leases or concessions.
6. Personal Liability: Neither the Owner, Developer
nor the Managing Entity nor any of their respective officers,
directors or employees shall be personally liable to any Licensee
or to any other party, for any damage, loss or prejudice suffered
or claimed on account of any act, omission, error or negligence
of the Owner, Managing Entity, or Developer or any other
representative or employee of the Managing Entity, Owner, or the
Developer, provided that such person, firm or entity has, upon
the basis of such information as may be possessed by him at such
time, acted in good faith, without willful or intentional
misconduct.
7. Books and Records: To keep separate the books and
records for the Resort Facility.
8. Occupancy: To prohibit occupancy of a Unit in
accordance with applicable law.
9. Charthouse Rental Pool: To operate the Charthouse
rental pool and pay all costs of the rental pool.
ARTICLE IV
ASSESSMENTS FOR COMMON EXPENSES
A. Affirmative Covenant to Pay Expenses.
In order to (1) fulfill the covenants in the Plan; (2)
to preserve the Units and the Resort Facility for the recreation,
safety, welfare and benefit of the Licensees and their invitees,
guests, family members and lessees; and (3) to provide for
improvement, maintenance and preservation of the Units and the
Resort Facility and the services and amenities provided for
herein, there is hereby imposed upon the Licensees, the
affirmative covenant and obligation to pay the Common Expenses as
defined and more particularly set forth in this Plan. The
Managing Entity shall prepare and adopt an Annual Budget setting
forth the Common Expenses for the operation and management of the
Resort Facility.
The Managing Entity shall assess each Licensee in the
Resort Facility its share of the Common Expenses, which share
shall be assessed annually as an Annual Assessment, and the
Managing Entity shall collect said sums. The Assessment shall be
determined as follows: Each Licensee shall be responsible for a
proportionate share of the Common Expenses attributable to the
Unit Weeks which are licensed to the Licensee. It is understood
that the total Common Expenses shall be allocated to the
respective Classes of Interests as follows:
Total Total
Per Interest
Class A Interest -- 14.5716% .3736%
Class B Interest -- 11.4284% .4396%
Class C Interest -- 22.7142% .5824%
Class D Interest -- 31.2858% .8022%
Class E Interest -- 11.2858% .8681%
Class F Interest -- 8.7143% 1.2407%
Total 100%
Each Licensee shall be responsible for a uniform portion of the
Common Expenses allocated to the Class of Interest under such
License, with the numerator being the number of Assigned Unit
Weeks licensed to the Licensee and the denominator being the
total number of Unit Weeks included in that particular class.
For the period through and including December 31, 1997 the
Developer guarantees that the Annual Assessment per Unit Week
shall not exceed the amounts per Class of Interest as set forth
below:
Class A - $175.00
Class B - $175.00
Class C - $190.00
Class D - $270.00
Class E - $290.00
Class F - $350.00
Thereafter, such Annual Assessment shall not increase
annually by more than 10% per annum determined on a compounded
basis (except for the portion of the assessment relating to real
estate taxes and insurance) without the affirmative vote of a
majority in interest of the total Unit Weeks. For purposes of
the vote of Unit Week Holders, Decade Properties, Inc. will be
allowed to vote the Unit Week of unissued Interests or defaulted
Interests. An Advisory Committee as described in subsection C
below may be consulted for advice regarding certain management
decisions relevant to establishing the Annual Assessment. The
Licensee shall not have the right to use of a suite during such
Licensee's assigned Unit Weeks if the Licensee is not current in
the payment of Annual Assessments due by the Licensee as
determined by the Managing Entity. If the Licensee participates
in an Exchange Program, then prior to any transfer of a Unit Week
to which the Licensee is entitled, all assessments which will be
applicable for all periods prior to the Unit Week(s) to be
transferred shall be due and must be paid in full prior to any
transfer. Any transfer without such assessments being paid in
full shall be void and neither the Managing Entity nor the
Developer shall be bound to honor same.
B. Special Assessments. Notwithstanding the foregoing,
each Licensee shall be obligated to pay such Special Assessments
as shall be levied in addition to the Annual Assessments by the
Managing Entity for that year only, as a result of (a)
extraordinary items of expense; (b) nonrecurring capital
expenditures; (c) any sums expended by the Managing Entity for
the repair or replacement of a Unit or the Resort Facility
damaged by a Licensee, its family, guests or any person claiming
by, through or under the Licensee; (d) any sums expended by the
Managing Entity for the addition or alteration of a Unit or the
Resort Facility made by a Licensee in violation of the provisions
of the Plan and/or Rules and Regulations, or (e) such other
reason or basis determined by the Managing Entity in its sole
discretion. Notwithstanding the foregoing, special assessments
arising under subparagraphs (a), (b) and (e) above shall not be
made unless approved by an affirmative vote of a majority in
interest of the total number of Unit Weeks unless (a) such
assessment (other than a special assessment to restore or rebuild
because of damage or destruction to a Unit(s) or to the Resort
Facility) does not exceed 5% of the budgeted gross expenses for
the calendar year; or (b) such assessment is a special assessment
for the repair or rebuilding of a Unit(s) or the Resort Facility
which does not exceed 10% of the budgeted gross expenses for the
calendar year in which the assessment is levied. For purposes of
the vote of Unit Week Holders, the Company will be allowed to
vote the Unit Week of unissued Interests. The Managing Entity
may to the extent possible allocate Special Assessments to the
Licensee applicable when the special assessment is for the
purpose of reimbursing the Managing Entity for costs incurred in
bringing a Licensee or its License into compliance with the
provision of this Plan, the Rules and Regulations, or the
License. In addition special assessments may be levied against
individual Licensees for sums expended for repairs or
replacements relating to damage caused by such Licensee or its
family members, guests, lessees and any sums expended for
violations by a Licensee of the provisions of the Plan, Rules and
Regulations and the License.
C. Advisory Committee. At the Managing Entity's option,
the Managing Entity may appoint from time to time, an Advisory
Committee of Licensees, or officers, directors or principals of
Licensees, consisting of between five and nine members. Advice
may be sought by the Managing Entity from the Advisory Committee
as to the amount of Annual and/or Special Assessments and other
matters with respect to the operation of the Resort Facility as
determined by the Managing Entity. The advice sought from the
Advisory Committee is strictly advisory in nature and the
Managing Entity shall not be bound by advice from the Advisory
Committee.
D. Liability. Until the Licensee relinquishes his License
to the Developer, the record Licensee(s) of each License in the
Resort Facility shall be personally liable, jointly and severally
to the Managing Entity for the payment of the Annual Assessments
or any Special Assessment (hereinafter collectively referred to
as "Assessments") levied by the Managing Entity against the
Licensees and for all costs of collecting such Assessments,
including interest, delinquent assessments and attorneys' fees at
all trial and appellate levels. Until the Licensee relinquishes
his License to the Developer, the Assessments, together with
interest thereon, and the costs of collection, including
attorneys fees at all trial and appellate levels shall be a lien
upon such Licensee's License, but shall not encumber the
property, real or personal of any other person.
E. Cancellation Rights. If the event a Licensee has
cancellation rights under Chapter 721, F.S., in order to
calculate the benefit the amount shall be
Dollar Amount Benefit
Per Night
Interest A $ 65.00
Interest B $ 75.00
Interest C $ 85.00
Interest D $120.00
Interest E $130.00
Interest F $175.00
ARTICLE V
REMEDIES OF ENFORCEMENT
A. Intent of Operation of Plan. It is intended that this
Plan be operated in a manner so that if a Licensee fails to pay
the Assessments (Annual and Special) due by such Licensee
hereunder as they become due, that the Licensee shall be deprived
of use of such Licensee's Unit Weeks until any delinquencies are
paid in full.
B. Enforcement of Plan.
1. The covenants and restrictions herein contained
may be enforced by the Developer or the Managing Entity in any
judicial proceeding seeking any relief recognizable at law or in
equity, including damages, injunction, and other mandatory relief
against any person, persons, firm or entity violating or
attempting to violate any covenant or restriction. The failure
either by the Developer or the Managing Entity to enforce any
covenant or restriction herein contained shall in no event be
deemed a waiver of the right to do so thereafter. The prevailing
party in any such litigation shall be entitled to reasonable
attorneys' fees and court costs, including costs and fees at all
trial and appellate levels.
2. All rights, remedies or relief of whatsoever
nature or kind provided herein in favor of the Developer or the
Managing Entity shall be cumulative and non-exclusive and none
shall exclude, jointly or severally, any other right, remedy or
relief permitted by law or otherwise available to the Developer
or the Managing Entity.
3. In addition to any other remedies which Developer
or Managing Entity may have, in the event a Licensee shall be in
default of any of the provisions of the Plan, the License, or the
Rules and Regulations, the Developer and the Managing Entity may
levy a fine as determined from time to time by the Managing
Entity against such Licensee which shall continue until such
default shall be remedied by the defaulting Licensee.
C. Other Remedies in the Event of Non-payment of
Assessments.
1. In the event a Licensee shall fail to pay any
Assessment after the same becomes due, then during such period of
default, the Licensee will be denied possession of a Unit for
such Licensee's Assigned Unit Weeks. Such denial of use shall
also extend to those parties claiming under the Licensee
(including exchange programs). The Developer shall have the
right to the use or rent of the Unit Weeks for such periods that
the Licensee shall be deprived of use thereof and the Developer
shall be entitled to all income derived therefrom. Any income
received by the Developer, however, shall not reduce the amount
of Assessments owed by the Licensee.
2. Delinquent assessments shall bear interest at the
highest rate permitted by law. In addition, the Managing Entity
may, in its sole discretion, impose an administrative late fee in
an amount not to exceed $25.00 for each delinquent assessment.
3. In addition, in the event a Licensee shall fail to
pay any Assessment and such default continues for more than six
(6) months or there are more than three (3) defaults of any
duration, then the Developer may cancel the License of a
Licensee. Upon cancellation of the Licensee's interest, the
Interest shall belong to the Developer and the Licensee shall
forfeit all payments made previously.
4. If the Licensee remains in possession of the Unit
after his License has been canceled, the Licensee shall pay a
rental fee for the Unit equal to the daily rack rate which is
applicable to the suite in the Class of Interest purchased as
determined by the Managing Entity or the Developer from time to
time.
5. The remedies provided herein shall be non-
exclusive and cumulative and shall not exclude any other remedies
available to the Developer of this Plan, law, the License or
otherwise.
D. Failure of Licensee to Vacate.
In the event any Licensee of a License fails to vacate
a Unit at the expiration of his Assigned Unit Weeks or at such
earlier time as may be fixed by the Rules and Regulations adopted
by the Managing Entity from time to time, he shall be deemed a
"Holdover Licensee." It shall be the responsibility of the
Managing Entity to take such steps as may be necessary to remove
such Holdover Licensee from the Unit and to assist the Licensee
of a License entitled to occupy a subsequent Assigned Unit Week
who may be affected by the Holdover Licensee's failure to vacate,
to find alternative accommodations during such holdover period.
In addition to such other remedies as may be available
to it, the Managing Entity shall secure, at its expense,
alternate accommodations for any Licensee who may not occupy a
Unit during his Assigned Unit Week due to the failure to vacate
of any Holdover Licensee. Such accommodations shall be as near
in value to the Licensee's category of Interest as possible. The
Holdover Licensee shall be charged the rack rate applicable to
such suite for the period of the holdover, the cost of such
alternative accommodations for the Licensee who was not able to
use such Licensee's Unit Week because of the holdover, any other
costs incurred due to such Holdover Licensee's failure to timely
vacate and an administrative fee of Fifty ($50.00) Dollars per
day during his period of holding over. In the event it is
necessary that the Managing Entity contract for a period greater
than the actual period of holding over in order to secure
alternative accommodations as set forth above, the entire period
shall be the responsibility of the Holdover Licensee, although
the Fifty ($50.00) Dollars per day administrative fee shall cease
upon actual vacating by the Holdover Licensee.
The Managing Entity shall submit a bill to the Holdover
Licensee in accordance with this paragraph.
The foregoing provisions shall not abridge the Managing
Entity's right to take such other action as is provided by law or
equity.
ARTICLE VI
GUARANTEE OF ASSESSMENTS
The Developer may guarantee the Common Expenses as may be
permitted by law and, during any such period of guarantee, the
Developer shall not be required to pay any assessments levied
with respect to Unit Weeks owned by the Developer or the Owner,
provided, however, during such period of the Developer's
guarantee, Developer shall be obligated to pay for any amount
required to pay the Common Expenses not receivable from Licensees
of Licenses other than the Developer or the Owner.
ARTICLE VII
COMMON EXPENSES
The following expenses are declared to be Common Expenses
which the Licensees are obligated to pay as provided herein.
A. Maintenance Fees. All expenses for the repair and
upkeep of a Unit for normal wear and tear, repair and replacement
of furniture, fixtures, appliances, carpeting and utilities.
B. Utility Charges. All charges levied for utilities
providing services for any portion of the Resort Facility,
whether they are supplied by a private or public firm. It is
contemplated that this obligation will include all charges for
water, gas, sprinkler systems, sprinkler pumps, telephone, sewer,
sewage pumps, garbage removal, pest control, cable, elevators and
any other type of utility or any other type of service charge.
C. Liability Insurance. The premiums on the policy or
policies of insurance as described in Article IX of this Plan.
D. Fire, Windstorm and Other Casualty Insurance. The
premiums for insurance as described in Article X of this Plan.
E. Destruction of Buildings or Improvements. Any sums
necessary to repair or replace, construct or reconstruct damages
caused by the destruction of any portion of the Resort Facility
by fire, windstorm or other casualty in excess of the insurance
proceeds available with respect to said damage or destruction.
F. Repair, Replacement and Maintenance. All expenses
necessary to keep and maintain, repair and replace any portion of
the Resort Facility, including, but not limited to, personal
property, furniture, fixtures and equipment, in a manner
consistent with the development of the Resort Facility and in
accordance with the covenants and restrictions contained herein
and in conformity with all orders, ordinances, rulings and
regulations of any and all federal, state and city governments
having jurisdiction thereof, as well as the statutes and laws of
the State of Florida and the United States.
G. Operational Expenses. The costs of administration and
operation of the Resort Facility, including but not limited to
accounting costs, employee costs, front desk costs, management
fees, maid service, deficits from any prior period, costs
associated with operating the reservation system and rental pool,
and all other costs of operating the Vacation License Plan.
H. Maintenance Costs under the Non-exclusive Easement.
All costs for maintenance, replacement and repair of Common Areas
due by the Developer under the Non-exclusive Easement granting to
the Developer rights to use certain Common Areas of the Property.
I. Indemnification. Indemnification against any and all
claims, suits, actions, damages and/or causes of action arising
from any personal injury, loss of life, and/or damage to
property, sustained on the Resort Facility and from and against
all costs, counsel fees, expenses and liabilities incurred in
connection with any such claim, the investigation thereof or the
defense of any action or proceeding brought thereon and from and
against any orders, judgments and/or decrees which may be entered
thereon. Included in the foregoing provisions of indemnification
are any expense that the Developer may be compelled to incur in
bringing suit for the purpose of enforcing rights hereunder or
for the purpose of compelling the specific enforcement of the
provisions, conditions and covenants to be kept and performed by
the Licensees.
J. Reserve Funds. Amounts to establish adequate reserve
funds and/or sinking funds for replacement and/or capital
refurbishment and/or capital improvements of all or any portion
of the Resort Facility determined proper and sufficient by the
Managing Entity. Each Licensee acknowledges, understands and
consents that no Licensee shall have any interest, claim or right
to any such reserves.
K. Taxes. Any and all taxes levied or assessed at any and
all times by any and all taxing authorities, including all taxes,
charges, assessments and impositions and liens for public
improvements, special charges and assessments in water drainage
districts and in general, all taxes and tax liens which may be
assessed against the Resort Facility and against any and all
personal property and improvements which are now or which may
hereinafter be placed thereon, including any interest, penalties
or other charges which may be included thereon.
L. Miscellaneous Expenses. The cost of all items or
expenses pertaining to or for the benefit of the Resort Facility
and any improvements now or hereafter located thereon or any part
thereof and the operation of the Vacation License Plan not herein
specifically enumerated.
ARTICLE VIII
MANAGEMENT OF RESORT FACILITY
The Managing Entity has entered into a management agreement
with Decade Properties, Inc. to provide management services with
respect to the Resort Facility and the operation of the Vacation
License Plan. The Managing Entity may enter into such other
management agreements as the Managing Entity may determine in its
sole discretion (including agreements with the Developer or its
affiliate(s)), whereby it contracts for management services which
are required to discharge its duties under this Plan and for the
management, operation and maintenance of the Resort Facility and
the Vacation License Plan. All costs associated with such
management, exclusive of the 5% rental pool fee payable to the
rental agent, shall be assessed as a Common Expense against the
Licensees.
ARTICLE IX
LIABILITY INSURANCE
The Managing Entity shall obtain liability insurance with
such coverage and in such amounts as it may determine from time
to time for the purpose of providing liability insurance coverage
for the Resort Facility. Premiums for such insurance shall be
part of the Common Expenses. Such insurance shall also include
public liability, workmen's compensation and hired automobile
coverage.
ARTICLE X
CASUALTY INSURANCE AND DESTRUCTION OF IMPROVEMENTS
A. The Managing Entity shall obtain casualty insurance
with such coverage and in such amounts as it may determine from
time to time for the purpose of providing casualty insurance
coverage for the Resort Facility, including fire and extended
coverage insurance, vandalism and malicious mischief insurance,
all of which insurance shall insure all of the insurable
improvements on and within the Resort Facility, including
personal property owned by the Managing Entity, in a company
acceptable to the Managing Entity in an amount equal to the full
insurable replacement value as determined from time to time by
the Managing Entity. The premiums for such coverage and other
expenses in connection with such insurance shall be charged to
the Licensees as part of the Common Expenses. The company or
companies with which the Managing Entity shall place its
insurance coverage, as provided in this Plan, and the insurance
agent or agents placing such insurance must be authorized to do
business in the State of Florida. Such insurance shall name the
Owner and the Developer as insureds as their respective interests
may appear.
B. Where a loss or damage occurs to any part of the Resort
Facility it shall be obligatory upon the Managing Entity to
repair or restore the damage caused by said loss, subject to the
provisions below.
1. The Managing Entity shall promptly obtain reliable
and detailed estimates of the cost of repairing and
reconstruction of such damaged property for the purpose of
determining whether the available insurance proceeds are
sufficient to pay for the same.
2. If the insurance proceeds are sufficient to pay
for the estimated cost of restoration and repair, the Managing
Entity shall have the right and obligation to cause the damage to
be repaired and restored.
3. If the net proceeds of the insurance are
insufficient to pay for the estimated cost of restoration and
repair (or for the actual cost thereof, if the work has actually
been done), the Managing Entity shall promptly, upon
determination of the deficiency, determine the amount of the
Special Assessment which will be necessary to obtain the
necessary funds to repair and to restore such damaged
improvements. If the Special Assessment is 10% or less of the
budgeted gross expenses for the calendar year in which the
assessment is levied, then the Managing Entity shall levy such
Assessment against the Licensees and shall upon receipt of
adequate funds proceed to have the repairs and reconstruction
completed. Each Licensee shall be responsible for a
proportionate share of the Assessment attributable to the Unit
Weeks which are licensed to the Licensee in the same manner that
the Annual Assessment is allocated.
4. If the Special Assessment exceeds 10% of the
budgeted gross expenses for the calendar year in which the
assessment is levied, then the damage or destruction shall not be
repaired or reconstructed without the affirmative vote of a
majority in interest of the total number of Unit Weeks. If the
affirmative vote is obtained, then the Managing Entity shall levy
such Special Assessment against the Licensees and shall upon
receipt of adequate funds proceed to have the repairs and
reconstruction completed. If the affirmative vote is not
obtained, then in such event and only in such event, the damage
and destruction shall not be repaired and this Plan and all
Licenses shall terminate. The entire insurance proceeds shall be
allocated between the Owner and the holders of the Unit Weeks in
the Resort Facility with the holders of the right to use Unit
Weeks being entitled to that portion of the proceeds equal to a
ratio the numerator of which is the remaining number of years
from the date of the damage to December 31, 2050 and the
denominator is 54. The Owner shall be entitled to the balance of
the proceeds. The proceeds due to the holders of the right to
use Unit Weeks shall be allocated in the percentages and manner
in which Common Expenses are allocated, provided that if a
particular Licensee has not paid the entire purchase price and
all payments for the License, then such Licensee shall have the
option of (a) paying the balance due on such License, in which
event such Licensee shall receive the pro rata share of insurance
proceeds allocated to such Licensee's Unit Weeks as provided
above, or (b) not paying such balance due on the purchase price
of the License, in which event the insurance proceeds allocated
to such Licensee's Unit Weeks shall be paid to the Developer.
C. Notwithstanding any provision to the contrary, during
such time that the Resort Facility or the Unit(s) are
untenantable because of such damage or destruction, the Managing
Entity shall notify the holders of the affected Unit Weeks and
such holders shall not be permitted to use said Unit Weeks. Such
affected holders shall not be entitled to any compensation for
such loss of use, unless the Managing Entity is able to obtain
and does obtain loss of use insurance coverage, in which event
the affected holders shall only be entitled to the portion of
loss of use insurance proceeds applicable to the Unit Weeks in
which the Licensee was not able to occupy a suite because of such
damage or destruction.
ARTICLE XI
CONDEMNATION
The taking of the Resort Facility by condemnation shall
be deemed to be a casualty and the awards for that taking shall
be deemed to be proceeds from insurance on account of the
casualty. Whether the Resort Facility will be continued after
condemnation will be determined in the manner provided for
determining whether damaged property will be reconstructed and
repaired after casualty. For this purpose, the taking by
condemnation shall be deemed to be a casualty. If the Resort
Facility is terminated after condemnation, the proceeds of the
award shall be divided into two (2) portions, one relating to the
respective value of the Units Weeks until December 31, 2050 and
the other portion to the Owner for the value of the Owner's
remainder interest. Such two portions shall be calculated in the
same manner as provided with respect to the allocation and
payment of proceeds in connection with a casualty. The portion
due to the holders of Unit Weeks shall be allocated in the same
manner as provided with respect to a casualty, including the
provisions relating to the requirement that the purchase price
and all License fees be paid in full before a Licensee is
entitled to receive any part of the award. In the event of
taking of any common area of the Resort Facility (not including a
Unit), the Licensees shall have no right to any part of the
award, and the Owner shall be entitled to the entire award.
ARTICLE XII
GRANT OF EASEMENTS AND RESERVATION OF EASEMENTS AND RIGHTS
A. Perpetual Non-Exclusive Easement to Common Areas and
Public Ways.
The driveways, walks and other rights-of-way in the
Resort Facility shall be available for ingress and egress on a
non-exclusive basis from the common areas and publicly dedicated
ways for the Owner, Developer, the Managing Entity, the Licensees
and all of their family members, guests, licensees, lessees and
invitees and all other parties entitled to use any part of the
Property or the Marina during the term of this Plan.
B. Non-exclusive Easement.
The Owner has granted to the Developer a Non-exclusive
Easement for the use and enjoyment of those areas designated as
Common Areas in such Non-exclusive Easement Agreement. The
Licensees shall have the right to use such Common Areas during
their Unit Weeks in accordance with this Plan. The expenses for
the maintenance, replacement and repair of such Common Areas
shall be Common Expenses under this Plan.
ARTICLE XIII
RULES AND REGULATIONS
The use of the Resort Facility shall be subject to such
Rules and Regulations as established and promulgated by the
Managing Entity from time to time. All Licensees shall ensure
compliance during their Unit Weeks.
ARTICLE XIV
AMENDMENTS TO THE PLAN
This Plan may be amended only by the vote of the holders of
a majority in the interest of the total number of Unit Weeks,
including those held by the Developer or Decade Properties, Inc.,
with the consent of the Developer.
ARTICLE XV
TERMINATION
A. Notwithstanding any provision to the contrary, in the
event that less than 76 Interests are sold by the Developer by
December 31, 1997, the Developer has the right to reacquire the
Interests sold by refunding to the Licensees the purchase price
paid by the Licensee less any and all income earned by such
Licensee in connection with the ownership of the Interest or
rentals earned for the assigned Unit Weeks. The Licensees shall
not be entitled to a refund of any Maintenance Fees paid. Upon
such reacquisition, this Plan and the License Agreements shall be
null and void.
B. In the event of the termination of this Plan, the
Resort Facility shall be deemed removed from the provisions of
the Act and all Licenses will be deemed canceled with all
Licensees relinquishing any and all rights under the Plan.
ARTICLE XVI
PARTITION
No Licensee or any other person or entity acquiring any
right, title or interest in a License shall be entitled to seek
or obtain through any legal procedures, judicial partition of the
Resort Facility or sale of the Resort Facility in lieu of
partition. It is understood that the License interest does not
constitute real estate.
ARTICLE XVII
OWNER'S REMAINDER INTEREST
By acceptance of a License subject to this Plan, each
Licensee acknowledges the Owner's remainder interest (the
"Remainder Interest") in that the License to each Licensee
consists of a license which terminates on December 31, 2050 or
such earlier date as provided herein.
The Remainder interest is transferable by the Owner in its
sole and absolute discretion. The holder of the Remainder
interest shall have the following rights under the Declaration:
1. To enforce all provisions of the Declaration against
Licensees, the Managing Entity and the Developer, including, but
not limited to, through an action for specific performance.
2. To be named as an additional insured under all
insurance policies as its interest may appear.
3. To be entitled to share in any award under a
condemnation proceeding as its interest may exist.
4. The consent of the holder of the Remainder Interest
shall be required for any termination of the Plan, any amendment
that adversely affects its interest and any amendment of this
Article.
In any litigation brought by the holder of the Remainder
interest, the holder of the Remainder Interest shall be entitled
to recover its costs and attorneys' fees in the event it is the
successful party, including such costs and fees on appeal.
Notwithstanding the existence of the Remainder Interest, the
Licensees shall be responsible for all Common Expenses and taxes
for the Resort Facility without any right of contribution against
the holder of the Remainder Interest.
ARTICLE XVIII
TRANSFER OF LICENSE AND UNIT WEEKS
Provided that a Licensee is not in default of any provision
of this Vacation License Plan or the License, such Licensee shall
be permitted to sell, transfer or convey such Licensee's entire
Interest and the License without the consent of the Developer or
the Managing Entity, provided (a) that the entire purchase price
and License Fee has been paid in full, (b) all Assessments are
current, (c) the transferee executes such assumption documents
required by the Seller, (d) the transfer, sale, or conveyance
complies with the federal and state securities laws.
After such permitted transfer, sale or conveyance, the
transferring Licensee shall have no further liability for Common
Expenses under this Plan. Provided that a Licensee is not in
default of any provision of this Vacation Plan or the License,
such Licensee may also sell, transfer, or convey partial
Interests (a right to a certain Unit Week) but only with the
prior written consent of the Managing Entity. The Managing
Entity shall be permitted to impose such conditions as the
Managing Entity determines necessary in its sole discretion in
connection with transfers of partial Interests. With respect to
any permitted transfer, prior to such transfer, the name, address
and such other information as requested by the Managing Entity
shall be delivered to the Managing Entity.
ARTICLE XIX
SEVERABILITY
Invalidation of any one of these covenants or restrictions
or any of the terms and conditions herein contained shall in no
way affect any other provision which shall remain in full force
and effect for such period of time as may be permitted by law.
IN WITNESS WHEREOF, this Plan has been executed by
Developer, this _________ day of ____________________, 1997.
Signed, Sealed and Delivered
In the Presence of: CHARTHOUSE SUITES VACATION
OWNERSHIP, INC.
________________________________ BY: __________________________
Print Name: _________________ Print Name:___________________
________________________________
Print Name: ____________________
<PAGE>
ACKNOWLEDGMENT
STATE OF ________________)
) SS.
COUNTY OF _______________)
The foregoing instrument was acknowledged before me this
____ day of ___________________________, 1997, by
______________________________, as
_________________________________, of CHARTHOUSE SUITES VACATION
OWNERSHIP, INC., on behalf of the corporation. He/she is
personally known to be or has produced
_____________________________________ as a type of identification
and who did/did not take an oath.
________________________________
Print Name: ____________________
Notary Public, State of ________
Serial Number, if any: _________
My commission expires: _________
<PAGE>
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION OF PROPERTY
<PAGE>
<PAGE>
ANNEX B
RULES AND REGULATIONS FOR CHART HOUSE SUITES HOTEL SUITES
RULES AND REGULATIONS
FOR
CHARTHOUSE SUITES HOTEL
1. Unless the context clearly indicates otherwise, the term
"Holder," as used in these rules and regulations, shall be
deemed to include not only the purchaser of the Charthouse
Suites Vacation Investment and Ownership Interest, as
defined in the Charthouse Suites Vacation License Plan, but
also each purchaser's family, servants, employees, agents,
renters, lessees, visitors, exchange guests, and licensees.
All capitalized terms used in these rules and regulations
shall have the meanings set forth herein or in the
Charthouse Suites Vacation License Plan.
2. No part of the Charthouse Suites hotel shall be used for any
purpose except hotel, vacation ownership, vacation support
areas, sales and marketing of the Interests, and the common
recreational purposes for which the hotel was designed.
Each hotel room and suite (hereafter collectively a "Suite")
shall be used as accommodations for Holders. The maximum
occupancy for each Suite shall be as follows:
Suite Type Maximum Occupancy
B Class 2
A, C, D, E Class 4
F Class 6
3. There shall be no obstruction of the Charthouse Suites hotel
operations by an Holder, nor shall anything be stored in the
Charthouse or affiliated area without the prior written
consent of Charthouse Suites Vacation Ownership, Inc. or the
property manager, except as herein provided.
4. Nothing shall be done or kept in any Suite or in any other
part of the Charthouse hotel which will increase the rate of
insurance on the Charthouse without the prior written
consent of Charthouse Suites Vacation Ownership, Inc. No
Holder shall permit anything to be done or kept in a Suite
or in any other part of the Charthouse which will result in
the cancellation of insurance on any of the foregoing or
which would be in violation of any law.
5. No waste shall be committed of the Charthouse Suites hotel
or affiliated areas. Except with respect to the common
areas permitted by the Charthouse Suites Vacation License
Plan, Holders shall not cause or permit anything to be done
or displayed on the outside of windows or placed on the
outside walls or doors of the Building, and no sign
(including, but not limited to, "for sale" or "for lease"
signs), awning, canopy, shutter, or radio or television
antenna (except for a master antenna system) shall be
affixed or placed upon the exterior walls or doors, roofs or
any part thereof or exposed on or at any window of a Suite,
or in or on any car, truck, recreational vehicle or other
wheeled conveyance located on the Charthouse or any other
related property.
6. Except as otherwise permitted by the Vacation License Plan
(including, but not limited to, guide dogs for the unsighted
or for similar purposes), no animals, livestock or poultry
of any kind shall be permitted or kept in the Charthouse at
any time. Any Holder who violates this rule shall be
assessed a fine of $200 per animal, livestock or poultry for
each day in which the violation exists.
7. No obnoxious or offensive activity shall be carried on in a
Suite or in any other part of the Charthouse, nor shall
anything be done therein, either willfully or negligently,
which may be or become an annoyance or nuisance to any other
Holders. No Holder shall make or permit any disturbing
noises in the Charthouse hotel, nor do or permit anything to
be done that will interfere with the rights, comfort or
convenience of other Holders. No Holder shall play any
musical instrument in the Charthouse hotel, nor give, nor
permit it to be given, vocal or instrumental instruction at
any time; provided, however, Charthouse Suites Vacation
Ownership, Inc. or manager is authorized to permit the
playing of musical instruments in lobbies and other such
areas and facilities as deemed advisable.
8. Except as authorized by the Vacation License Plan, nothing
shall be altered or constructed in or removed from the
Charthouse hotel.
9. Nothing shall be done in any Suite or in any other part of
the Charthouse hotel which will impair the structural
integrity of the Charthouse hotel or which would
structurally change the Charthouse hotel.
10. No clothes, sheets, towels, blankets, laundry or any other
articles shall be hung out of a Suite or be exposed on any
other part of the Charthouse hotel. The Charthouse hotel
shall be kept free and clear of rubbish, debris and other
unsightly materials.
11. No obstructing personal property shall be placed in the
halls or on the staircase landings, nor shall anything be
hung from the windows, terraces, balconies, patios or placed
upon the window sills, nor shall any rugs or mops be shaken
or hung on any of the windows, door, balconies, patios or
terraces. No clothes, sheets, blankets, laundry or any
other kind of articles shall be hung out of a Suite or
exposed to, any other part of the Charthouse. No personal
property shall be permitted on the balconies, terraces or
patios, except that Charthouse Suites Vacation Ownership,
Inc. may place and maintain patio furniture of a uniform
type on balconies, terraces or patios. No Holder may
utilize a grill on the balcony, terrace or patio, as the
case may be.
12. No window, terrace, balcony or patio shall be enclosed or
covered by any awning or otherwise enclosed, except as
permitted by Charthouse Suites Vacation Ownership, Inc. or
manager.
13. No industry, business, trade, occupation or profession of
any kind, commercial, educational or otherwise, designed for
profit or otherwise, shall be conducted, maintained or
permitted on any part of the Charthouse, other than rental
of Suites, use of the Suite as sales offices and for other
business purposes permitted by the Vacation License Plan,
including, but not limited to, those business purposes
related to the common areas.
14. No public hall of the Charthouse shall be decorated or
furnished by any Holder in any matter, except as permitted
by Charthouse Suites Vacation Ownership, Inc. or manager.
15. Subject to the provisions of the Vacation License Plan, each
Holder shall keep any Suite he or she occupies in a good
state of preservation and cleanliness and shall not sweep or
throw or permit to be swept or thrown therefrom, or from the
doors, windows, terraces or balconies thereof, any dirt or
other substance.
16. All radio, television or other electrical equipment of any
kind or nature located in a Suite shall be utilized in
compliance with all rules, regulations, requirements and
recommendations of Charthouse Suites Vacation Ownership,
Inc. and the public authorities having jurisdiction over
Charthouse, and the Holder alone shall be liable for any
damage or injury caused by any electrical equipment
improperly utilized by them in such Suite.
17. The agents of Charthouse Suites Vacation Ownership, Inc. and
any contractor or workman authorized by Charthouse Suites
Vacation Ownership, Inc. or manager may enter any Suite in
Charthouse at any reasonable hour of the day after
notification (except that in case of emergency no
notification shall be required) for the purpose of
inspecting such Suite for the presence of any vermin, insect
or other pests, and for the purpose of taking such measures
as may be necessary to control or exterminate any such
vermin, insects or other pests.
18. Any consent or approval given under these rules and
regulations may be added to, amended or repealed at any time
by resolution of Charthouse Suites Vacation Ownership, Inc.
19. The parking areas shall be used only for parking of
automobiles, motorcycles and other authorized vehicles. No
Holder may park or store boats, trailers, recreational
vehicles or related or similar vehicles at the Charthouse,
except in areas which are specifically designated for such
uses, if any. There is no assurance that parking for such
vehicles will be available. No Holder shall park any
vehicle except in areas authorized for such parking and
Holders shall obey all parking regulations applicable to the
Charthouse. Vehicles improperly parked may be towed at the
Holder's sole cost and expense. No repair, lubrication or
other maintenance of any kind shall take place in the
parking areas and any automobile or motorcycle parked
therein shall at all times be in running order.
20. No Holder shall at any time bring into or keep in their
Suite any flammable, combustible or explosive fluid,
material, chemical or substance.
21. Charthouse Suites Vacation Ownership, Inc. or manager of the
Charthouse shall retain a pass key to each Suite. No Holder
shall alter any lock or install a new lock on any door of a
Suite. All Suites shall be on a master key system to be
administered by Charthouse Suites Vacation Ownership, Inc.
or manager of the Charthouse.
22. The Charthouse may include certain common facilities, such
as a pool. Any use of such facilities shall be subject to
and consistent with all rules and regulations for the use of
such facilities which are promulgated by Charthouse Suites
Vacation Ownership, Inc., which rules and regulations may be
amended or modified from time to time without notice. All
Holders shall be required to abide by said rules and
regulations, and by any rules and regulations for common and
recreational facilities associated with the Charthouse.
Holders shall only have access to the Charthouse during
their confirmed Occupancy Period(s).
23. All window coverings installed as part of the Suites must be
maintained in said windows at all times. All window
coverings shall be determined, installed and maintained by
Charthouse Suites Vacation Ownership, Inc. or manager.
24. Holders shall comply with and conform to all applicable laws
and regulations of the United States and the State of
Florida and with all ordinances, rules and regulations of
Pinellas County, and shall hold Charthouse Suites Vacation
Ownership, Inc., manager and their respective officers and
agents harmless from all fines, penalties, costs or
prosecutions for the violation thereof or noncompliance
therewith.
25. Unless otherwise designated by Charthouse Suites Vacation
Ownership, Inc., the parking spaces will not be assigned,
but are to be used on a first-come first-served basis.
Holders shall be responsible for informing guests of all
parking rules and regulations. No vehicle shall be parked
in such a manner as to impede or prevent ready access to
another parking space, nor shall any vehicle be parked in a
driveway or fire lane. Any Holder who is not residing at a
Suite shall not be entitled to use the parking areas.
26. No Holder shall send any employee of Charthouse Suites
Vacation Ownership, Inc. or manager on any private business
of any Holder.
27. Any complaint regarding the management of the Charthouse
hotel or the actions of any other Holder shall be made in
writing to Charthouse Suites Vacation Ownership, Inc.
28. Bicycles, buggies and wagons shall be stored and parked in
the designated storage areas, and shall not be placed on
balconies or patios, in hallways or other areas of the
Charthouse hotel.
29. All Holders shall abide by the Charthouse Suites Vacation
License Plan, the Bylaws, and these rules and regulations,
as applicable.
30. Skateboards, rollerblades and rollerskates are strictly
prohibited anywhere in the Charthouse hotel.
<PAGE>
<PAGE>
ANNEX C
TIME SHARE PUBLIC OFFERING STATEMENT
PUBLIC OFFERING STATEMENT
FOR
CHARTHOUSE SUITES INVESTMENT AND OWNERSHIP INTERESTS
THIS PUBLIC OFFERING STATEMENT CONTAINS IMPORTANT MATTERS TO BE
CONSIDERED IN ACQUIRING A CHARTHOUSE SUITES VACATION INVESTMENT
AND OWNERSHIP INTEREST. THE STATEMENTS CONTAINED HEREIN ARE ONLY
SUMMARY IN NATURE. A PROSPECTIVE PURCHASER SHOULD REFER TO ALL
REFERENCES, EXHIBITS HERETO, CONTRACT DOCUMENTS AND SALES
MATERIALS. YOU SHOULD NOT RELY UPON ORAL REPRESENTATIONS AS
BEING CORRECT. REFER TO THIS DOCUMENT AND ACCOMPANYING EXHIBITS
FOR CORRECT REPRESENTATIONS. THE SELLER IS PROHIBITED FROM
MAKING ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THE
CHARTHOUSE SUITES VACATION LICENSE PLAN, THIS PUBLIC OFFERING
STATEMENT OR THE PROSPECTUS FOR THE CHARTHOUSE SUITES INVESTMENT
AND OWNERSHIP INTERESTS.
<PAGE>
<PAGE>
INDEX TO PUBLIC OFFERING STATEMENT
TEXT AND EXHIBITS
TAB # PUBLIC OFFERING STATEMENT
0 Public Offering Statement Text
1 Master License Agreement or Membership
Agreement or Recreational Lease
2 Receipt for Time Share Documents
A1 Declaration of Condominium
A2 Cooperative Documents
A3 Declaration of Covenants and Restrictions
A4 Association Articles of Incorporation
A5 Association By-Laws
A6 Underlying Lease
A7 Management Agreement and Related Contracts
A8 Estimated Operating Budget for Plan and
Schedule of Required Purchasers' Expenses
A9 Floor and Plot Plans
A10 Leases of Facilities to be Used Only by
Purchasers
A11 Leases of Facilities to be Used by Purchasers
and Others
A12 Form of Time Share Period Lease for Leasehold
Offer
A13 Declaration of Servitude of Properties
A14 Statement of Condition
A15 Statement of Inspection
A16 Purchase Contract
A17 Executed Agreement for Escrow Payments
A18 Summary of Restrictions on Use of
Accommodations and Facilities
A19 Other Documents Creating the Time Share Plan
A20 Other Contracts or Leases Signed by Purchasers
A21 Nondisturbance and Notice to Creditors
A22 Notice of Election to be Deemed a Member Resort
A23 Form of Vacation License
<PAGE>
<PAGE>
EXHIBIT "O"
CHARTHOUSE SUITES INVESTMENT AND OWNERSHIP INTERESTS
PUBLIC OFFERING STATEMENT TEXT
<PAGE>
<PAGE>
INDEX TO PUBLIC OFFERING STATEMENT TEXT
I. PUBLIC OFFERING STATEMENT DEFINITIONS AND
ABBREVIATIONS . . . . . . . . . . . . . . . . . . . . . . 1
II. REQUIRED DISCLOSURES. . . . . . . . . . . . . . . . . . . 4
III. PUBLIC OFFERING STATEMENT TEXT. . . . . . . . . . . . . . 5
A. THE TIME SHARE PLAN . . . . . . . . . . . . . . . . 6
1. The Plan . . . . . . . . . . . . . . . . . . . 6
a. Resort Facility. . . . . . . . . . . . . . 6
b. Common Amenities . . . . . . . . . . . . . 6
2. Common Expenses and Elements of the Plan . . . 9
B. CLUB MEMBERSHIP OR RECREATIONAL LEASE, AS
APPLICABLE. . . . . . . . . . . . . . . . . . . . . 11
C. TERM OF PLAN. . . . . . . . . . . . . . . . . . . . 11
D. RESPONSIBLE ENTITIES. . . . . . . . . . . . . . . . 11
1. The Entities . . . . . . . . . . . . . . . . . 11
2. Judgments and Pending Lawsuits . . . . . . . . 13
E. RESORT/COMPONENT SITE . . . . . . . . . . . . . . . 13
1. The Resort Accommodations and Facilities . . . 13
a. Restrictions on Use. . . . . . . . . . . . 15
(1) Occupancy and Use Restrictions. . . . 15
b. Private Use. . . . . . . . . . . . . . . . 18
c. Rules and Regulations. . . . . . . . . . . 18
2. Phasing. . . . . . . . . . . . . . . . . . . . 18
3. Recreational Facilities. . . . . . . . . . . . 18
4. Financial Arrangements for Promised
Improvements . . . . . . . . . . . . . . . . . 19
5. Utilities. . . . . . . . . . . . . . . . . . . 20
6. Insurance. . . . . . . . . . . . . . . . . . . 20
7. Leasing of Units/Sale of Whole Units . . . . . 22
8. Disclosures Regarding Real Property. . . . . . 22
9. Description of Developer Financing . . . . . . 22
10. Control of Association . . . . . . . . . . . . 22
F. BUDGETS, DUES AND FEES. . . . . . . . . . . . . . . 23
1. Estimated Operating Budgets. . . . . . . . . . 23
G. PURCHASE OF AN OWNERSHIP INTEREST . . . . . . . . . 24
1. Licensee's Right of Cancellation . . . . . . . 24
2. Total Financial Obligation of the Licensee . . 24
3. Status of Title Underlying Each
Resort/Component Site. . . . . . . . . . . . . 25
4. Restrictions Upon Rental or Resale . . . . . . 25
5. Special Risk Factors . . . . . . . . . . . . . 26
H. EXCHANGE PROGRAM OPPORTUNITIES. . . . . . . . . . . 26
I. SERVICE, MAINTENANCE OR RECREATIONAL CONTRACTS
OR LEASES THAT MAY BE CANCELED BY LICENSEES . . . . 27
J. NAME OF THE PERSON WHO WILL OR MAY HAVE THE
RIGHT TO ALTER, AMEND OR ADD TO THE CHARGES
WHICH THE LICENSEE MAY BE SUBJECT AND THE TERMS
AND CONDITIONS UNDER WHICH SUCH ALTERATIONS,
AMENDMENTS OR ADDITIONS MAY BE IMPOSED. . . . . . . 28
K. PROVISIONS FOR ALTERATIONS OF UNITS BY
DEVELOPER . . . . . . . . . . . . . . . . . . . . . 28
L. AMENDMENTS TO THE TIME SHARING PLAN . . . . . . . . 28
M. LIEN ON TIME SHARE LICENSES TO SECURE
ASSESSMENTS . . . . . . . . . . . . . . . . . . . . 29
N. AD VALOREM TAXES. . . . . . . . . . . . . . . . . . 29
O. GUARANTEED RENTAL ARRANGEMENT . . . . . . . . . . . 29
P. TAX CONSIDERATIONS. . . . . . . . . . . . . . . . . 31
<PAGE>
<PAGE>
I. PUBLIC OFFERING STATEMENT DEFINITIONS AND ABBREVIATIONS
A. "Act" means Chapter 721, Florida Statutes, as amended
prior to the recordation of these covenants, conditions and
restrictions.
B. "Annual Assessment" means the share of funds required
for the payment of Common Expenses which is assessed annually
against a Licensee by Charthouse Suites Vacation Ownership, Inc.
C. "Articles" means the Articles of Incorporation of
Charthouse Suites Vacation Ownership, Inc.
D. "Assigned Unit" means the Unit of a certain category of
hotel suite assigned to a Licensee by Developer at the time of
conveyance of a Time Share License which such Licensee shall
occupy during the Licensee's "Assigned Unit Week" (as hereinafter
defined).
E. "Assigned Unit Week" means the Unit Week assigned to a
Licensee by the Developer at the time of conveyance of a Time
Share License.
F. "Board" means the Board of Directors of Charthouse
Suites Vacation Ownership, Inc.
G. "By-Laws" means the By-Laws of Charthouse Suites
Vacation Ownership, Inc.
H. "Common Amenities" means those areas not included as
part of the Resort Facility which are to be used by Licensees of
the Resort Facility and other hotel guests. The Common Amenities
shall consist of a swimming pool, administrative office and
laundry facilities. The Common Amenities may be expanded from
time to time in the sole discretion of the Developer in the
manner provided for in the Plan. Licensees of the Resort
Facility shall not acquire any direct ownership in the Common
Amenities, however, the Common Amenities initially provided for
by the Developer, as described herein, shall be leased by
Charthouse Suites Vacation Ownership, Inc. pursuant to the
provisions set forth in the Master License Agreement and
available for reasonable use by Licensees.
I. "Common Areas" means those portions of the Resort
Facility which are not included in the Units and specifically
excludes any portion of the Common Amenities.
J. "Common Expenses" means costs incurred in the operation
of the Resort Facility, the Common Amenities, and Common Areas
and includes:
1. Costs relating to or incurred in the operation,
maintenance, repair or replacement of the Units, the Common
Areas, the Common Amenities, including, but not limited to,
real estate taxes, costs of carrying out the powers and
duties of Charthouse Suites Vacation Ownership, Inc., costs
of fire and extended coverage insurance; and
2. Any other expenses designated as "Common Expenses"
in accordance with applicable law by Charthouse Suites
Vacation Ownership, Inc. in its sole discretion or as set
forth in the Vacation License Plan.
K. "Developer" means Charthouse Suites Vacation Ownership
Inc., a Florida corporation, its grantees, successors and
assigns. A "Licensee" (as hereinafter defined) shall not solely
by reason of the purchase of a "Time Share License" (as
hereinafter defined) by deemed a grantee, successor or assign of
Developer's rights or obligations under the Plan unless such
Licensee acquires the interests for purposes of resale or is
specifically so designated as a successor or assign of
Developer's rights or obligations in the respective instrument of
conveyance or other instruments executed by Developer. Nothing
herein shall be deemed to contradict the definition of Developer
in the Time Share Act with regard to the sale of time share
licenses.
L. "Division" as used herein shall be deemed to mean and
refer to the Division of Florida Land Sales, Condominiums and
Mobile Homes, Department of Business and Professional Regulation.
M. "License" means a right to occupy a time share unit,
terminating on December 31, 2050, which right is neither coupled
with a freehold interest nor coupled with an estate for years
with a future interest in a time share property, as described in
the Plan.
N. "Licensee" means a person to whom the Developer has
conveyed of record a Time Share License, his heirs, successors
and assigns.
O. "Managing Entity" means the person who operates or
maintains the Plan pursuant to Section 721.13(1), F.S.
P. "Plan" or "Vacation License Plan" or "Time Sharing
Plan" means the Charthouse Suites Vacation License Plan, as
amended from time to time.
Q. "Preferred Lender" means a bank, a federal or state
savings and loan association, an insurance company, a security
agreement company, a real estate investment or business trust, a
pension fund, an agency of the United States government, any
other lender generally recognized as an institutional type lender
owning and holding a security agreement encumbering a Time Share
License and includes Developer or its assigns with respect to
security agreements which it holds encumbering a Time Share
License including liens for Annual Assessments.
R. "Resort Facility" means the property described on
Exhibit "A" attached to the Vacation License Plan, and all
improvements thereon (including the Units and the Common Areas
and all furniture, furnishings and fixtures therein) and all
easements and rights appurtenant thereto intended for use in
connection therewith, but shall not include the attached marina
which shall remain the sole and exclusive property of Decade
Properties, Inc., or its grantees, successors, and assigns.
S. "Rules and Regulations" means the Rules and Regulations
of Charthouse Suites Vacation Ownership, Inc.
T. "Service Period" means that period of time designated
by Charthouse Suites Vacation Ownership, Inc. in its sole
discretion, commencing at the end of each Unit Week and ending at
the beginning of the next Unit Week or as necessary to be used by
Charthouse Suites Vacation Ownership, Inc. to clean, service and
maintain a Unit and the Common Areas. The Service Period shall
initially run for six (6) hours from 10:00 a.m. until 4:00 p.m.
however it may be changed by Charthouse Suites Vacation
Ownership, Inc. in its sole discretion provided however that the
Service Period shall not be less than three (3) hours nor more
than seven (7) hours, unless needed for an emergency.
U. "Special Assessment" means a share of funds required
for the payment of Common Expenses which from time to time is
assessed against a Licensee in addition to the Annual Assessment.
V. "Time Share License" or "License" means the ownership
of a time share license which is an estate for years,
terminating on December 31, 2050.
W. "Unit" means a part of the Resort Facility which is
subject to exclusive possession of a licensee.
X. "Unit Week" means a period of use of a Unit which shall
consist of not less than seven (7) days. Unit Weeks are computed
as follows:
Unit Week No. 1 is the Seven (7) Days commencing on the
first Friday, Saturday or Sunday in each year.
Unit Week No. 2 is the Seven (7) Days succeeding.
Additional Unit Weeks, up to and including Unit Week
No. 51, are computed in a like manner.
Unit Week No. 52 contains the Seven (7) Days succeeding
the end of Unit Week No. 51, without regard to the
month or year. Unit Weeks run from 12:00 p.m. on the
first Sunday of the Unit Week to 12:00 p.m. on the last
Saturday of the Unit Week, subject to the service
period as defined in Article I (V) hereof. Any excess
days not otherwise assigned shall remain the property
of the Developer.
II. REQUIRED DISCLOSURES
A. THERE IS A LIEN OR LIEN RIGHT AGAINST EACH CHARTHOUSE
SUITES VACATION INVESTMENT AND OWNERSHIP INTEREST TO SECURE THE
PAYMENT OF ASSESSMENTS OR OTHER EXACTIONS COMING DUE FOR THE USE,
MAINTENANCE, UPKEEP OR REPAIR OF THE RECREATIONAL OR COMMONLY
USED FACILITIES. A LICENSEE'S FAILURE TO MAKE THESE PAYMENTS MAY
RESULT IN CANCELLATION OF THE LICENSE AND THE RIGHT TO USE THE
UNIT.
For a more complete description, please refer to
Article V of the Vacation License Plan attached as Exhibit "A19"
to the Public Offering Statement.
B. THE DEVELOPER HAS THE RIGHT TO RETAIN CONTROL OF
CHARTHOUSE SUITES VACATION OWNERSHIP, INC. EVEN AFTER A MAJORITY
OF THE LICENSES HAVE BEEN SOLD.
For a more complete description of the Developer's
right of control, please refer to Article III of the Vacation
License Plan attached as Exhibit "A19" to the Public Offering
Statement.
C. THE PURCHASE OF A TIME SHARE PERIOD SHOULD BE BASED
UPON ITS VALUE AS A VACATION EXPERIENCE OR FOR SPENDING LEISURE
TIME, AND NOT CONSIDERED FOR PURPOSES OF ACQUIRING AN
APPRECIATING INVESTMENT OR WITH AN EXPECTATION THAT THE TIME
SHARE PERIOD MAY BE RESOLD UNLESS YOU ARE PURCHASING IT AS A
SECURITY.
D. YOU MAY CANCEL THE PURCHASE AGREEMENT WITHOUT ANY
PENALTY OR OBLIGATION WITHIN TEN (10) DAYS FROM THE DATE YOU SIGN
THE CONTRACT, AND UNTIL TEN (10) DAYS AFTER YOU RECEIVE THIS
PUBLIC OFFERING STATEMENT, WHICHEVER IS LATER.
E. IF YOU DECIDE TO CANCEL THE CONTRACT IN THE ALLOWED
CANCELLATION PERIOD, YOU MUST NOTIFY THE DEVELOPER IN WRITING OF
YOUR INTENT TO CANCEL. YOUR NOTICE OF CANCELLATION SHALL BE
EFFECTIVE UPON THE DATE SENT AND SHALL BE SENT TO CHARTHOUSE
SUITES VACATION OWNERSHIP INC., 250 PATRICK BLVD., BROOKFIELD, WI
53045. ANY ATTEMPT TO OBTAIN A WAIVER OF YOUR CANCELLATION
RIGHTS IS UNLAWFUL. WHILE YOU MAY EXECUTE ALL CLOSING DOCUMENTS
IN ADVANCE, THE CLOSING, BEFORE EXPIRATION OF YOUR TEN (10) DAY
CANCELLATION PERIOD, IS PROHIBITED.
F. PURSUANT TO THE ACT, YOU MAY ALSO CANCEL THE CONTRACT
AT ANY TIME AFTER THE ACCOMMODATIONS OR FACILITIES ARE NO LONGER
AVAILABLE AS PROVIDED IN THE PLAN AND THE PUBLIC OFFERING
STATEMENT.
G. THE ACT INCLUDES A RIGHT TO CANCEL IF THE
ACCOMMODATIONS OR FACILITIES ARE NO LONGER AVAILABLE. THE PLAN
CONTEMPLATES THAT UNITS MAY NOT BE AVAILABLE FROM TIME TO TIME IN
ORDER TO MAINTAIN, REPAIR OR UPDATE THE UNITS. IN SUCH EVENT,
AND ON AN INTERIM BASIS TO TIME CHARTHOUSE SUITES VACATION
OWNERSHIP, INC. WILL OBTAIN AT ITS OWN EXPENSE EQUIVALENT
ACCOMMODATIONS FOR A PURCHASER.
H. ANY RESALE OF THIS TIME SHARE LICENSE MUST BE
ACCOMPANIED BY CERTAIN DISCLOSURES IN ACCORDANCE WITH SECTION
721.065, FLORIDA STATUTES.
I. THIS PUBLIC OFFERING STATEMENT CONTAINS IMPORTANT
MATTERS TO BE CONSIDERED IN ACQUIRING A CHARTHOUSE SUITES
VACATION INVESTMENT AND OWNERSHIP INTEREST. THE STATEMENTS
CONTAINED HEREIN ARE ONLY SUMMARY IN NATURE. A PROSPECTIVE
PURCHASER SHOULD REFER TO ALL REFERENCES, EXHIBITS HERETO, THE
PLAN AND SALES MATERIALS. YOU SHOULD NOT RELY UPON ORAL
REPRESENTATIONS AS BEING CORRECT. REFER TO THIS DOCUMENT AND
ACCOMPANYING EXHIBITS FOR CORRECT REPRESENTATIONS. THE SELLER IS
PROHIBITED FROM MAKING ANY REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THE CONTRACT AND THIS PUBLIC OFFERING STATEMENT.
J. THE PLAN PROVIDES THAT THE DEVELOPER MAY CANCEL IN ITS
SOLE DISCRETION THE CONTRACT IN THE EVENT THAT LESS THAN 76
INTERESTS (OF ANY CLASS) ARE SOLD BY THE DEVELOPER BEFORE
DECEMBER 31, 1997.
III. PUBLIC OFFERING STATEMENT TEXT
This Summary does not purport to be a complete description
of the Charthouse Suites Vacation Investment and Ownership
Interests and is qualified in its entirety by reference to the
more detailed information contained elsewhere in this Public
Offering Statement and the Annexes and Exhibits thereto.
Capitalized terms used, but not defined in this Summary, are
defined elsewhere in this Public Offering Statement. Prospective
purchasers are urged to read and evaluate this Public Offering
Statement and the Annexes and Exhibits in their entirety in order
to weigh fully the merits and risks of an investment in the
Interests.
Charthouse Suites Vacation Ownership, Inc., a Florida
corporation (the "Company" or "Charthouse"), hereby offers Class
A Interests, Class B Interests, Class C Interests, Class D
Interests, Class E Interests, and Class F Interests (collectively
hereafter the "Interests") for sale to purchasers. The purchaser
of an Interest (a "Licensee") will have the right to use for two
specific and consecutive weeks of every Spring, Summer, Fall, and
Winter Season until December 31, 2050, a hotel suite of a certain
category in the Charthouse Suites hotel located in Clearwater
Beach, Florida. The Licensee will have the flexibility to use
one or more of the eight weeks each year, place one or more weeks
in the Charthouse rental pool and receive net earnings arising
from renting hotel suites, if any, or join RCI Travel's Vacation
Exchange Program and utilize the RCI Travel's Vacation Exchange
Program to exchange vacation weeks at the Charthouse Suites hotel
for vacation weeks at approximately 2,800 RCI affiliated resorts
located around the world.
A. THE TIME SHARE PLAN
1. The Plan
The name of the Time Share Plan is Charthouse Suites
Vacation Investment and Ownership Interest, and all
accommodations and facilities are located at 850 Bayway Blvd.,
Clearwater Beach, Florida. The Resort Facility is owned in fee
simple by Decade Properties, Inc., without any outstanding
mortgages. The Developer is the holder of a Master License and
Non-exclusive Easement which granted to the Developer certain
rights to use the hotel room and suites (hereafter ("Suites") and
common areas of the Resort Facility. The Developer has been
formed to facilitate the sale of Interests to use the Resort
Facility. The Resort Facility or common amenities does not
include the marina on the Resort Facility.
The property upon which the accommodations and
facilities are located is divided into two (2) categories as
follows:
a. Resort Facility: The overall project
consists of twenty-five (25) Units contained in one (1) building.
The Resort Facility also includes use of all furniture,
furnishings and fixtures therein. All Units are located upon the
Resort Facility.
b. Common Amenities: There shall be certain
Common Amenities available for use by Licensees in connection
with the Resort Facility. The Common Amenities are those areas
not included as part of the Resort Facility which are to be used
by Licensees of the Resort Facility and Licensees in subsequent
Phases of the development, including the Developer, its
successors and assigns. The Common Amenities shall be located on
the property are described in the Vacation License Plan.
The Developer shall convey to each Licensee by License
the ownership of a time share license which is an estate for
years terminating on December 31, 2050 entitling the Licensee to
occupancy of an Assigned Unit during an Assigned Week, as set
forth in the Plan.
The Developer shall enter into a License with each
Licensee, whereby such Licensee is granted the right to receive
rental revenue from the Charthouse rental pool, if any, and, upon
request, occupy a particular category of suite for eight weeks
each calendar year (two weeks in each season) terminating on
December 31, 2050. Winter is Weeks 46-52 and 1-6, Spring is
Weeks 7-19, Summer is Weeks 20-32 and Fall is Weeks 33-45. The
Developer and/or Managing Entity shall establish the annual
Schedule in its sole discretion, whose decision as to the Weeks
assigned to a Licensee each calendar year shall be final. The
particular Unit to which the Licensee's Weeks shall be applicable
shall be assigned by the Developer and/or the Managing Entity in
the category of the Class of Interest purchased by the Licensee.
The category of suite that may be used by a Licensee shall be
determined by the Class of Interest purchased by the Licensee.
The Classes of Interests are as follows:
Class A Interests-- The ownership of A Interests allows the
Standard Studio Licensee use of a standard studio suite
Suite: with 2 queen sized beds overlooking the
marina and Clearwater Bay, for two weeks in
each season until December 31, 2050. Units
201, 202, 301, 302, 401 and 402 in
Charthouse Suites Hotel are the suites
applicable to the Class A Interests. The
suites have approximately 364 square feet.
Class B Interest-- The ownership of B Interests allows the
King Bed Studio Licensee use of a spacious King Studio
Suite: suite with 1 king sized bed overlooking the
marina and Clearwater Bay, for two weeks in
each season until December 31, 2050. Units
103, 104, 105 and 106 in Charthouse Suites
Hotel are the suites applicable to the
Class B Interests. The suites have
approximately 360 square feet.
Class C Interests-- The ownership of C Interests allows the
Large Studio Suite: Licensee use of a large studio suite with 2
queen sized beds overlooking Clearwater
Bay, the marina or southern exposure, for
two weeks in each season until December 31,
2050. Units 101, 102, 206, 207, 305 and
306 in Charthouse Suites Hotel are the
suites applicable to the Class C Interests.
The suites have approximately between 430
and 436 square feet.
Class D Interests-- The ownership of D Interests allows the
1 Bedroom Suite: Licensee use of a one bedroom suite
overlooking the marina, Clearwater Bay, the
swimming pool or southern exposure for two
weeks in each season until December 31,
2050. Units 204, 303, 304, 307, 403 and
404 in Charthouse Suites Hotel are the
suites applicable to the Class D Interests.
The suites have approximately between 638
and 869 square feet.
Class E Interests-- The ownership of E Interests allows the
1 Bedroom Suite Licensee use of a one bedroom suite with
(with lanai): lanai with a view of Clearwater Bay, for
two weeks in each season until December 31,
2050. Units 203 and 205 in Charthouse
Suites Hotel are the suites applicable to
the Class E Interests. The suites have
approximately between 815 and 982 square
feet.
Class F Interest-- The ownership of F Interests allows the
Penthouse: Licensee use of a two bedroom penthouse
suite, with a fully equipped kitchen,
living room, den, dining room, two full
baths (one with a jacuzzi), and a large
private balcony overlooking Clearwater Bay,
for two weeks in each season until
December 31, 2050. Unit 405 in Charthouse
Suites Hotel is the suite applicable to the
Class F Interest. The suite has
approximately 1,875 square feet.
The remainder interest shall be vested in the Developer. A
Licensee may be the Licensee of more than one (1) License or more
than one (1) Interest. The Licensee shall be entitled to the
exclusive use of a Unit in the Class of Interest purchased, the
specific Unit to be designated by the Managing Entity, which use
shall only be during the Assigned Unit Weeks and to no other Unit
or during any other Unit Weeks. A Licensee should expect to
occupy different suites available within the Class of Interest
purchased for each of the Licensee's Unit Weeks. During the
Assigned Unit Weeks, the Licensee shall also have the right to
the non-exclusive reasonable use of the common areas of the
Resort Facility. A Licensee shall not have the right to the use
of the Resort Facility, except during such Licensee's Assigned
Unit Weeks.
Title to the Resort Facility, and the Common Amenities,
will at all times, be vested in Decade Properties, Inc., its
successors, grantees and assigns. The Developer has obtained the
rights to the Resort Facility, Common Amenities and Common Areas
pursuant to a Master License Agreement (which is attached as an
exhibit). A Licensee may be the Licensee of more than one time
share license. The grant of a License by the Developer of a time
share license shall designate a Unit which the Licensee shall
occupy and a Unit Week during which the Licensee shall occupy his
Unit. The Unit and Unit Week which is designated for use by a
particular Licensee shall be such Licensee's Assigned Unit and
Assigned Unit Week. Such Assigned Unit and Assigned Unit Week
shall be selected by the Licensee. The Licensee shall be
entitled to exclusive use of the Assigned Unit, during the
Assigned Unit Week and to none other, and to the nonexclusive
reasonable use of the Common Amenities in accordance with the
Plan. The Licensee of a time share license shall not have any
right to use any portion of the property not specifically
designated for use by Licensees of time share licenses,
including, but not limited to the marina.
It is to be specifically noted that the Common
Amenities are not included as part of the Resort Facility, and no
Licensee shall acquire any ownership interest therein or in the
marina.
CHARTHOUSE SUITES VACATION OWNERSHIP, INC. is the
governing body for the operation of the Resort Facility and
Common Amenities. Charthouse Suites Vacation Ownership, Inc.
shall have the obligation to maintain, manage, repair and replace
the Common Amenities and such costs will be common expenses. The
legal description of the Common Amenities may be amended by the
Developer provided that such an amendment shall not affect the
legal description of the Resort Facility or any Member Resort
Facility.
The Developer does not plan to develop adjacent
properties as a Resort Facility.
For a more complete description of the Plan, please
refer to Exhibit "A19" to this Public Offering Statement.
2. Common Expenses and Elements of the Plan
The assessment of Common Expenses for management and
maintenance of the Resort Facility is apportioned in accordance
with Article IV of the Vacation License Plan.
Under the Plan, the Managing Entity shall assess each
Licensee in the Resort Facility its share of the Common Expenses,
which share shall be assessed annually as an Annual Assessment,
and the Managing Entity shall collect said sums. The Assessment
shall be determined as follows: Each Licensee shall be
responsible for a proportionate share of the Common Expenses
attributable to the Unit Weeks which are licensed to the
Licensee. It is understood that the total Common Expenses shall
be allocated to the respective Classes of Interests as follows:
Total
Total of Category Per Interest
Class A Interest - 14.5716% .3736%
Class B Interest - 11.4284% .4396%
Class C Interest - 22.7142% .5824%
Class D Interest - 31.2858% .8022%
Class E Interest - 11.2858% .8681%
Class F Interest - 8.7143% 1.3407%
Total 100%
Each License shall be responsible for a uniform portion of the
Common Expenses allocated to the Class of Interest under such
License, with the numerator being the number of Assigned Unit
Weeks licensed to the Licensee and the denominator being the
total number of Unit Weeks included in that particular class.
For the period through and including December 31, 1997 the
Developer guarantees that the Annual Assessment per Unit Week
shall not exceed the amounts per Class of Interest as set forth
below:
Class A - $175.00
Class B - $175.00
Class C - $190.00
Class D - $270.00
Class E - $290.00
Class F - $350.00
Thereafter, such Annual Assessment shall not increase
annually by more than 10% per annum determined on a compounded
basis (except for the portion of the assessment relating to real
estate taxes and insurance) without the affirmative vote of a
majority in interest of the total Unit Weeks. An Advisory
Committee as described in subsection C below may be consulted for
advice regarding certain management decisions relevant to
establishing the Annual Assessment. The Licensee shall not have
the right to use of a suite during such Licensee's assigned Unit
Weeks if the Licensee is not current in the payment of Annual
Assessments due by the Licensee as determined by the Managing
Entity. If the Licensee participates in an Exchange Program,
then prior to any transfer of a Unit Week to which the Licensee
is entitled, all assessments which will be applicable for all
periods prior to the Unit Week(s) to be transferred shall be due
and must be paid in full prior to any transfer. Any transfer
without such assessments being paid in full shall be void and
neither the Managing Entity nor the Developer shall be bound to
honor the transfer.
For a more complete description of the manner in which the
undivided interest of each Licensee has been determined and the
apportionment of Common Expenses, please refer to Articles II,
IV, and VII of the Vacation License Plan attached as Exhibit
"A19" to this Public Offering Statement.
As set forth in the Plan, Common Expenses include
indemnification for the Developer against any and all claims,
suits, actions, damages and/or causes of action arising from any
personal injury, loss of life, and/or damage to property,
sustained on the Resort Facility and from and against all costs,
counsel fees, expenses and liabilities incurred in connection
with any such claim, the investigation thereof or the defense of
any action or proceeding brought thereon and from and against any
orders, judgments and/or decrees which may be entered thereon.
Included in the foregoing provisions of indemnification are any
expense that the Developer may be compelled to incur in bringing
suit for the purpose of enforcing rights hereunder or for the
purpose of compelling the specific enforcement of the provisions,
conditions and covenants to be kept and performed by the
Licensees.
B. CLUB MEMBERSHIP OR RECREATIONAL LEASE, AS APPLICABLE
The Common Amenities are available pursuant to the Master
License Agreement, and, specifically, there are no other
recreational leases or club memberships associated with this
Vacation License Plan, nor is there any person, firm or entity,
other than Charthouse Suites Vacation Ownership, Inc. (for
maintenance purposes), reserving the right to collect any fee or
other payment for use of the facilities.
C. TERM OF PLAN
The interests being conveyed in the Resort Facility shall be
a time share license which is an estate for years terminating on
December 31, 2050. Notwithstanding any provision to the
contrary, in the event that less than 76 Interests are sold by
the Developer by December 31, 1997, the Developer or Charthouse
Suites Vacation Ownership, Inc. has the right to reacquire the
Interests sold by refunding to the Licensees the purchase price
paid by the Licensee less any and all income earned by such
Licensee in connection with the ownership of the Interest or
rentals earned for the assigned Unit Weeks less benefits for use
of the suite. The Plan states assumed benefits. The Licensees
shall not be entitled to a refund of any Maintenance Fees paid.
Upon such reacquisition, this Plan and the License Agreements
shall be null and void.
In the event of the termination of this Plan, the Resort
Facility shall be deemed removed from the provisions of the Act
and all Licenses will be deemed canceled with all Licensees
relinquishing any and all rights under the Plan.
D. RESPONSIBLE ENTITIES
1. The Entities
The rights and obligations inherent in the management
of the Resort Facility is vested in CHARTHOUSE SUITES VACATION
OWNERSHIP, INC., a Florida corporation, organized pursuant to the
provisions of Florida Statutes. The address for Charthouse
Suites Vacation Ownership, Inc. is 250 Patrick Blvd., Brookfield,
WI 53045. Charthouse Suites Vacation Ownership, Inc. is
responsible for the maintenance and operation of Charthouse
Suites Vacation Investment and Ownership Interests. Charthouse
Suites Vacation Ownership, Inc. is also responsible for the
operation, management and maintenance of the Common Amenities and
may also become responsible, pursuant to the terms and conditions
of the Plan, for operation, maintenance and management of
additional properties (Member Resorts) as described herein.
The Vacation License Plan provides that Charthouse
Suites Vacation Ownership, Inc. may enter into a Management
Agreement with a management company in order to confer on another
management entity, responsibility for management and operation of
the Resort Facility, Common Amenities and/or any Member Resort
Facility.
Charthouse Suites Vacation Ownership, Inc. has entered
into a Management Agreement with DECADE PROPERTIES, INC., a
Wisconsin corporation, whose address is 250 Patrick Blvd.,
Brookfield, WI 53045. A copy of the Management Agreement is
attached to this Public Offering Statement as Exhibit "A7". The
Management Agreement shall commence on the date the
Nondisturbance and Notice to Creditors is recorded and shall
continue for a period of 54 years. There are substantial
penalties in the event Decade Properties, Inc. is removed as a
property manager.
The duties of the Developer or Charthouse Suites
Vacation Ownership, Inc. shall include, but are not limited to:
a. Management and maintenance of all
accommodations and facilities;
b. Collection of all assessments for Common
Expenses;
c. Providing each year to all Licensees an
itemized Annual Budget, which shall include
all receipts and expenditures of Common
Expenses;
d. Maintenance of all books and records
concerning the Vacation License Plan on the
premises of the accommodations or facilities
of the Plan and making all such books and
records reasonably available for inspection
by any Licensee;
e. Arranging for an annual independent audit of
all the books and financial records of the
Vacation License Plan by a certified public
accountant in accordance with generally
accepted auditing standards as defined by the
rules of the Board of Accountancy of the
Department of Business and Professional
Regulation; and
f. Making available for inspection by the
Division any books and records of the
Vacation License Plan upon the request of the
Division.
The compensation payable to the managing entity by
Licensees in Charthouse Suites Vacation Investment and Ownership
Interests shall be equal to $2,500 per month plus reimbursement
of expenses incurred by providing services. Increases in
compensation may take place annually pursuant to agreement in
writing between Charthouse Suites Vacation Ownership, Inc. and
managing entity, which is based on the increases in CPI index.
The Developer reserves the right, in its sole
discretion, to create an owners association or a separate
Condominium, Homeowners or other similar Association to manage
the Resort. In such case, the Resort Facility shall be operated
and managed by the newly created association.
The name of the Developer is CHARTHOUSE SUITES VACATION
OWNERSHIP, INC., 250 Patrick Blvd., Brookfield, WI 53045. This
is the first time share development for Charthouse Suites
Vacation Ownership, Inc. or its affiliates.
The Chief Executive and Operating Officer for the
Developer is Jeffrey Keierleber. Mr. Keierleber is responsible
for overall operations, management and control of the
development. Mr. Keierleber has had extensive experience in the
real estate industry, including both development and marketing.
2. Judgments and Pending Lawsuits
There are no judgments or pending suits against the
Developer, Charthouse Suites Vacation Ownership, Inc. or the
Managing Entity which are material to the Vacation License Plan.
E. RESORT/COMPONENT SITE
1. The Resort Accommodations and Facilities
As previously indicated, the Resort Facility consists
of one (1) building, containing a total of twenty-five (25) hotel
rooms ("Units"). Each Interest has the right to eight (8) Unit
Weeks. There will be eight (8) time share licensees which
represent for each Unit. With respect to the Resort Facility,
there shall be a total of one hundred fifty (150) time share
periods sold. This offering is limited to time share licenses in
the Resort Facility.
The Developer shall enter into a License with each
Licensee, whereby such Licensee is granted the right to receive
rental revenue, if any, and occupy a particular category of suite
for eight weeks each calendar year (two weeks in each season)
terminating on December 31, 2050. Winter is Weeks 46-52 and 1-6,
Spring is Weeks 7-19, Summer is Weeks 20-32 and Fall is Weeks 33-
45. The Developer and/or Managing Entity shall establish the
annual Schedule in its sole discretion, whose decision as to the
Weeks assigned to a Licensee each calendar year shall be final.
The particular Unit to which the Licensee's Weeks shall be
applicable shall be assigned by the Developer and/or the Managing
Entity in the category of the Class of Interest purchased by the
Licensee. The category of suite that may be used by a Licensee
shall be determined by the Class of Interest purchased by the
Licensee. The Classes of Interests are as follows:
Class A Interests-- The ownership of A Interests allows the
Standard Studio Licensee use of a standard studio suite
Suite: with 2 queen sized beds overlooking the
marina and Clearwater Bay, for two weeks in
each season until December 31, 2050. Units
201, 202, 301, 302, 401 and 402 in
Charthouse Suites Hotel are the suites
applicable to the Class A Interests.
Class B Interest-- The ownership of B Interests allows the
King Studio Suite: Licensee use of a spacious King Studio
suite with 1 king sized bed overlooking the
marina and Clearwater Bay, for two weeks in
each season until December 31, 2050. Units
103, 104, 105 and 106 in Charthouse Suites
Hotel are the suites applicable to the
Class B Interests.
Class C Interests-- The ownership of C Interests allows the
Large Studio Suite: Licensee use of a large studio suite with 2
queen sized beds overlooking Clearwater
Bay, the marina or southern exposure, for
two weeks in each season until December 31,
2050. Units 101, 102, 206, 207, 305 and
306 in Charthouse Suites Hotel are the
suites applicable to the Class C Interests.
Class D Interests-- The ownership of D Interests allows the
1 Bedroom Suite: Licensee use of a one bedroom suite
overlooking the marina, Clearwater Bay, the
swimming pool or southern exposure for two
weeks in each season until December 31,
2050. Units 204, 303, 304, 307, 403 and
404 in Charthouse Suites Hotel are the
suites applicable to the Class D Interests.
Class E Interests-- The ownership of E Interests allows the
1 Bedroom Suite Licensee use of a one bedroom suite with
(with lanai): lanai with a view of Clearwater Bay, for
two weeks in each season until December 31,
2050. Units 203 and 205 in Charthouse
Suites Hotel are the suites applicable to
the Class E Interests.
Class F Interest-- The ownership of F Interests allows the
Penthouse: Licensee use of a two bedroom penthouse
suite, with a fully equipped kitchen,
living room, den, dining room, two full
baths (one with a jacuzzi), and a large
private balcony overlooking Clearwater Bay,
for two weeks in each season until
December 31, 2050. Unit 405 in Charthouse
Suites Hotel is the suite applicable to the
Class F Interest.
a. Restrictions on Use
Licensees may be denied access to their Units upon
failure to pay assessments (annual or special, if any) in
accordance with the provisions of Section 721.13(6)(a), Florida
Statutes or for failure to pay for their Interests on a timely
basis.
(1) Occupancy and Use Restrictions
(a) The Units shall be transient resort
occupancy only. No trade, business, profession or other type of
commercial activity may be conducted in any Unit except for any
Units which are used by Developer for models, sales offices,
construction offices, storage or related uses. Each Licensee
shall have the exclusive right to use and occupy his Assigned
Unit during the Assigned Unit Week assigned to such Licensee
subject to the provisions of the Plan.
(b) Presently, a Licensee may not keep
a pet in his Unit, nor shall a Licensee keep any other animals,
livestock or poultry in his Unit, nor may any of the same be
raised, bred or kept upon the Common Areas or any portion of the
Resort Facility. Charthouse Suites Vacation Ownership, Inc.
shall have the authority in the future to adopt rules and
regulations permitting the keeping of pets.
(c) A Licensee shall not permit or
suffer anything to be done or kept in its Unit which will
increase the insurance rates on its Unit or the Common Areas
which will obstruct or interfere with the rights or other
Licensees or Charthouse Suites Vacation Ownership, Inc. or the
Managing Entity.
(d) No Licensee shall annoy other
Licensees by unreasonable noises or otherwise and no Licensee
shall commit or permit to be committed any nuisance or immoral or
illegal act in its Unit or on the Common Areas.
(e) In the event of damage to or
destruction of any Unit, the furnishings of any Unit or the
Common Area caused by a Licensee or the family members, guests,
invitees, lessees or licensees of a Licensee, such Licensee shall
be liable for the cost of necessary repairs and reconstruction to
restore the Unit, furnishings and/or Common Area to its original
condition and the cost thereof shall be a lien in accordance with
the terms provided for herein.
(f) No Licensee (with the exception of
Developer, for so long as Developer is a Licensee) shall display
any sign, advertisement or notice of any type on the exterior of
its Unit, the Common Areas or at any window or other part of its
Unit or on any personal property located therein; no Licensee
shall erect any exterior antennae or aerials upon its Unit or the
Common Areas; and no Licensee shall cause anything to project out
of any window, door, porch or balcony except as may be approved
in writing by Charthouse Suites Vacation Ownership, Inc. (except
as installed as of the date the Plan is recorded or except as
thereafter installed by Developer).
(g) A Licensee (excluding Developer,
for so long as Developer is a Licensee) shall not be permitted to
keep any boat, trailer, truck, camper, van in excess of twenty
(20) feet long, recreational vehicle or other vehicle which is
not a private passenger car on any portion of the Resort Facility
and any such vehicle shall be removed at the expense of the
Licensee responsible therefor. The use of parking spaces may be
further regulated and limited by the Rules and Regulations
promulgated by Charthouse Suites Vacation Ownership, Inc.
(h) No clothesline or other similar
device shall be allowed on any portion of the Resort Facility and
no clothes, sheets, blankets, laundry, rugs or any kind of
article shall be dried, aired, beaten or dusted by extending same
from the windows, doors, porches or balconies of a Unit.
(i) Each Licensee shall keep its Unit
in a good state of preservation and cleanliness and shall not
sweep or throw or permit to be swept or thrown therefrom or from
the doors, windows, porch or balcony thereof any dirt or other
substances.
(j) Waterclosets and other water
apparatus on the Resort Facility shall not be used for any
purposes other than those for which they were constructed. A
Licensee shall pay for any damage to a Unit, its contents and/or
the Common Areas because of the misuse of waterclosets or other
apparatus in its Unit. Liability for any damage to a Unit caused
by the moving or carrying of any article on the Resort Facility
shall be borne by the Licensee responsible or the presence of
such article. A Licensee shall be liable for the expense of any
maintenance, repair or replacement of any real or personal
property rendered necessary by his act, neglect or carelessness,
or by that of any member of his family, or his or their guests,
employees, agents, licensees, or lessees. Such liability shall
include any increase in fire insurance rates occasioned by use,
misuse, occupancy or abandonment of a Unit or the Common Areas
and shall also include the cost of repairing broken windows. A
Licensee shall also be liable for any personal injuries caused by
his negligent acts or those of any member of his family, or his
or their guests, employees, agents, licensees or lessees.
Nothing herein contained, however, shall be construed so as to
modify any waiver by insurance companies of rights of
subrogation.
(k) No Licensee shall use or permit to
be brought into any Unit, porch or balcony any inflammable oils
or fluids such as gasoline, kerosene, naphtha, benzine or other
explosives or articles deemed extra hazardous to life, limb or
property.
(l) Charthouse Suites Vacation
Ownership, Inc. will retain a passkey to each Unit. No Licensee
shall alter any lock or install a new lock on any door leading
into its Unit without the prior written consent of Charthouse
Suites Vacation Ownership, Inc. If such consent is given, the
Licensee shall provide Charthouse Suites Vacation Ownership, Inc.
with a key for the use of Charthouse Suites Vacation Ownership,
Inc. In the event Charthouse Suites Vacation Ownership, Inc. is
not provided with a key to the Unit, the Licensee shall pay the
cost incurred by Charthouse Suites Vacation Ownership, Inc. in
gaining entrance to its Unit.
(m) No Licensee shall cook or barbecue
on any porch or balcony. Only lawn furniture is permitted on
porches and balconies. The hanging of articles of any type on
the porch or balcony railings is not permitted.
(n) A Licensee may not make or cause to
be made any structural modifications to its Unit (except those
modifications which exist as of the date the Plan is recorded or
as made by Developer) without Charthouse Suites Vacation
Ownership, Inc.'s prior written consent, which consent may be
withheld for any reason.
(o) There are no restrictions
prohibiting children in the Resort Facility or the Common
Amenities, however, parents shall be required to supervise
children at all times.
b. Private Use: The Units and the Common Areas
are not for the use and enjoyment of the public, but are
expressly reserved for the reasonable private use and reasonable
enjoyment of the Developer, Charthouse Suites Vacation Ownership,
Inc., the Managing Entity, the Licensees, guests, invitees and
lessees in accordance with the Plan.
c. Rules and Regulations: Charthouse Suites
Vacation Ownership, Inc. shall impose rules and regulations
regulating the use and enjoyment of the Units and the Common
Areas. The rules and regulations so promulgated shall in all
respects be consistent with the use covenants set forth in the
Vacation License Plan and with the architectural and
beautification concept presently existing. Charthouse Suites
Vacation Ownership, Inc. may modify, alter, amend and rescind
such rules and regulations, provided such modifications,
alterations, amendments and rescissions are consistent with the
use covenants set forth herein.
A copy of the initial Rules and Regulations
adopted by Charthouse Suites Vacation Ownership, Inc. is attached
hereto as Exhibit "A18" to this Public Offering Statement.
2. Phasing
The construction, finishing and equipping of the Resort
Facility and Common Amenities is complete.
It is not the present intent of the Developer to
develop additional properties which are located either adjacent
to or contiguous with the Resort Facility and/or the Common
Amenities as shown on Exhibit "A9".
3. Recreational Facilities
Those portions of the property designated as Common
Amenities are not included as part of the Resort Facility,
however, are to be used and occupied on a mutual and non-
exclusive basis by Licensees in the Resort Facility and Licensees
in previously or subsequently created developments. No Licensee
shall acquire any exclusive possessory interest in the Common
Amenities. All Common Amenities shall be managed by Charthouse
Suites Vacation Ownership, Inc.
The following is a description of the recreational and
other commonly used facilities referred to above:
a. Swimming Pool
(1) Location: As shown on the Plot Plan as
set forth on Exhibit "A9" to the Public
Offering Statement
(2) Approximate size: 546 sq. ft.
(3) Approximate depth: 3-5 feet
(4) Maximum capacity: 20 persons
(5) The swimming pool is heated.
b. Administrative Office
(1) Location: As shown on the Plot Plan as
set forth on Exhibit "A9" to the Public
Offering Statement
(2) Approximate size: 1325 sq. ft.
(3) Maximum capacity: 3 persons
c. Laundry Room
(10 Location: As shown on the Plot Plan as
set forth on Exhibit "A9" to the Public
Offering Statement
(2) Approximate size: 170 sq. ft.
(3) Maximum capacity: 3 persons
There are no facilities which are not built.
As previously indicated, the Common Amenities are not
included as part of the Resort Facility, and no Licensee shall
acquire any ownership interest therein. Title to the Common
Amenities is vested in the Developer. The use rights of a
Licensee in the Common Amenities shall be an estate for years,
terminating on December 31, 2050. For a more complete
description of the terms of such ownership, control and
management by Charthouse Suites Vacation Ownership, Inc., please
refer to Articles II, III, IV and VII of the Plan attached as
Exhibit "A19" to this Public Offering Statement.
The Developer is unable at this time to itemize each
and every item of personal property to be used in connection with
the common facilities. The minimum amount of expenditure that
the Developer or Association will commit to purchase personal
property for the Common Amenities shall be zero ($0.00).
4. Financial Arrangements for Promised Improvements
All accommodations and facilities are presently
complete.
5. Utilities
The manner in which the utilities and other services
are to be provided and the person or entity furnishing them are
as follows:
a. Electricity: Florida Power Corporation
b. Solid waste disposal: City of Clearwater
c. Sewer and water: City of Clearwater
d. Storm drainage: Natural gravity flow
e. Garbage disposal: City of Clearwater
f. Telephone: Florida Telephone
6. Insurance
Insurance is or will be maintained on the Resort
Facility and Common Amenities by Charthouse Suites Vacation
Ownership, Inc. Coverage shall include all risk, property
damage, flood and personal injury insurance. All buildings shall
be adequately covered to insure full replacement cost. The
responsibility for maintaining all required insurance shall be
that of Charthouse Suites Vacation Ownership, Inc. Insurance
policies will be maintained, naming the Developer and Charthouse
Suites Vacation Ownership, Inc. as their interests may appear.
Premiums for payment of such insurance shall be paid by
Charthouse Suites Vacation Ownership, Inc. and charged as part of
the Common Expense. Insurance covering the replacement cost of
all improvements located within each Unit will also be maintained
by Charthouse Suites Vacation Ownership, Inc.
For a further description of the terms and conditions
of the required insurance coverage, please refer to Articles IX
and X of the Vacation License Plan. Insurance policies will be
made reasonably available for inspection by Licensees or their
agents in accordance with law.
a. Loss to Property
Where a loss or damage occurs to any part of the Resort
Facility it shall be obligatory upon the Managing Entity to
repair or restore the damage caused by said loss, subject to the
provisions below.
The Managing Entity shall promptly obtain reliable and
detailed estimates of the cost of repairing and reconstruction of
such damaged property for the purpose of determining whether the
available insurance proceeds are sufficient to pay for the same.
If the insurance proceeds are sufficient to pay for the
estimated cost of restoration and repair, the Managing Entity
shall have the right and obligation to cause the damage to be
repaired and restored.
If the net proceeds of the insurance are insufficient
to pay for the estimated cost of restoration and repair (or for
the actual cost thereof, if the work has actually been done), the
Managing Entity shall promptly, upon determination of the
deficiency, determine the amount of the Special Assessment which
will be necessary to obtain the necessary funds to repair and to
restore such damaged improvements. If the Special Assessment is
10% or less of the budgeted gross expenses for the calendar year
in which the assessment is levied, then the Managing Entity shall
levy such Assessment against the Licensees and shall upon receipt
of adequate funds proceed to have the repairs and reconstruction
completed. Each Licensee shall be responsible for a
proportionate share of the Assessment attributable to the Unit
Weeks which are licensed to the Licensee in the same manner that
the Annual Assessment is allocated.
If the Special Assessment exceeds 10% of the budgeted
gross expenses for the calendar year in which the assessment is
levied, then the damage or destruction shall not be repaired or
reconstructed without the affirmative vote of a majority in
interest of the total number of Unit Weeks. If the affirmative
vote is obtained, then the Managing Entity shall levy such
Special Assessment against the Licensees and shall upon receipt
of adequate funds proceed to have the repairs and reconstruction
completed. If the affirmative vote is not obtained, then in such
event and only in such event, the damage and destruction shall
not be repaired and this Plan and all Licenses shall terminate.
The entire insurance proceeds shall be allocated between the
Owner and the holders of the Unit Weeks in the Resort Facility
with the holders of the right to use Unit Weeks being entitled to
that portion of the proceeds equal to a ratio the numerator of
which is the remaining number of years from the date of the
damage to December 31, 2050 and the denominator is 64. The Owner
shall be entitled to the balance of the proceeds. The proceeds
due to the holders of the right to use Unit Weeks shall be
allocated in the percentages and manner in which Common Expenses
are allocated, provided that if a particular Licensee has not
paid the entire purchase price and all payments for the License,
then such Licensee shall have the option of (a) paying the
balance due on such License, in which event such Licensee shall
receive the pro rata share of insurance proceeds allocated to
such Licensee's Unit Weeks as provided above, or (b) not paying
such balance due on the purchase price of the License, in which
event the insurance proceeds allocated to such Licensee's Unit
Weeks shall be paid to the Developer.
Notwithstanding any provision to the contrary, during
such time that the Resort Facility or the Unit(s) are
untenantable because of such damage or destruction, the Managing
Entity shall notify the holders of the affected Unit Weeks and
such holders shall not be permitted to use said Unit Weeks. Such
affected holders shall not be entitled to any compensation for
such loss of use, unless the Managing Entity is able to obtain
and does obtain loss of use insurance coverage, in which event
the affected holders shall only be entitled to the portion of
loss of use insurance proceeds applicable to the Unit Weeks in
which the Licensee was not able to occupy a suite because of such
damage or destruction.
7. Leasing of Units/Sale of Whole Units
Other than operating the Charthouse rental pool, the
Developer's present plan does not include a program of leasing
units rather than selling time share licenses, however, this
shall not preclude the Developer from leasing or renting Units or
time share periods.
The Developer does not intend to offer whole Units in
addition to Time Share Units,however, this shall not preclude the
Developer from offering whole Units as part of future
development.
8. Disclosures Regarding Real Property
To the best knowledge, information and belief of the
Developer, there are no unusual and material circumstances,
features and characteristics of the property other than as set
forth in this Public Offering Statement.
There are no properties offered by the Developer for
use by the Licensees which are neither owned by them or leased to
them, Charthouse Suites Vacation Ownership, Inc., or any entity
controlled by the Licensees.
9. Description of Developer Financing
The Developer will be providing financing to all
qualified Licensees, subject to terms to be agreed upon between
the individual Licensee and Developer for up to seventy-five
(75%) percent of the purchase price, for a term of up to thirty
(30) years, with increased licensing payment not to exceed the
maximum rate interest allowed under Florida law. In the event of
any change in any such financing, same shall be deemed not to be
a material change to this Offering Statement.
10. Control of Association
THE DEVELOPER HAS THE RIGHT TO RETAIN CONTROL OF
Charthouse Suites Vacation Ownership, Inc. AFTER A MAJORITY OF
THE LICENSES HAVE BEEN SOLD.
For a more complete description of the Developer's
right of control, please refer to the Vacation License Plan
attached as Exhibit "A19" to the Public Offering Statement.
F. BUDGETS, DUES AND FEES
1. Estimated Operating Budgets
The Estimated Operating Budget for the Resort Facility
and the Common Amenities is attached as Exhibit "A8" to this
Public Offering Statement. Based upon the Estimated Operating
Budget, each Licensee shall be required to pay, as a Licensee,
for each time share license owned the annual sum of set forth in
the Estimated Operating Budget. There shall be a single
Estimated Operating Budget for the Resort Facility, and for the
Common Amenities. The Developer has undertaken to guarantee the
assessments for the Resort Facility and Common Amenities during
the current fiscal year commencing as of January 1, 1996 through
December 31, 1997. In this regard, the Developer shall guarantee
that assessments during the guarantee period shall not be made
against any Licensee of a time Share License, other than the
Developer, exclusive of real estate taxes, as set forth in the
Estimated Operating Budget.
For the period through and including December 31, 1997
the Developer guarantees that the Annual Assessment per Unit Week
shall not exceed the amounts per Class of Interest as set forth
below:
Class A - $175.00
Class B - $175.00
Class C - $190.00
Class D - $270.00
Class E - $290.00
Class F - $350.00
Under December 31, 1997, the Developer will pay all
expenses in excess of the amounts collectible from Unit Licensees
pursuant to Section 721.05(x)(5), Florida Statutes.
Pursuant to the Vacation License Plan, Charthouse
Suites Vacation Ownership, Inc. has the authority to alter or
amend charges for which the Licensee may be liable. This right
includes the right of Charthouse Suites Vacation Ownership, Inc.
to increase the Estimated Budget for the Resort Facility and
Common Amenities from year to year (unless otherwise guaranteed
by the Developer as set forth herein) and the right to make
special assessments from time to time.
G. PURCHASE OF AN OWNERSHIP INTEREST
1. Licensee's Right of Cancellation
Each Licensee is given the right, pursuant to Florida
Statutes, Chapter 721, to cancel the License Agreement without
any penalty or obligation within ten (10) days from the date the
License Agreement is signed and until ten (10) days after receipt
of the Public Offering Statement, whichever is later. Licensee
must notify the Developer in writing of his/her intent to cancel.
The Notice of cancellation shall be effective upon the date sent
and shall be sent to the Developer at 250 Patrick Blvd.,
Brookfield, WI 53045. Any attempt to obtain a waiver of the
Licensee's cancellation rights is unlawful. While the Licensee
may execute all closing documents in advance, the closing, as
evidenced by the delivery of the Deed, before the expiration of
the ten (10) day cancellation period is prohibited.
Each Licensee may also cancel the License Agreement at
any time after the accommodations or facilities are no longer
available as provided in the Vacation Plan and this Public
Offering Statement. In such event, the Vacation Plan provides
that a Licensee will receive the price of their Interest
(exclusive of assessments) less any benefits received. The
Vacation License Plan contemplates that purchasers may have the
accommodation or facility unavailable on a temporary basis in
order to facilitate repairs, maintenance, or emergencies. Such
events shall not give rise to a right to cancel.
2. Total Financial Obligation of the Licensee
There are no closing expenses to a Licensee, exclusive
of state taxes.
In connection with the purchase of a Time Share
License, the Licensee shall be subject to the following financial
obligations:
a. Payment of the purchase price as indicated in
the License Agreement, together with finance charges in the event
the purchase price is financed in whole or in part.
b. Maintenance fees as set forth in the Plan
attached as Exhibit "A19" to this Public Offering Statement.
c. Exchange membership fees pursuant to the
separate exchange agreement to be entered into between the
Licensee and the exchange company in the event Licensee elects to
become a member of the exchange program.
d. Unless included in the Common Expenses,
property taxes charged to each Licensee with respect to each time
share license owned.
e. Sales and document taxes imposed by the
Florida Department of Revenue.
f. The only additional charges to which a
Licensee shall be subject are reoccurring maintenance fees and
special assessments pursuant to the Plan, property taxes, and
exchange membership fees.
3. Status of Title Underlying Each Resort/Component
Site
Title to the Resort Facility and title to the Common
Amenities is vested in the Developer. Title to the property is
free and clear, subject to a utility easement as recorded in
Official Records Book 435, at Page ___ of the Public Records of
Pinnelas County, Florida.
A nondisturbance and Notice to Creditors, in the form
attached as Exhibit "A21" to this Public Offering Statement, will
be filed in the Public Records of Pinnelas County, Florida,
setting forth the legal description of the Resort Facility. Such
Nondisturbance and Notice shall be effective as to all persons,
firms or entities acquiring rights or claims against the Resort
Facility and shall notify all persons, firms and entities that
such property has been dedicated for use by Licensees in the
Resort Facility, as well as Licensees in all Member Resort
Facilities. All persons, firms or entities acquiring rights in
the Resort Facility or the Common Amenities, subsequent to the
date of such notice, shall be specifically subject to all terms,
conditions and provisions of the Vacation License Plan relating
to such Common Amenities.
Other than as set forth above, there are no other
liens, defects, judgments or other encumbrances affecting title
to the Resort Facility or Common Amenities.
4. Restrictions Upon Rental or Resale
There are restrictions upon the sale, lease or transfer
of time share periods.
UNLESS PURCHASING AS A SECURITY UNDER THE SECURITIES
LAWS, THE PURCHASE OF A TIME SHARE PERIOD SHOULD BE BASED UPON
ITS VALUE AS A VACATION EXPERIENCE OR FOR SPENDING LEISURE TIME,
AND NOT CONSIDERED FOR PURPOSES OF ACQUIRING AN APPRECIATING
INVESTMENT OR WITH AN EXPECTATION THAT THE TIME SHARE PERIOD MAY
BE RESOLD.
Provided that a Licensee is not in default of any
provision of this Vacation License Plan or the License, such
Licensee shall be permitted to sell, transfer or convey such
Licensee's entire Interest and the License without the consent of
the Developer or the Managing Entity, provided (a) that the
entire purchase price and License Fee has been paid in full, (b)
all Assessments are current, (c) the transferee executes such
assumption documents required by the Seller, (d) the transfer,
sale, or conveyance complies with the federal and state
securities laws.
After such permitted transfer, sale or conveyance, the
transferring Licensee shall have no further liability for Common
Expenses under this Plan. Provided that a Licensee is not in
default of any provision of this Vacation Plan or the License,
such Licensee may also sell, transfer, or convey partial
Interests (a right to a certain Unit Week) but only with the
prior written consent of the Managing Entity. The Managing
Entity shall be permitted to impose such conditions as the
Managing Entity determines necessary in its sole discretion in
connection with transfers of partial Interests. With respect to
any permitted transfer, prior to such transfer, the name, address
and such other information as requested by the Managing Entity
shall be delivered to the Managing Entity.
5. Special Risk Factors
a. The future value of timeshare interests is
very uncertain; do not count on appreciation.
b. Resale of your interest or Unit Weeks may be
subject to the Developer's paying the cost of the Interest. You
should check your contract for such restrictions and also note
whether your contract or any other obligation would affect your
right to sell your Interest.
c. You should consider the competition which you
may experience from the Developer in attempting to resell your
interest and the possibility that real estate brokers may not be
interested in listing your Interest or Unit.
H. EXCHANGE PROGRAM OPPORTUNITIES
The Developer has entered into an Agreement with RCI
(registered trademark) for the purpose of providing a reciprocal
exchange program. The Licensee should note that all
representations concerning the exchange program are solely those
of RCI (registered trademark) and not those of the Developer and,
further, that RCI (registered trademark) is an independent
company not affiliated or connected with the Developer in any
way. Developer has agreed to pay to RCI (registered trademark),
on behalf of Licensee, the first year's exchange membership dues.
All future membership or exchange dues assessed by RCI
(registered trademark) shall be the sole responsibility of
Licensee. The participation by Licensee in the exchange program
is voluntary on the part of Licensee.
Licensees may enroll in RCI Travel's Vacation Exchange
Program, upon payment of membership fees to RCI Travel. Upon
subscription, the Company intends to pay the costs of a
Licensee's one year subscription in RCI Travel. RCI Travel's
Vacation Exchange Program allows members to deposit a week or
more of vacation time at the Charthouse Suites hotel and request
an exchange for a week or weeks at another participating resort
located around the world. Under the RCI program, a Licensee
deposits a week at the Charthouse Suites hotel, up to 24 months
in advance, and then requests an exchange from one of the
approximately 2,800 RCI affiliated resorts around the world.
Under this program a Licensee may exchange weeks, whether or not
the deposited Charthouse Suites hotel weeks are used by another
RCI member. RCI Travel's Vacation Exchange Program provides the
opportunity to save vacation time and use the banked weeks up to
two years after the scheduled start date or, if desired, up to
one year prior to the scheduled start date. As of the date of
this Prospectus, the cost of membership in RCI Travel was $67 for
one year, $123 for two years, $181 for three years and $285 for
five years. In addition, RCI charges a $93 exchange fee ($123
for international exchanges) for each week deposited into the RCI
Travel's Vacation Exchange Program. Under the terms of the RCI
Travel's Vacation Exchange Program, a Licensee must have paid his
or her annual dues and license payment to Charthouse associated
with the deposited week in order to utilize RCI's Vacation
Exchange Program. RCI Travel's Vacation Exchange Program is not
affiliated with the Company or any affiliate of the company. The
Company assumes no liability or responsibility to RCI's program
or performance.
If a Licensee becomes a member of RCI Travel, that
Licensee, subject to certain terms established by RCI Travel,
will have the opportunity to enjoy extra vacation time at RCI
affiliated resorts at a low cost ($39 as of the date of this
Prospectus) without exchanging a vacation week at the Charthouse
or may participate in discount programs on leisure travel,
including airfares, rental cars, cruises and hotels.
I. SERVICE, MAINTENANCE OR RECREATIONAL CONTRACTS OR
LEASES THAT MAY BE CANCELED BY LICENSEES
Presently, there are no service, maintenance or
recreational contracts or leases that may be canceled by
Licensees, however, this shall not preclude the Developer or
Charthouse Suites Vacation Ownership, Inc. from entering into
such contracts at a future time.
J. NAME OF THE PERSON WHO WILL OR MAY HAVE THE RIGHT TO
ALTER, AMEND OR ADD TO THE CHARGES WHICH THE LICENSEE
MAY BE SUBJECT AND THE TERMS AND CONDITIONS UNDER WHICH
SUCH ALTERATIONS, AMENDMENTS OR ADDITIONS MAY BE
IMPOSED
The Developer, its successors and assigns may have the
right to alter, amend or add to the charges to which Licensee may
be subject. Such right will exist if additional Common Amenities
are added pursuant to the terms of the Plan. The addition of
additional Common Amenities may increase a Licensee's maintenance
expenses. A Licensee's expense may also be increased if property
taxes increase pursuant to reoccurring appraisal and assessment
of the property. Exchange membership fees to which the Licensee
may be subject may increase pursuant to the terms and conditions
of the separate exchange membership agreement executed between
the Licensee and the exchange company. For a more complete
description of the terms under which the Developer may alter,
amend or add to the charges to which a Licensee may be subject
and the terms and conditions under which such alterations,
amendments, or additions may be imposed, please refer to Articles
II, III, IV, and VII of the Vacation License Plan attached as
Exhibit "A19" to this Public Offering Statement.
K. PROVISIONS FOR ALTERATIONS OF UNITS BY DEVELOPER
There are no provisions for alterations of Units by
Developer.
L. AMENDMENTS TO THE TIME SHARING PLAN
1. So long as the Developer has a right to appoint
all officers and directors of the Board, as provided for in the
Plan, any Amendments may be made by the Developer alone, which
Amendment shall be signed by the Developer and need not be joined
in by any other party (including, but not limited to, the right
to alter the boundaries of the Common Amenities), provided,
however, that such Amendment shall not materially and adversely
affect any Licensee's property rights.
2. Except for a Developer's Amendment, as provided
for herein, the Plan may be amended only by the consent of a
majority of all Licensees of the Resort Facility. Except for an
Amendment made by the Developer, pursuant to the terms hereof, no
Amendment of the Plan shall change the configuration or size of
any Unit in any material fashion or materially alter or modify
the appurtenances to such Unit, unless all of the record
Licensees of the time share license affecting such Unit and all
of the Preferred Lenders of record holding Security Agreement on
said time share license shall consent in writing thereto. Any
such amendment shall be voted on at a special meeting of the
affected Licensees and their consent thereto shall be evidenced
by a certificate joined in and executed by such Licensees and all
affected Preferred Lenders and recorded in the same manner as an
amendment provided in paragraph A of Article XIV of the Vacation
License Plan.
M. LIEN ON TIME SHARE LICENSES TO SECURE ASSESSMENTS
THERE IS A LIEN OR LIEN RIGHT AGAINST EACH TIME SHARE
PERIOD TO SECURE THE PAYMENT OF ASSESSMENTS OR OTHER EXACTIONS
COMING DUE FOR THE USE, MAINTENANCE, UPKEEP OR REPAIR OF THE
RECREATIONAL OR COMMONLY USED FACILITIES. A LICENSEE'S FAILURE
TO MAKE THESE PAYMENTS MAY RESULT IN CANCELLATION OF THE LICENSE.
For a more complete description of the terms and
conditions under which liens may be imposed, please refer to the
Vacation License Plan attached as Exhibit "A" to this Public
Offering Statement.
N. AD VALOREM TAXES
Failure by some time share license Licensees to pay ad
valorem taxes may result in additional financial burdens for
those who have paid their taxes in order to prevent a tax
certificate being sold against the entire time share unit.
O. GUARANTEED RENTAL ARRANGEMENT
The following is condensed information concerning the
Guaranteed Rental Arrangement by Charthouse. Reference to the
provisions of the Guaranteed Rental Arrangement are qualified in
their entirety by reference to the text of the Payment and
Guarantee Agreement, a form of which has been filed as an exhibit
to the Public Offering Statement.
General
The Company guarantees that Licensees who purchase an Interest
by [6 months after the Effective Date of the Public Offering
Statement] will receive the right to put six weeks of their
Charthouse Suites hotel use to the Company and receive the
applicable Guaranteed Rental Rate (hereafter "Guaranteed Rates").
Under the terms of the Guaranteed Rental Arrangement, the Licensees
put right must be exercised by [five years after the Effective Date
of the Public Offering Statement] and is subject to certain terms
and conditions. Licensees who purchase between [6 months & 1 day
and 9 months after the Effective Date of the Public Offering
Statement] will receive the right to put four weeks over the life
of the Interests to the Company and receive the Guaranteed Rates,
subject to the terms and conditions of the Guaranteed Rental
Arrangement. Licensees who purchase between [9 months & 1 day and
one year after the Effective Date of the Registration Statement]
will have the right to put two weeks over the life of the Interests
to the Company and receive the Guaranteed Rates, subject to the
terms and conditions of the Guaranteed Rental Arrangement.
Licensees purchasing after [one year of the Effective Date] will
not be able to participate in the Guaranteed Rental Arrangement.
Guaranteed Rates
The Company agrees to pay the following rates under the
Guaranteed Rental Arrangement. These rates are the off-season
walk-in rates (as of the date of the Prospectus):
Guaranteed Rate Total (Assuming Six Weeks)
A-Standard Studio $ 65.00 per night $2,730
B-King Studio $ 75.00 per night $3,150
C-Studio $ 85.00 per night $4,410
D-1 Bedroom $120.00 per night $5,040
E-1 Bedroom $130.00 per night $5,460
F-Penthouse $175.00 per night $7,350
Licensees should not assume that the Charthouse rental pool
will generate such rates, as the rental pool could return higher or
lower rates, due to among other things, discounts, corporate rental
rates, the 5% rental agent charge, and seasonality.
Terms and Conditions of Guaranteed Rental Arrangement
The Guaranteed Rental Arrangement is subject to the following
terms and conditions:
(1) Licensees must give the Company at least 30 days written
notice of their intent to put the weeks pursuant to the Guaranteed
Rental Arrangement. Thereafter, the Licensee may not withdraw the
"put" weeks without the consent of the Company.
(2) The Licensees must put entire weeks to the Company.
(3) The Company will have the exclusive right to use,
exchange, or rent the suite for the designated weeks and may
collect and retain all revenue arising therefrom.
(4) Subject to the Company's waiving such condition, no more
than 5 suites may be put to the Company from all Licensees in any
one week. In case more than 5 suites are put to the Company, the
Company will accept put requests in the order in which written
requests are received. Licensees whose put rights are not accepted
will be notified within one week of receipt of a letter request.
(5) All puts must be exercised by [five years after Effective
Date].
(6) There must be no action threatened, pending or taken,
which makes the rental pool or the Guaranteed Rental Arrangement,
unlawful or otherwise restricts or prohibits the ability of
Charthouse to use the suite.
(7) Under the terms of the property management agreement, the
rental management fee of 5% will be waived for amounts received and
all amounts shown above are exclusive of the rental management fee.
(8) Licensees must elect whether to accept the Rental
Guarantee or the cash surrender value (described below at the time
of subscription to purchase the Interests).
Cash Surrender Value
The Guaranteed Rental Arrangement allows Licensees to elect to
receive cash to be used as payment towards the subscription at the
time of subscription instead of utilizing the Guaranteed Rental
Arrangement. Under the terms of the Guaranteed Rental Arrangement,
Licensees who purchase in the period between [Effective Date] and
[6 months after Effective Date] may elect to receive a 5% discount
on the net Subscription Amount in lieu of the Rental Guarantee
Arrangement. Licensees who purchase between [6 months & 1 day
after the Effective Date and Nine Months after the Effective Date]
may elect to receive a 3% discount on the net Subscription Amount
in lieu of the Rental Guarantee Arrangement. Licensees who
purchase between [9 months & 1 day after Effective Date and one
year after Effective Date] may elect to receive a 1-1/2% discount
on the net Subscription Amount in lieu of the Rental Guarantee
Arrangement.
Right to Amend
The Company reserves the right to amend the Guaranteed Rental
Arrangement, provided that any amendment does not reduce the cash
benefit to a Licensee.
P. TAX CONSIDERATIONS
The tax considerations of the purchase of an Interest
will depend on the nature and structure of the Company's
operations, on the particular circumstances of each Licensee, and
the then applicable federal tax principles. Moreover, taxes other
than federal income taxes, such as foreign, state and local taxes,
and federal estate and gift taxes, may affect a Licensee's
investment in an Interest. In addition, controversy and
uncertainty exist in many areas of the federal income tax law which
may affect the structure and operation of the Company and a
Licensee acquiring and holding an Interest.
PROSPECTIVE LICENSEES ARE URGED TO CONSULT, AND MUST DEPEND UPON,
THEIR OWN TAX ADVISERS WITH SPECIFIC REFERENCE TO THEIR OWN TAX
SITUATIONS AND POTENTIAL CHANGES IN APPLICABLE LAW, INCLUDING THE
APPLICATION OF STATE AND LOCAL, FOREIGN AND OTHER TAX
CONSIDERATIONS.
<PAGE>
<PAGE>
ANNEX D
SUBSCRIPTION AGREEMENT
SUBSCRIPTION AND PURCHASE AGREEMENT
FOR CHARTHOUSE SUITES VACATION
INVESTMENT AND OWNERSHIP INTERESTS
This Agreement is made on the date set forth below by and
between Charthouse Suites Vacation Ownership, Inc., a Florida
corporation, hereinafter referred to as "Charthouse," whose
executive office address is 250 Patrick Boulevard, Brookfield,
Wisconsin 53045, and the undersigned buyer(s), hereinafter referred
to as "Purchaser":
Name of Purchaser and Principal Contact (See paragraph 3 of the
attached terms and conditions):
________________________________________________
Purchaser _____________________________________
(sign)
Name of Purchaser _____________________________
(written or typed)
Address _______________________________________
City, State ___________________________________
Zip ___________________________________________
Telephone (Day) _______________________________
Telephone (Night) _____________________________
Fax No. _______________________________________
Social Security Number or
Tax Identification Number* ____________________
________________________________________________
________________________________________________
Purchaser
(If more than one) ____________________________
(sign)
Name of Purchaser _____________________________
(written or typed)
Address _______________________________________
City, State ___________________________________
Zip ___________________________________________
Telephone (Day) _______________________________
Telephone (Night) _____________________________
Fax No. _______________________________________
Social Security Number or
Tax Identification Number* ____________________
________________________________________________
* Under penalties of perjury, the Purchaser certifies (1) that the
number shown as his or her taxpayer identification number or Social
Security number is his or her correct taxpayer identification
number and (2) that he or she is not subject to backup withholding
either because he or she had not been notified that he or she is
subject to backup withholding as a result of a failure to report
all interest and dividends or because the Internal Revenue Service
has notified him or her that he or she is no longer subject to
backup withholding.
Title to be Held
____ Individual ____ Partnership ____ Joint Tenants With
Right of Survivorship
____ Corporation ____ Trust ____ Tenants in Common
____ Other: ______________________ ____ Marital Survivorship
Property
Class of Interest and Purchase Price (Check one or more):
A (Standard Studio Suite $17,000) _____
B (King Studio Suite $20,000) _____
C (Large Studio Suite $26,500) _____
D (1 Bedroom Suite $36,500) _____
E (1 Bedroom Suite with Lanai $39,500) _____
F (Penthouse $61,000) _____
Weeks Selected (Must be 2 consecutive weeks):
First Choice:
Winter ___________ Spring ________
Summer ___________ Fall __________
Second Choice:
Winter ___________ Spring ________
Summer ___________ Fall __________
Third Choice:
Winter ___________ Spring ________
Summer ___________ Fall __________
Total Purchase Price. Purchaser agrees to pay the total
purchase price for the Charthouse Suites Vacation Investment and
Ownership Interest ("Interest") in Charthouse as follows:
a. Purchase Price of Interest
(from above) $_____
b. If applicable, Cash Discount
Applied as part of Down Payment $_____
c. Net Purchase Price $_____
d. Total Minimum Down Payment Due --
25% of Net Balance $_____
e. Florida State Taxes Due on
Subscription ($.70 per $100 of
Net Purchase Price) $_____
f. Florida State Documentary Taxes
(If Paying by Installments and
the Subscription Agreement is
Signed in Florida) ($.35 of Net
Purchase Price) $_____
g. Total Due Upon Subscription
(Total of lines d, e, f) $_____
h. Total Remaining Owned for Interests $_____
Purchaser's total obligation includes the purchase price of the
Interest and Annual Dues (and special assessments, if any). Upon
acceptance of the subscription, Charthouse will send a letter
setting forth dates and amounts for annual due payments and, if the
Purchase pays on an installment basis, the amount of monthly
payments. In the year of closing, Purchaser shall be responsible
for the prorated portion of the Annual Dues based upon the actual
closing date. For purposes of compliance with the Real Estate
Settlement Procedures Act and regulations promulgated thereunder,
the following constitutes Charthouse's GOOD FAITH ESTIMATE of
closing costs to be paid by Purchaser, exclusive of state taxes, at
closing: $0.00.
If purchase of the above described property is being financed by
the Seller, Licensee hereby acknowledges receipt of the following
Truth-In Lending Disclosure. The Interests have the effect of an
annual percentage cost of 9%.
Net Worth and Other Tests. The undersigned acknowledges
receipt of the prospectus and the Florida Time-Share Public
Offering Statement and understands that all license payments for
the Interests and Annual Dues (including Special Assessments)
payments must be made on a timely basis. The undersigned also
acknowledges that he has sufficient resources to pay all amounts
and no need for liquidity in the Interest and understands that a
purchase of an Interest involves risks including the loss of all
amounts paid, and that he or she has the following net worth
(exclusive of home, home furnishings and automobiles) (check one):
__________ (under $30,000)
__________ ($30,001 to $50,000)
__________ ($50,001 to $100,000)
__________ (more than $100,000)
The undersigned also acknowledges that he is in a financial
position to realize the benefits and net worth to sustain risks
inherent in the purchase of an Interest.
Name of Soliciting Dealer Selling Interest ______________________
Address ____________________________________________________
Telephone Number ___________________________________________
Name of Registered Representative _______________________________
(signature)
Name of Registered Representative _______________________________
(written or typed)
Soliciting Dealer Authorized Signature __________________________
CHARTHOUSE SUITES VACATION OWNERSHIP, INC.,
a Florida corporation
By: _____________________________
As its: _________________________
Date: ___________________________
Weeks Accepted: Winter _______ Spring ________
Summer _______ Fall __________
If acquiring the Charthouse Suites Vacation Investment and
Ownership Interest(s) in the appropriate time period (within one
year of the initial prospectus date) and qualifying for the
Guaranteed Rental Arrangement, the Purchaser elects the following:
(select one)
__________ Guaranteed Rental Arrangement Payments
(Right to Put Weeks to Charthouse for a
guaranteed rate)
__________ Cash Discount (Applied to Purchase Price)
<PAGE>
<PAGE>
ADDITIONAL TERMS TO THE SUBSCRIPTION AGREEMENT
1. Ownership Interest Purchased. Purchaser hereby agrees to
purchase and Charthouse hereby agrees to sell to Purchaser an
Interest in Charthouse more fully described in the Charthouse
Suites Vacation License Plan and the prospectus. The Interest is
not a right to an equity or ownership interest in Charthouse.
2. Owner of the Underlying Fee. The "owner of the
underlying fee" is Decade Properties, Inc., a Wisconsin
corporation, whose address is 250 Patrick Avenue, Brookfield,
Wisconsin, 53045. Decade Properties, Inc. has entered into a
Master License Agreement with Charthouse whereby Charthouse has
acquired the right to sell Interests in the Charthouse Hotel.
3. Charthouse Suites Vacation Investment and Ownership
Interests. As more specifically described in the prospectus and
the Charthouse Suites Vacation License Plan, the Charthouse hotel
is subject to a license plan known as the Charthouse Suites
Vacation License Plan ("Charthouse Plan"). Pursuant to the
Charthouse Plan, holder will acquire no legal or beneficial
interest in the Charthouse hotel, marina or any affiliates of
Charthouse and agrees to abide by and be subject to the terms and
conditions of the Charthouse Plan.
By Purchaser's execution of this Agreement, Purchaser
further agrees to abide by the rules, regulations and restrictions
imposed upon Purchaser by the Agreement, as the same may be amended
from time to time, a copy of which is attached hereto as Exhibit B
of the prospectus. By execution of this Agreement, Purchaser also
hereby designates the person set forth above as Purchaser's
Principal Contact for purposes of receiving notices on behalf of
Purchaser. Purchaser hereby appoints Purchaser's Principal Contact
and all successors thereto as Purchaser's agent and attorney in-
fact for the purposes set forth herein.
4. License Payments. If Purchaser cannot pay the entire
subscription price, Purchaser agrees to cooperate with all
reasonable requests made by Charthouse in connection with
evaluating Purchaser's ability to pay license payments on an
installment basis, and Purchaser shall furnish to Charthouse upon
request such financial information as Charthouse may from time to
time reasonably request.
5. Furnishings. The suites will have furniture, appliances,
equipment and accent furnishings substantially similar or of equal
quality to those shown in the model and on the plans and
specifications. Since the models and the materials are for display
purposes only, Charthouse reserves the right to make substitutions,
in its sole discretion, of material of equal or better quality, as
determined in its sole discretion.
6. Purchaser's Default. Upon Purchaser's default or breach
of any term or condition of this Agreement, all sums paid hereunder
by Purchaser shall be retained by Charthouse as liquidated and
agreed damages, and not as a penalty, and the parties hereto shall
be relieved from all obligations hereunder. The parties agree that
the damages that may result from a breach of this Agreement are
uncertain and difficult to ascertain, and that the agreed upon
amount is a reasonable estimate of probable damages. In connection
with any litigation arising out of this Agreement, Charthouse or
its affiliates shall be entitled to recover all costs incurred,
including reasonable attorneys' fees, through and including all
appellate levels.
7. Charthouse's Election to Cancel. As set forth in the
Charthouse Plan, Charthouse reserves the right to terminate this
Agreement by refunding amounts paid hereunder less certain amounts
received by a purchaser (including benefits associated with the use
under the Charthouse Plan) if Charthouse does not sell 76 Interests
by December 31, 1997. All notices herein required shall be in
writing and shall be served on the parties at the address following
their names. The mailing of a notice by mail, shall be sufficient
notice.
8. Closing and Title Except as Set Forth in the Charthouse
Plan. Charthouse warrants that title to the Interest is free and
clear of all encumbrances except taxes and assessments for the year
of closing. The closing will be at such time and place as shall be
specified by Charthouse or by mail, if authorized by Charthouse.
Purchaser, on or prior to closing, shall execute any necessary
documents.
9. Modifications and Changes. Charthouse reserves the right
to make changes in the proposed documents and modifications to the
organizational documents, including the Charthouse Plan and
specifications as may be necessary to conform to applicable
government requirements or to expedite the sale of Interests;
provided, however, that any such amendments, additions, or changes
shall not adversely diminish the Interest of or increase any
obligations of Purchaser to any material degree. Purchaser agrees
that any amendments, additions, or changes so made shall be at the
discretion of Charthouse.
10. Deposit. Purchaser is entitled to a receipt for the
deposit upon request. In the event Purchaser cancels this
Agreement during the 10-day cancellation period, Charthouse will
refund to the Purchaser the total amount of all payments made by
the Purchaser under the Agreement, reduced by the proportion of any
contract benefits the Purchaser has actually received under the
Agreement, if any, prior to the effective date of cancellation;
however, in no event shall the failure to return a prospectus be
deemed a contract benefit. The refund shall be made within twenty
(20) days after receipt of notice of cancellation, or within five
(5) days after receipt of funds from the Purchaser's cleared check,
whichever is later. Any interest generated by the funds deposited
in any account shall be paid to and retained by Charthouse.
11. Annual Dues. Purchaser understands and agrees that in
accordance with the rules and regulations of Charthouse, Purchaser
will be responsible for Purchaser's share of any and all expenses
incurred in the operation of Charthouse, including special
assessments, if any. The estimated Annual Dues are set forth in
the prospectus. Annual Dues will be prorated over the calendar
year in the year of closing based upon the actual closing date and
must be paid in accordance with the Schedule set forth in the
Vacation Plan and Exhibit 1.
12. Agreement. Except as set forth herein, this Agreement
may not be modified or amended except by a writing signed by both
Purchaser and Charthouse. All the terms and provisions of this
Agreement shall survive the closing. Time is of the essence
hereunder, particularly where the obligation to pay money is
concerned. If this Agreement is executed outside of the sales
office of Charthouse located in Brookfield, Wisconsin, it shall
constitute an offer by Purchaser to Charthouse, and shall in all
events be subject to acceptance by Charthouse in Charthouse's
discretion at Charthouse's offices in Brookfield, Wisconsin.
Purchaser authorizes Charthouse or its authorized agent
to insert or change Unit numbers wherever necessary to conform with
the Vacation Plan and to make any changes, insertions or deletions
in this Agreement; provided, however, that any changes in such
documents shall be of an administrative nature only and shall not
materially or adversely alter the reasonable expectations of
Purchaser without Purchaser's consent first being given in writing.
13. Exchange Program. Pursuant to an agreement, Charthouse
has become a "corporate participant" of Resort Condominiums
International, Inc. ("RCI (registered trademark)"), an Indiana
corporation, whose address is One RCI Plaza, 3502 Woodview Trace,
P.O. Box 80229, Indianapolis, Indiana 46280-0229. This RCI
(registered trademark) agreement presently allows club members to
exchange to other RCI (registered trademark) resorts. During the
term of the agreement, Charthouse may at any time and from time to
time enter into an agreement with other providers of alternative
vacation experiences. The RCI (registered trademark) agreement is
for a five year term. Charthouse has the option, at its election,
to extend the term of the RCI (registered trademark) agreement for
up to two additional five (5) year terms. Charthouse makes no
commitment to extend or to renew the RCI (registered trademark)
agreement for any particular length of time. Neither Charthouse
nor RCI (registered trademark) is obligated to renew the agreement.
Upon termination or expiration of the RCI (registered trademark)
agreement, Charthouse, in its sole discretion, may enter into
another agreement of short or long duration with RCI (registered
trademark) or with another provider of exchange services so that
members will have the opportunity to avail themselves of
alternative vacation opportunities through the duration of
Charthouse Plan. There can be no assurance, however, that
Charthouse will be successful in doing so. Under such
circumstances, members may contact RCI (registered trademark) or
another provider of exchange services directly to establish
individual exchange privileges. There can be no assurance,
however, that an individual club member will be able to satisfy the
terms and conditions then required by RCI (registered trademark) or
another provider of exchange services to participate individually
in the RCI (registered trademark) or other exchange program. If
neither Charthouse nor the individual member is successful in
establishing an agreement with RCI (registered trademark) or
another provider of exchange services, the ability of an individual
club member to request future exchanges outside of the Charthouse
Plan will cease. Charthouse makes no representations regarding any
exchange company or other provider of alternative vacation
experiences, and any and all representations set forth within the
brochures and other literature and documents of an exchange company
or such other provider are the sole representations of such
exchange company or other provider.
14. Charthouse's Representations. Charthouse represents that
the use of the accommodations and facilities of the Charthouse
suites hotel is limited solely to the personal use of the
Purchaser, his approved guests, invitees, exchangers and renters
and for authorized uses by corporations or other similar entities
owning Interests. Purchase and use of Ownership Interests for
commercial purposes is expressly prohibited. This Agreement
contains the entire understanding between the PurchaserS and
Charthouse relating to the purchase and sale of the Interest
described herein. PURCHASERS SHOULD ALSO UNDERSTAND, HOWEVER, THAT
SINCE THERE CAN BE NO ASSURANCE AS TO THIS FEDERAL INCOME TAX
TREATMENT, AS WELL AS THE FACT THAT ACTUAL TAX RESULTS WILL DEPEND
UPON A PURCHASER'S PARTICULAR CIRCUMSTANCES (INCLUDING, AMONG OTHER
FACTORS, WHETHER OR NOT THE PURCHASER ITEMIZES DEDUCTIONS ON THE
PURCHASER'S FEDERAL INCOME TAX RETURN OR WHETHER THE PURCHASER
ALREADY OWNS AN EXISTING VACATION HOME), CHARTHOUSE MAKES NO
REPRESENTATIONS AS TO THE INCOME TAX CONSEQUENCES OF THE PURCHASE,
USE OR EXCHANGE OF ANY INTEREST AND RELATED RIGHTS AND
APPURTENANCES OR AS TO THE DEDUCTIBILITY OF RELATED EXPENSES SUCH
AS INTEREST, TAXES AND DEPRECIATION. EACH PURCHASER SHOULD CONSULT
HIS OWN TAX ADVISOR AS TO THESE ISSUES. AN INTEREST SHOULD NOT BE
PURCHASED IN RELIANCE UPON ANY PARTICULAR KIND OF TAX CONSEQUENCES.
15. Purchaser's Representations. Purchaser represents that
Purchaser is not purchasing an Interest with the intent or desire
to become a legal domiciliary of the State of Florida or any
political subdivision thereof, and Purchaser hereby waives,
releases and remises any such intent or desire. Purchaser also
represents that the Interest is not intended to be and shall not at
any time become the Purchaser'S principal dwelling, which Purchaser
shall maintain at all times in another location. Purchaser also
represents to Charthouse and the title insurer, if any, that
Purchaser has full authority and capacity to enter into this
Agreement in the manner set forth on the first page hereof.
Purchaser further understands that Charthouse is under no
obligation to associate any additional resorts with Charthouse
Plan. It is the express intent of the parties that the terms of
this paragraph shall survive the closing of this Agreement.
16. Radon Gas. Radon is a naturally occurring radioactive
gas that, when it has accumulated in a building in sufficient
quantities, may present health risks to persons who are exposed to
it over time. Levels of radon that exceed federal and state
guidelines have been found in buildings in Florida. Additional
information regarding radon and radon testing may be obtained from
your county public health unit.
17. Warranty Limitation. EXCEPT FOR THOSE WARRANTIES
REQUIRED BY CHAPTER 714, FLORIDA STATUTES, CHARTHOUSE MAKES NO
WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, AND CHARTHOUSE HEREBY
DISCLAIMS ANY AND ALL WARRANTIES, INCLUDING BUT NOT LIMITED TO
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE, WITH RESPECT TO THE CONSTRUCTION OF THE UNITS AND THE
COMMON ELEMENTS AND WITH RESPECT TO THE PERSONAL PROPERTY LOCATED
WITHIN THE UNITS OR ON THE PROPERTY, AND THE INTEREST HOLDERS
ASSUME ALL RISK AND LIABILITY RESULTING FROM THE USE OF THIS
PROPERTY.
18. Governing Law and Severability. THIS AGREEMENT SHALL BE
GOVERNED UNDER AND INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF WISCONSIN. THE PARTIES HEREBY WAIVE
ANY RIGHT THEY MAY HAVE UNDER ANY APPLICABLE LAW TO A TRIAL BY JURY
WITH RESPECT TO ANY SUIT OR LEGAL ACTION WHICH MAY BE COMMENCED BY
OR AGAINST ANOTHER PARTY CONCERNING THE INTERPRETATION,
CONSTRUCTION, VALIDITY, ENFORCEMENT OR PERFORMANCE OF THIS
AGREEMENT OR ANY OTHER AGREEMENT OR INSTRUMENT EXECUTED IN
CONNECTION WITH THIS AGREEMENT. Wherever possible, each provision
of this Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of
this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
19. Rental Pool. The undersigned agrees that Charthouse may
forward the rental proceeds, if any, on a quarterly basis to the
address shown on its records. Charthouse may amend the terms of
the Rental Pool upon a vote of all Unit Weeks outstanding.
20. YOU MAY CANCEL THIS AGREEMENT WITHOUT ANY PENALTY OR
OBLIGATION WITHIN TEN (10) DAYS FROM THE DATE YOU SIGN THE
CONTRACT, AND UNTIL TEN (10) DAYS AFTER YOU RECEIVE THIS PUBLIC
OFFERING STATEMENT, WHICHEVER IS LATER.
IF YOU DECIDE TO CANCEL THE CONTRACT, YOU MUST NOTIFY CHARTHOUSE IN
WRITING OF YOUR INTENT TO CANCEL. YOUR NOTICE OF CANCELLATION
SHALL BE EFFECTIVE UPON THE DATE SENT AND SHALL BE SENT TO:
CHARTHOUSE SUITES VACATION OWNERSHIP, INC., AT 250 PATRICK BLVD.,
SUITE 140, BROOKFIELD, WI 53045. ANY ATTEMPT TO OBTAIN A WAIVER OF
YOUR CANCELLATION RIGHTS IS UNLAWFUL. WHILE YOU MAY EXECUTE ALL
CLOSING DOCUMENTS IN ADVANCE, THE CLOSING, AS EVIDENCED BY DELIVERY
OF THE DEED OR OTHER DOCUMENT, BEFORE EXPIRATION OF YOUR TEN (10)
DAY CANCELLATION PERIOD, IS PROHIBITED.
YOU MAY ALSO CANCEL THIS CONTRACT AT ANY TIME AFTER THE
ACCOMMODATIONS OR FACILITIES ARE NO LONGER AVAILABLE AS PROVIDED IN
THIS CONTRACT AND THE PUBLIC OFFERING STATEMENT.
The following notice is taken substantially from 16 C.F.R.
433.2(b):
Notice
Any holder of this document is subject to all claims and
defenses which the debtor could assert against the seller of goods
and services (if any) obtained with the proceeds hereof. Recovery
hereunder by the debtor shall not exceed amounts paid by the debtor
hereunder.
Charthouse does not believe that applicable law requires the
above notice to be included in this document and reserves the right
not to include such notice in any future document from or with any
borrower.
<PAGE>
<PAGE>
ANNEX E
SCHEDULE OF WEEKS
Each purchase of an Interest entitles the Holder to two
consecutive weeks for each season at the Chart House Suites hotel.
Seasons as set forth in the Charthouse Suites Vacation License Plan
are defined as follows: Winter is weeks 46-52 and 1-6, Spring is
weeks 7-19, Summer is weeks 20-32 and Winter is weeks 33-45. As of
the date of this prospectus, the occupancy period for Holders
begins and ends on Sundays. Pursuant to the Charthouse Suites
Vacation License Plan, weeks may begin with the first Friday,
Saturday or Sunday of each calendar year and the Company shall
establish the annual schedule. Occupancy shall begin at 4:00 p.m.
on the start day and cease at 10:00 a.m. on that following same day
of the next week. The tentative schedules for 1996, 1997 and 1998
are contained in the following tables. Interest Holders will
obtain weeks in an order of request and Company will strive to meet
all the requests, but there can be no assurances the requested
weeks will be available. Any unassigned weeks shall be rented,
traded, and/or assigned at the sole discretion of the Company.
<PAGE>
<PAGE>
1997
Week Number Sunday to Sunday
1 Jan 5 - Jan 12
2 Jan 12 - Jan 19
3 Jan 19 - Jan 26
4 Jan 26 - Feb 2
5 Feb 2 - Feb 9
6 Feb 9 - Feb 16
7 Feb 16 - Feb 23
8 Feb 23 - Mar 2
9 Mar 2 - Mar 9
10 Mar 9 - Mar 16
11 Mar 16 - Mar 23
12 Mar 23 - Mar 30
13 Mar 30 - Apr 6
14 Apr 6 - Apr 13
15 Apr 13 - Apr 20
16 Apr 20 - Apr 27
17 Apr 27 - May 4
18 May 4 - May 11
19 May 11 - May 18
20 May 18 - May 25
21 May 25 - Jun 1
22 Jun 1 - Jun 8
23 Jun 8 - Jun 15
24 Jun 15 - Jun 22
25 Jun 22 - Jun 29
26 Jun 29 - Jul 6
27 Jul 6 - Jul 13
28 Jul 13 - Jul 20
29 Jul 20 - Jul 27
30 Jul 27 - Aug 3
31 Aug 3 - Aug 10
32 Aug 10 - Aug 17
33 Aug 17 - Aug 24
34 Aug 24 - Aug 31
35 Aug 31 - Sep 7
36 Sep 7 - Sep 14
37 Sep 14 - Sep 21
38 Sep 21 - Sep 28
39 Sep 28 - Oct 5
40 Oct 5 - Oct 12
41 Oct 12 - Oct 19
42 Oct 19 - Oct 26
43 Oct 26 - Nov 2
44 Nov 2 - Nov 9
45 Nov 9 - Nov 16
46 Nov 16 - Nov 23
47 Nov 23 - Nov 30
48 Nov 30 - Dec 7
49 Dec 7 - Dec 14
50 Dec 14 - Dec 21
51 Dec 21 - Dec 28
52 Dec 28 - Jan 4
53 --
<PAGE>
1998
Week Number Sunday to Sunday
1 Jan 4 - Jan 11
2 Jan 11 - Jan 18
3 Jan 18 - Jan 25
4 Jan 25 - Feb 1
5 Feb 1 - Feb 8
6 Feb 8 - Feb 15
7 Feb 15 - Feb 22
8 Feb 22 - Mar 1
9 Mar 1 - Mar 8
10 Mar 8 - Mar 15
11 Mar 15 - Mar 22
12 Mar 22 - Mar 29
13 Mar 29 - Apr 5
14 Apr 5 - Apr 12
15 Apr 12 - Apr 19
16 Apr 19 - Apr 26
17 Apr 26 - May 3
18 May 3 - May 10
19 May 10 - May 17
20 May 17 - May 24
21 May 24 - May 31
22 May 31 - Jun 7
23 Jun 7 - Jun 14
24 Jun 14 - Jun 21
25 Jun 21 - Jun 28
26 Jun 28 - Jul 5
27 Jul 5 - Jul 12
28 Jul 12 - Jul 19
29 Jul 19 - Jul 26
30 Jul 26 - Aug 2
31 Aug 2 - Aug 9
32 Aug 9 - Aug 16
33 Aug 16 - Aug 23
34 Aug 23 - Aug 30
35 Aug 30 - Sep 6
36 Sep 6 - Sep 13
37 Sep 13 - Sep 20
38 Sep 20 - Sep 27
39 Sep 27 - Oct 4
40 Oct 4 - Oct 11
41 Oct 11 - Oct 18
42 Oct 18 - Oct 25
43 Oct 25 - Nov 1
44 Nov 1 - Nov 8
45 Nov 8 - Nov 15
46 Nov 15 - Nov 22
47 Nov 22 - Nov 29
48 Nov 29 - Dec 6
49 Dec 6 - Dec 13
50 Dec 13 - Dec 20
51 Dec 20 - Dec 27
52 Dec 27 - Jan 3
53 --
<PAGE>
1999
Week Number Sunday to Sunday
1 Jan 3 - Jan 10
2 Jan 10 - Jan 17
3 Jan 17 - Jan 24
4 Jan 24 - Jan 31
5 Jan 31 - Feb 7
6 Feb 7 - Feb 14
7 Feb 14 - Feb 21
8 Feb 21 - Feb 28
9 Feb 28 - Mar 7
10 Mar 7 - Mar 14
11 Mar 14 - Mar 21
12 Mar 21 - Mar 28
13 Mar 28 - Apr 4
14 Apr 4 - Apr 11
15 Apr 11 - Apr 18
16 Apr 18 - Apr 25
17 Apr 25 - May 2
18 May 2 - May 9
19 May 9 - May 16
20 May 16 - May 22
21 May 23 - May 30
22 May 30 - Jun 6
23 Jun 6 - Jun 13
24 Jun 13 - Jun 20
25 Jun 20 - Jun 27
26 Jun 27 - Jul 4
27 Jul 4 - Jul 11
28 Jul 11 - Jul 18
29 Jul 18 - Jul 25
30 Jul 25 - Aug 1
31 Aug 1 - Aug 8
32 Aug 8 - Aug 15
33 Aug 15 - Aug 22
34 Aug 22 - Aug 29
35 Aug 29 - Sep 5
36 Sep 5 - Sep 12
37 Sep 12 - Sep 19
38 Sep 19 - Sep 26
39 Sep 26 - Oct 3
40 Oct 3 - Oct 10
41 Oct 10 - Oct 17
42 Oct 17 - Oct 24
43 Oct 24 - Oct 31
44 Oct 31 - Nov 7
45 Nov 7 - Nov 14
46 Nov 14 - Nov 21
47 Nov 21 - Nov 28
48 Nov 28 - Dec 5
49 Dec 5 - Dec 12
50 Dec 12 - Dec 19
51 Dec 19 - Dec 26
52 Dec 26 - Jan 2
53 --
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
CHARTHOUSE SUITES SCHEDULE OF WEEKS
A B C D E F
1 Bdrm 2 Bdrm
Standard Studio King Studio Large Studio 1 Bdrm Suite w/ Lanai Penthouse
Season Week 201 202301 202301 402 103 104105 106 206207 305306 101102 204403 404304 303307 205 203 405
<S> <S> <C> <C><C> <C><C> <C> <C> <C><C> <C> <C><C> <C><C> <C><C> <C><C> <C><C> <C><C> <C> <C> <C>
W 1
I 2 X X X
N 3
T 4 X X X X
E 5
R 6 X X X X
Ends
Approx.
Feb. 15
<S> <S> <C> <C><C> <C><C> <C> <C> <C><C> <C> <C><C> <C><C> <C><C> <C><C> <C><C> <C><C> <C> <C> <C>
S 7 X X X X
P 8
R 9 X X X X
I 10
N 11 X X X X
G 12
13 X X X X
14
Ends 15
Approx. 16
May 15 17 X X Z
18
19 X X X X
<S> <S> <C> <C><C> <C><C> <C> <C> <C><C> <C> <C><C> <C><C> <C><C> <C><C> <C><C> <C><C> <C> <C> <C>
S 20 X X X
U 21
M 22 X X X X
M 23
E 24 X X X X
R 25
26 X X X X
27
Ends 28 X X X
Approx. 29
Aug. 15 30 X X X
<S> <S> <C> <C><C> <C><C> <C> <C> <C><C> <C> <C><C> <C><C> <C><C> <C><C> <C><C> <C><C> <C> <C> <C>
31
32 X X X
F 33 X X X X
A 34
L 35 X X X
L 36
37 X X X
38
Ends 39 X X X X
Approx. 40
Nov. 15 41 X X X
42
43 X X X X
44
45 X X X X
<S> <S> <C> <C><C> <C><C> <C> <C> <C><C> <C> <C><C> <C><C> <C><C> <C><C> <C><C> <C><C> <C> <C> <C>
W 46 X X X
I 47
N 48 X X X X
T 49
E 50 X X X
R 51
52 X X X
Cont.
</TABLE>
<PAGE>
<PAGE>
No person is authorized in connection with any Offering made
hereby to give any information or to make any representation not
contained in this Prospectus, an if given or made, such information
or representation must not be relied upon as have been authorized
by the Company or by any security other than the Interests offered
hereby, nor does it constitute an offer to sell or a solicitation
of an offer to buy any of the securities offered hereby to any
person in any jurisdiction in which it is unlawful to make such an
offer or solicitation to such person. Neither the delivery of this
Prospectus nor any sale made hereunder shall under any
circumstances create any implication that the information contained
herein is correct as of any date subsequent to the date hereof.
______________
SUMMARY OF TABLE OF CONTENTS
Summary. . . . . . . . . . . . . .1
Risk Factors . . . . . . . . . . .7
The Company. . . . . . . . . . . 10
Description of the Chart House Suites Hotel 10
The Interests. . . . . . . . . . 11
Guaranteed Rental Arrangement. . 14
License Payment Options. . . . . 16
Annual Dues. . . . . . . . . . . 17
Determination of Offering Price. 17
Use of Proceeds. . . . . . . . . 18
Description of Master License Agreement 18
Plan of Distribution . . . . . . 18
Summary of Promotional and Sales Material 20
How to Subscribe . . . . . . . . 20
Capitalization . . . . . . . . . 20
Management's Discussion and Analysis of
Financial Condition. . . . . . 20
Operation of Chart House Suites Hotel 21
Management . . . . . . . . . . . 21
Interests of Management and Affiliates 23
Florida Regulations. . . . . . . 23
Certain Federal Income Tax Considerations 23
Liability and Indemnification of Officers
and Directors. . . . . . . . . 33
Legal Matters. . . . . . . . . . 33
Experts. . . . . . . . . . . . . 34
Available Information. . . . . . 34
Financial Statements and Related Information 35
Annex A. . . . . . . . . .Annex A-1
Annex B. . . . . . . . . .Annex B-1
Annex C. . . . . . . . . .Annex C-1
Annex D. . . . . . . . . .Annex D-1
Annex E. . . . . . . . . .Annex E-1
<PAGE>
<PAGE>
CHARTHOUSE VACATION OWNERSHIP
150
Class A-F Interests
___________
PROSPECTUS
___________
_____________ ___, 1997
<PAGE>
<PAGE>
PART II -- INFORMATION NOT REQUIRED IN PROSPECTUS
Item 30. Other Expenses of Issuance and Distributions
Set forth below is a current estimate of the approximate
amount of the fees and expenses (other than sales commissions)
payable by the Registrant in connection with the issuance and
distribution of the Interests:
Type of Fee Amount
Registration Fee $ 1,448
NASD Filing Fee 750
Florida Time Share Filing Fee 3,600
Printing and Engraving (estimate) 15,000
Legal Fees (estimate) 150,000
Accounting Fees (estimate) 10,000
Blue Sky Fees and Expense (estimate) 5,000
Miscellaneous Fees ______________
Total $
Item 31. Sales to Special Parties
None.
Item 32. Recent Sale of Unregistered Securities
The Company has sold 100 shares of stock to Jeffrey
Keierleber, in April 1996 as part of its organizational
activities that was exempt from registration pursuant to
Regulation D and Section 4(2).
Item 33. Indemnification of Directors and Officers
The Company's Officers and Directors are and will be
indemnified, to the fullest extent permitted under Florida
law, against certain liabilities pursuant to the Articles and
Bylaws of the Company, certain indemnification agreements to
be entered into with the Company, and the Articles and Bylaws
require the Company to indemnify the Directors and Officers,
among others, against claims and liabilities and reasonable
expenses actually incurred by them in connection with any such
claim or liability by reason of their services in those or
other capacities unless it is established that the act or
omission of the director or officer was material to the matter
giving rise to the proceeding and was committed in bad faith
or was the result of active and deliberate dishonesty, or the
director or officer actually received an improper personal
benefit, or in the case of any criminal proceeding, the
director or officer had reasonable cause to believe that the
act or omission was unlawful.
The Company will enter into indemnification agreements
with each of the Company's officers and the directors. The
indemnification agreements will require, among other things,
that Charthouse indemnify its Directors and Officers to the
fullest extent permitted by law and advance to the officers
and director all related expenses, subject to reimbursement if
it is subsequently determined that indemnification is not
permitted. Under these agreements, Charthouse also must
indemnify and advance all expenses incurred by officers and
the directors seeking to enforce their rights under the
indemnification agreement, and cover officers and the
directors under the Company's liability insurance, if any.
Although the form of indemnification agreement offers
substantially the same scope of coverage afforded by
provisions in the Articles and Bylaws, it provides greater
assurance to the directors and officers that indemnification
will be available because, as a contract, it cannot be
modified unilaterally in the future by the directors or to
eliminate the rights it provides.
Insofar as indemnification for liabilities arising under
the Securities Act of 1933, as amended (the "Securities Act"),
may be permitted to directors or officers or persons
controlling the Company pursuant to the foregoing provisions,
the Company has been informed that in the opinion of the
Securities and Exchange Commission (the "Commission") such
indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
Item 34. Treatment of Proceeds from Interests being Registered
Not Applicable.
Item 35. Financial Statements and Exhibits
A. Financial statements included in the Prospectus and
incorporated herein by reference to section titled
"FINANCIAL STATEMENTS AND RELATED INFORMATION."
B. Exhibits - see exhibit index on pages following signature
page of this registration statement which index is
incorporated herein by reference.
Item 36. Undertakings
(a) The Company hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the
registration statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the registration statement or any material
change to such information in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) That all post-effective amendments shall comply with
the applicable forms, rules and regulations of the Commission
in effect at the time such post-effective amendments are
filed.
(4) To remove from registration by means of a post-
effective amendment any of the Interests being registered
which remain unsold at the termination of the Offering.
(b) The Company undertakes to send to each Holder at least on
an annual basis a detailed statement of any transactions with the
Company and its affiliates, and of fees, commissions, compensation
and other benefits paid, or accrued to the Company and its
affiliates for the calendar year completed, showing the amount paid
or accrued to each recipient and the services performed.
(c) The Company undertakes to provide to the Holders the
financial statements required by Form 10-K for the first full
fiscal year of operations of Company and to send to Holders, within
45 days after the close of each quarterly fiscal period, the
information specified by the Form 10-Q, if such report is required
to be filed with the Commission.
(d) The Company undertakes to file a sticker supplement
pursuant to Rule 424(c) under the Act during the distribution
period describing each property not identified in the prospectus at
such time as there arises a reasonable probability that such
property will be acquired and to consolidate all such stickers into
a post-effective amendment filed at least once every three months,
with the information contained in such amendment provided
simultaneously to the existing Holders. Each sticker supplement
should disclose all compensation and fees received by the Company
and its affiliates in connection with any such acquisition. The
post-effective amendment shall include audited financial statements
meeting the requirements of Rule 3-14 of Regulation S-X only for
properties acquired during the distribution period.
(e) The Company also undertakes to file, after the end of the
distribution period, a current report on Form 8-K containing the
financial statements and any additional information required by
Rule 3-14 of Regulation S-X, to reflect each commitment (i.e., the
signing of a binding purchase agreement) made after the end of the
distribution period involving the use of 10% or more (on a
cumulative basis) of the net proceeds of the Offering and to
provide the information contained in such report to the Holders at
least once each quarter after the distribution period of the
Offering has ended.
(f) Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to the Company and its
affiliates and controlling persons of Company pursuant to the
foregoing provisions, or otherwise, Company has been advised that
in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the even that a claim for
indemnification against such liabilities (other than the payment by
Company of expenses incurred or paid by a Company and its
affiliates or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such
Company and its affiliate or controlling person in connection with
the securities being registered, Company will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on an amendment to
Form S-11 and has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized,
the City of Brookfield, State of Wisconsin, on January __, 1997.
CHARTHOUSE SUITES VACATION
OWNERSHIP, INC.
By /s/ Jeffrey Keierleber
Jeffrey Keierleber
President, Sole Director,
Principal Financial Officer and
Principal Accounting Officer
Pursuant to the requirements of the Securities Act of 1933
this registration statement has been signed by the following
persons in the capacities and on the dates indicated above.
/s/ Jeffrey L. Keierleber
Jeffrey Keierleber
President, Sole Director,
Principal Financial Officer and
Principal Accounting Officer
<PAGE>
<PAGE>
CHARTHOUSE SUITES VACATION OWNERSHIP, INC.
* * * * *
EXHIBIT INDEX
TO
REGISTRATION STATEMENT ON FORM S-11
Exhibit
Number Description Sequentially
Numbered
Page
1.1 Underwriting Agreement**
1.2 Soliciting Dealer Agreement**
3.1 Specimen of Certificates for Interests*
3.2 Charthouse Suites Vacation Ownership, Inc.
Articles of Incorporation**
3.3 Charthouse Suites Vacation Ownership, Inc.
By-laws**
4.1 Subscription and Purchase Agreement
(attached as an Annex)
4.2 Charthouse Suites Vacation License Plan
(attached as an Annex)
4.3 Charthouse Suites Rules and Regulations
(attached as an Annex)
4.4 Florida Time Share Public Offering Statement
(attached as an Annex)
5 Opinion re: Legality of Interests*
8 Tax Opinion*
10.1 Property Management Agreement**
10.2 Nondisturbance and Notice to Creditors**
10.3 Guaranteed Rental Arrangement Agreement**
10.4 Master License Agreement**
10.5 RCI Agreement*
10.6 Schedule of Weeks (attached as an Annex)
10.7 Escrow Agreement between Associated Bank
Milwaukee and Charthouse Suites Vacation
Ownership, Inc.*
10.8 Non-Exclusive Easement**
10.9 Private Letter Ruling Request
23.1 Consent of Ernst & Young
23.2 Consent of Quarles & Brady*
23.3 Consent of Virchow, Krause & Company
*To be filed
**Previously filed
July 16, 1996
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
Associate Chief Counsel (Domestic)
Internal Revenue Service
Attn: CC:DOM:CORP:T
P. O. Box 7604
Ben Franklin Station
Washington, DC 20044
Re: Request for Private Letter Ruling by Charthouse Suites
Vacation Ownership, Inc.
Dear Sir or Madam:
On behalf of Charthouse Suites Vacation Ownership, Inc., a
Florida corporation, and the proposed holders of vacation
ownership and investment interests to be sold by Charthouse
Suites Vacation Ownership, Inc., the undersigned requests your
ruling with respect to the federal income tax consequences of
certain proposed transactions entered into between the parties as
described below.
Copies of the current form of the following documents which
pertain to the proposed transactions described herein are
included with this request:
* Charthouse Suites Vacation License Plan
(Exhibit 1);
* Master License Agreement (Exhibit 2);
* Property Management Agreement (Exhibit 3); and
* Subscription and Purchase Agreement (Exhibit 4).
Capitalized terms herein have the meaning given to them in the
above-referenced documents.
No pre-submission conference was held concerning this
request. However, insofar as this request relates to Section
280A of the Internal Revenue Code, it has been discussed with
Marilyn Brookens of the Internal Revenue Service, Office of
Assistant Chief Counsel, Income Tax and Accounting, Branch 2,
Washington, DC.
I. STATEMENT OF FACTS
A. Charthouse Suites Vacation Ownership, Inc.
Charthouse Suites Vacation Ownership, Inc. ("Suites"), a
Florida corporation, was recently organized to engage in the
business of selling to individuals and entities ("Holders")
vacation investment and ownership interests ("Interests") that
will entitle Holders to the income from the rental of a hotel
suite for eight weeks annually and, upon proper notice, to use of
a hotel suite of a certain category at Charthouse Suites hotel in
Clearwater Beach, Florida for a specified time period each year
through the year 2060. Its principal office is located at 250
Patrick Boulevard, Brookfield, WI 53045 and its telephone number
is (414) 792-9201. Suites maintains its books and records using
the accrual method of accounting on a calendar year basis ending
on December 31 of each year. Suites is a newly-formed
corporation and its taxpayer identification number is 59-3388947.
Suites is under the audit jurisdiction of the District Director
of Internal Revenue Service for Atlanta, Georgia. Because Suites
is a newly-formed corporation it has not yet prepared a balance
sheet or income statement.
Suites was incorporated on April 16, 1996. Under its
Articles of Incorporation, Suites has authority to issue 10,000
shares of common stock with a par value of $.01 per share. As of
the date of this letter, Jeffrey L. Keierleber is the sole
shareholder of Suites.
B. Charthouse Suites Hotel.
Charthouse Suites hotel (the "Hotel") is located in
Clearwater Beach, Florida. It is a four-story structure
consisting of 25 hotel suites overlooking Clearwater Bay
featuring a heated underground pool, a marina and a laundry room,
in addition to easy access to white sand public beaches,
recreation, restaurants, nightlife and shopping in Clearwater
Beach.
C. Proposed Transactions.
1. Master License Agreement/Property Management
Agreement.
Suites will obtain the right to sell Interests for the
use of the Hotel pursuant to a Master License Agreement (Exhibit
2) with Decade Properties, Inc. ("Decade"), the owner of the
Hotel. Decade is owned by Jeff Keierleber. The Master License
Agreement provides that Decade shall have exclusive use of the
Hotel until Suites indicates that it intends to sell an Interest,
at which time the 8 weeks of a particular category of hotel suite
for the Interest will be reserved for the specific Unit Weeks (as
defined in the Charthouse Suites Vacation License Plan) and
placed in the Charthouse rental pool.
Under the Master License Agreement, Decade is obligated to
maintain, repair and replace the Hotel and provide front desk,
reservation and maid services. Suites agrees to pay for its pro
rata share of the costs of maintenance, repair, replacement and
common expenses, as set forth in the common expense allocation
procedures in the Master License Agreement and the Charthouse
Suites Vacation License Plan.
Under the Master License Agreement, Decade remains the owner
in fee simple of the Hotel and retains a remainder interest in
all interests in the Hotel, with the exception of the license
granted to Suites to use the property pursuant to the Master
License Agreement. Decade may transfer its remainder interest in
the Hotel at any time, in its sole and absolute discretion. Use
of the property by Suites, pursuant to the Master License
Agreement, terminates on December 31, 2060. Decade, however, has
retained the right to terminate the Master License Agreement and
refund amounts received under the Agreement in the event that
less than 76 Interests have been sold by Suites as of June 30,
1997 (see Section 3.1 of the Master License Agreement (Exhibit
2)).
In order to carry out its obligations under the Master
License Agreement, the Subscription and Purchase Agreement and
the Charthouse Suites Vacation License Plan, Suites and Decade
will enter into a Property Management Agreement (Exhibit 3)
whereby Suites will retain Decade to manage the Hotel on behalf
of Suites and the Holders of Interests in Suites. Under the
agreement, Decade will be paid $2,500 per month for its services,
plus reimbursement of expenses incurred in providing services.
The monthly fee will increase on the first day of each year
(beginning January 1, 1997) in the amount of the increase in the
Consumer Price Index over the previous year. In addition, Decade
will be entitled to reimbursement for all costs and expenses
incurred by Decade relating to the prudent operation of the Hotel
and the provision of services to Holders of Interests. Decade
can only be terminated as the property manager of the Hotel for
cause and only upon the payment in cash to Decade of the present
value of the future compensation to be paid to Decade under the
Property Management Agreement. Decade will also enter into
another agreement with Charthouse and receive 5% of all proceeds
from providing services for the rental pool.
2. Subscription and Purchase Agreement/Charthouse
Suites Vacation License Plan.
Suites proposes to sell A Interests, B Interests, C
Interests, D Interests, E Interests, and F Interests
(collectively referred to herein as "Interests") pursuant to the
terms of the Subscription and Purchase Agreement (Exhibit 4)
under which a Holder will acquire the right to rental income or,
upon proper notice, to use a suite of a particular class in the
Hotel for eight weeks of each calendar year (two consecutive
weeks in each of four seasons) until December 31, 2060. The
Interests are securities under the Securities Act of 1933, as
amended, and will be registered with the Securities and Exchange
Commission and Blue Sky Authorities. Under the Subscription and
Purchase Agreement, a Holder will be subject to the terms and
conditions of the Charthouse Suites Vacation License Plan
(Exhibit 1) (the "License Plan").
Each suite at the Hotel will have furniture, appliances,
equipment and accent furnishings provided. While occupying a
suite, the Holder will receive the services generally made
available to hotel guests, including maid service and front desk
services.
The suites are divided into six classes, with each class
(except Class A) containing a number of suites. The classes of
suites are as follows:
Class A Interest: The ownership of A Interests allows the
Holder use of a two bedroom penthouse
suite, with a fully equipped kitchen,
living room, den, dining room, two full
baths (one with a jacuzzi), and one
private balcony, for two weeks in each
season until December 31, 2060. Unit
405 in Charthouse Suites Hotel is the
suite applicable to the Class A
Interest. There are 6 Class A Interests
offered at a cost of $61,000 per
Interest.
Class B Interests: The ownership of B Interests allows the
Holder use of a one bedroom suite (with
a jacuzzi bath) with a view of
Clearwater Bay, for two weeks in each
season until December 31, 2060. Units
203 and 205 in Charthouse Suites Hotel
are the suites applicable to the Class B
Interests. There are 12 Class B
Interests offered at a cost of $39,500
per Interest.
Class C Interests: The ownership of C Interests allows a
Holder use of a one bedroom suite
overlooking the pool, for two weeks in
each season until December 31, 2060.
Units 204, 303, 304, 307, 403, and 404
in Charthouse Suites Hotel are the
suites applicable to the Class C
Interests. There are 36 Class C
Interests offered at a cost of $36,500
per Interest.
Class D Interests: The ownership of D Interests allows a
Holder use of a spacious suite
overlooking Clearwater Beach, for two
weeks in each season until December 31,
2060. Units 101, 102, 206, 207, 305 and
306 in Charthouse Suites Hotel are the
suites applicable to the Class D
Interests. There are 36 Class D
Interests offered at cost of $26,500 per
Interest.
Class E Interest: The ownership of E Interests allows a
Holder use of a spacious hotel suite,
for two weeks in each season until
December 31, 2060. Units 103, 104, 105
and 106 in Charthouse Suites Hotel are
the suites applicable to the Class E
Interests. There are 24 Class E
Interests offered at a cost of $20,000
per Interest.
Class F Interests: The ownership of F Interests allows a
Holder use of a spacious hotel suite,
for two weeks in each season until
December 31, 2060. Units 201, 202, 301,
302, 401 and 402 in Charthouse Suites
Hotel are the suites applicable to the
Class F Interests. There are 36 Class F
Interests offered at a cost of $17,000
per Interest.
A Holder may (i) pay the entire price of an Interest at the
time of purchase, or (ii) pay over the term of the Interest as
described in the Subscription and Purchase Agreement ("Pay Over
Term, Monthly License Payment"), with at least 25% of the
purchase price paid upon subscription and the balance paid in 360
monthly installments. The license payments under option (ii) in
the preceding sentence will increase at the rate of approximately
9% annually on the balance of amounts due and payable as compared
to payments under option (i).
A Holder must also pay Common Expenses pursuant to the
Subscription and Purchase Agreement subject to the License Plan.
Under the License Plan, a Holder will be assessed his or her
share of Common Expenses (costs incurred in operation of the
Hotel as more particularly described in the License Plan) in
accordance with the schedule set out in the License Plan, which
share will be assessed annually as an Annual Assessment. A
Holder may also be liable for the payment of a Special Assessment
in certain circumstances as more particularly described in the
License Plan.
If a Holder fails to pay any Common Expenses, Special
Assessments, or Pay Over Term payments as they become due, the
Holder will be denied rental income or, if applicable, use of a
suite for such Holder's Unit Weeks. If the default continues for
more than six (6) months or there are more than three (3)
defaults of any duration, the Holder's rights under the
Subscription and Purchase Agreement and accompanying License Plan
may be canceled by Suites. Upon cancellation, the Holder's
Interest will belong to Suites and the Holder shall forfeit all
payments made previously. The Holder will have no further
payment obligations and Suites shall have no other remedies
against the Holder. Similarly, the Master License Agreement
gives Suites the right to terminate that agreement insofar as it
applies to any Interest that a Holder chooses to terminate, and
Decade will have no right to recover from Suites.
A Holder may terminate his or her Interest at any time.
Upon such termination, the Holder shall have no obligation to
make any further payments under the Subscription and Purchase
Agreement or the License Plan. Suites will have no other
remedies against the Holder.
A Holder who is not in default under the Subscription and
Purchase Agreement or the License Plan may transfer his or her
entire Interest or a portion thereof. An entire Interest may be
freely transferred. Partial transfer of an Interest may be made
but only with the prior written consent of Suites and payment of
associated licensing payments.
It is anticipated that Charthouse will establish a discount
program for early purchasers whereby Holders who purchase within
one year of the initial offering date will have the option of
selecting a cash discount from the purchase price (the amount
will vary from 1-1/2% to 5% depending on the purchase date) or a
right to a guaranteed rental rate (the period and amount will
vary depending on the purchase date and type). At all times, a
Holder may also elect to rent the right to occupy a suite to
others through his or her own efforts.
It is anticipated that a Holder will have the right to
enroll in Resort Condominiums International, Inc.'s ("RCI")
vacation exchange program, upon payment by the Holder of
membership fees to RCI. Under that program a member may deposit
a week or more of vacation time at the Hotel and request an
exchange for a week or weeks at another participating resort.
RCI is not an affiliate of Decade, Suites, or Jeffrey L.
Keierleber.
The Master License, Subscription and Purchase Agreement and
accompanying License Plan do not convey to Holders an interest in
real estate under Florida law. The Master License, Subscription
and Purchase Agreement and accompanying License Plan convey
contractual rights to a Holder, which rights do not, individually
or collectively, constitute an interest in real estate. With the
exception of a Holder of a Class A Interest, the Holder does not
have the right to rental income or to occupy any particular hotel
suite, only a unit in a particular class.
II. REQUESTED RULINGS
A. An Interest purchased under the Subscription and
Purchase Agreement subject to the License Plan is not a
conveyance of real property. (Requested Ruling No. 1).
B. No amount from the sale of Interests pursuant to the
Subscription and Purchase Agreement and related License Plan will
be includible in the income of Suites until the earlier of (i)
the time services are performed (i.e., hotel suites are made
available for occupancy), (ii) the time amounts under the
Subscription and Purchase Agreement and related License Plan are
due and payable, or (iii) the time amounts under the Subscription
and Purchase Agreement and related License Plan, respectively,
are paid, whichever is earlier. (Requested Ruling No. 2).
C. The rights of the Holder of an Interest under the
Subscription and Purchase Agreement and the License Plan will not
constitute a dwelling unit under Section 280A of the Code, and as
a consequence, a Holder will not be subject to the limitations of
Section 280A with respect to such rights. (Requested Ruling No.
3).
III. REPRESENTATIONS
A. Neither the Master License Agreement, the Subscription
and Purchase Agreement, nor the License Plan constitutes an
interest in real estate under applicable state (Florida) law.
B. Except for the Class A Interests, neither the Master
License Agreement, the Subscription and Purchase Agreement, or
the License Plan grant rights to a particular hotel suite, only a
suite in a certain Hotel category.
IV. APPLICABLE LAW
A. Requested Ruling No. 1.
The issue with respect to Requested Ruling No. 1 is whether
the Subscription and Purchase Agreement and the License Plan
convey an interest in real property, such as a lease, or
constitute contracts for the provision of services.
A lease is a right to the exclusive use of a defined
physical area for a determinable period of time. See Lee v.
North Dakota Park Service, 262 N.W.2d 467 (N.D. 1977); BeWigged
by Suzzi, Inc. v. Atlantic Dept. Stores, Inc., 359 N.E.2d 721
(Ohio Ct. App. 1976); City of New York v. Pennsylvania Railroad
Co., 333 N.E.2d 361 (N.Y. Ct. App. 1975); 49 Am Jur 2d, Landlord
and Tenant sec. 21 (1995); 51C C.J.S., Landlord and Tenant,
sec. 6(1) (1968). A tenant under a lease differs from a lodger,
guest, or boarder in that a tenant has exclusive legal possession
of the premises and is in control of, and responsible for, the
care and condition of the premises. With respect to all classes
of Interests, except for a Class A Interest, the Holder does not
have the right to occupy a defined physical area. Because there
is only one unit with respect to the Class A Interests, the
Holder of such an Interest has the right to occupy a defined
area. However, the Holder of such an Interest, unlike a tenant
under a lease, does not have control of and is not responsible
for the care and condition of the suite.
Under the Subscription and Purchase Agreement and related
License Plan, the Holders, including the Holders of Class A
Interests, are not tenants under a lease. With respect to all
classes of Interests (including Class A Interests), the
Subscription and Purchase Agreement along with the related
License Plan are not leases or other conveyances of an interest
in real property. Rather, such agreements are contracts to
provide future hotel-like services (e.g., maid service and front
desk services). They, in effect, create hotel reservations for
an extended period of time.
Similarly, the Master License Agreement is not a conveyance
of real property but rather a contract to provide services.
Under this Agreement, Decade retains fee simple title to the
Hotel and retains the right to transfer all remainder interest in
the property without the consent of Suites. Furthermore, Decade
retains liability for the maintenance, repair and replacement of
the Hotel.
The Subscription and Purchase Agreement and the License Plan
should be treated as service contracts and not as conveyances of
real property for several reasons. The terms of these agreements
require the provision of significant hotel-like services.
Furthermore, Decade and Suites have control of and responsibility
for the care and condition of the premises.
Treatment of these agreements as service contracts is
consistent with the conclusion reached by the IRS in PLR
8252005.<F1> In that PLR, the IRS ruled that a vacation license
was not an interest in real property but rather a service
contract. The IRS reached this conclusion chiefly because the
vacation license at issue, as in our case, was a contract to
provide future services much like those of a hotel reservation.
This is confirmed by the Florida Department of Revenue treatment
of the Interests and the transactions for Florida taxes--Florida
will impose documentary excise taxes on the sale of Interests as
personal property and local and discretionary occupancy taxes on
the rental pool operations.
<F1> PLR 8252005 was partially superseded by PLR 8639006, but not
insofar as PLR 8252005 addressed the characterization of a
vacation license.
B. Requested Ruling No. 2
The issue with respect to Requested Ruling No. 2 is at what
time amounts payable under the Subscription and Purchase
Agreement, and the License Plan are includible in the taxable
income of Suites.
Generally, income is to be included in gross income for the
taxable year in which it is actually or constructively received
by the taxpayer pursuant to Treas. Reg. sec. 1.451-1(a). Under
an accrual method of accounting, income is includible in gross
income when all the events have occurred that fix the right to
receive such income and the amount thereof can be determined with
reasonable accuracy.
Rev. Rul. 84-31, 1984-1 C.B. 127 provides that all events
that fix the right to receive income occur when (1) the required
performance occurs, (2) payment therefor is due, or (3) payment
therefor is made, whichever happens earliest. See also Rev. Rul.
74-607, 1974-2 C.B. 149. Schlude v. Commissioner, 372 U.S. 128
(1963), based on a concession by the I.R.S., holds that contract
amounts not evidenced by a note, for which services have not yet
been performed, and which amounts are not yet due and payable,
are not includible in the gross income of an accrual basis
taxpayer.
Under the above cited authorities, recognition of income by
Suites occurs when either payment has been made or performance
has occurred.
Payment within the meaning of the all events test
encompasses more than just payment in cash. Receipt of a cash
equivalent also constitutes payment so as to require immediate
inclusion of income. However, in order for a right to future
payments to be considered a cash equivalent, the right to future
payment must be reflected in a negotiable note, bond, or other
evidence of indebtedness which, like money, commonly and readily
changes hands in commerce. Reed v. Commissioner, 723 F.2d 138,
147 (1st Cir. 1983). The amount of a non-negotiable note is not
includible in income until the installments are due and payable.
Schlude v. Commissioner, 372 U.S. 128 (1963).
As noted by the court in Cowden v. Commissioner, 289 F.2d 20
(5th Cir. 1961):
[I]f a promise to pay of a solvent obligor is
unconditional and assignable, not subject to
set-offs, and is of a kind that is frequently
transferred to lenders or investors at a
discount not substantially greater than the
generally prevailing premium for the use of
money, such promise is the equivalent of cash
and taxable in like manner as cash would have
been taxable had it been received by the
taxpayer rather than the obligation.
Id. at 24.
Neither the Subscription and Purchase Agreement nor the
License Plan is a negotiable instrument. Similarly, none of
these agreements is readily transferrable in commerce.
Furthermore, a Holder can cease making payments under the
Subscription and Purchase Agreement and the License Plan at any
time, and Suites will have no right to recover from the Holder.
The Master License Agreement similarly gives Suites the right to
terminate that agreement insofar as it applies to any Interest
which a Holder chooses to terminate, and Decade will have no
right to recover from Suites. As a consequence of these facts,
the obligations under the Master License Agreement, the
Subscription and Purchase Agreement and the License Plan are not
cash equivalents, but are akin to the type of contract which the
I.R.S. conceded, in Schlude, was not includible in income until
payment was due or performance had occurred. Thus, no amount
should be includible in income as payment of a cash equivalent at
the time the agreements are entered into by Suites, except to the
extent of actual receipt of payment.
Under the all events test for an accrual basis taxpayer,
amounts may be includible in income before payment is due or made
if the required performance has occurred. In our case,
performance will not occur until a Unit is made available for
occupancy.
Because (i) the Master License Agreement, the Subscription
and Purchase Agreement and the License Plan involve the
performance of services and are not cash equivalents, and (ii)
performance does not occur at the time the agreements are entered
into and will not occur until the Units are occupied (or when the
right to use a Unit has expired), no amount should be includible
in the income of Suites until the services are performed, amounts
are due and payable, or amounts are paid, whichever is earlier.
This conclusion is consistent with the position taken by the
I.R.S. in PLR 8639006 in which the I.R.S. considered vacation
licenses that did not involve the right to occupy a particular
unit and that granted the licensee the right to terminate the
license.
C. Requested Ruling No. 3.
The issue with respect to Requested Ruling No. 3 is whether
an Interest is a dwelling unit for purposes of Section 280A of
the Code. Section 280A of the Code disallows certain expenses,
otherwise allowable, with respect to the use of a dwelling unit
and provides in pertinent part:
(a) General Rule. -- Except as otherwise
provided in this section, in the case of a
taxpayer who is an individual or an S
corporation, no deduction otherwise allowable
under this chapter shall be allowed with
respect to the use of a dwelling unit which
is used by the taxpayer during the taxable
year as a residence.
The term "dwelling unit" is defined in Prop. Treas. Reg.
sec. 1.280A-1 as follows:
(c) Dwelling Unit --(1) In General. For
purposes of this section . . . the term
'dwelling unit' includes a house, apartment,
condominium, mobile home, boat, or similar
property, which provides basic living accom-
modations such as sleeping space, toilet, and
cooking facilities . . .
(2) Exception. Notwithstanding the
provisions of paragraph (c)(1) of this
section, the term 'dwelling unit' does not
include any unit or portion of a unit which
is used exclusively as a hotel, motel, inn,
or similar establishment . . .
The rights of a Holder under the Subscription and Purchase
Agreement and the License Plan do not constitute a dwelling unit.
Rather, the rights are the rights to obtain services.
Furthermore, with the exception of the Class A Interest, a Holder
does not have the right to occupy a particular unit. The
Subscription and Purchase Agreement and the License Plan, in
effect, are an arrangement for the provision of hotel-like
services. In fact, prior to the conversion of Charthouse hotel
to Charthouse Suites hotel, the property was operated as a
traditional hotel.
In addition, the rights of a Holder of a Class A Interest
should not be considered an interest in a dwelling unit. The
Holder of a Class A Interest does not have an interest in real
estate. The Holder has only intangible rights. Such a Holder is
not similar to the taxpayer in Fudim v. Commissioner, 67 T.C.M.
3011 (1994). In Fudim the taxpayers held an interest in real
estate, a time-share condominium. A Holder of a Class A
Interest, like the Holders of the other classes of Interests,
will hold rights to receive hotel-like services with respect to
premises, which premises (i) are controlled by Decade and Suites,
and (ii) for which Decade and Suites are responsible for
maintenance and operation. Such rights are not an interest in
real estate.
In Holmes v. U.S., 85 F.3d (2d Cir. 1996), the court held
that shares in a cooperative housing corporation constituted an
interest in a dwelling unit for purposes of Section 280A. The
shares in the cooperative housing corporation gave the
shareholder the right to occupy a particular apartment on a full-
time basis, presumably in perpetuity. However, the right to
occupy a Class A Interest is not comparable to the rights
possessed by an owner of shares in a cooperative housing
corporation. The right of a Holder of a Class A Interest is not
exclusive and is not in perpetuity. More importantly, a Holder's
right is, in substance, the right to obtain services. These
hotel-like services do not constitute an interest in a dwelling
unit.
V. MISCELLANEOUS
Suites has determined that there are no legislative
enactments, tax treaties, court decisions, regulations, revenue
rulings or revenue procedures that are contrary to the positions
advanced in this ruling request and that there is no pending
legislation that may affect the proposed transaction.
To the best of the knowledge of Suites and their
representatives, none of the identical or similar issues involved
in this ruling request (a) are contained in an earlier tax return
of Suites or in a tax return for any year of a related taxpayer,
(b) have been submitted to the Internal Revenue Service by
Suites, a related taxpayer, the predecessors of Suites, or the
representatives of Suites but withdrawn before a ruling was
issued, (c) have been ruled on by the Internal Revenue Service to
Suites, a related taxpayer, or the predecessors of Suites, (d)
have been previously submitted to the Internal Revenue Service by
Suites, a related taxpayer, or the predecessors of Suites in a
request that is currently pending, or (e) are being presently
submitted in another request by Suites or a related taxpayer.
The law in connection with this request is uncertain and the
issues presented here are not adequately addressed by relevant
authorities.
A Form 2848, Power of Attorney and Declaration of
Representative, authorizing Michael J. Conlan, Walter J. Skipper
and Patricia A. Hintz of Quarles & Brady, 411 East Wisconsin
Avenue, Milwaukee, Wisconsin 53202 to represent Suites is
enclosed. We request that all correspondence, or copies thereof,
be sent to such attorneys' attention at the following address:
Michael J. Conlan, Quarles & Brady, 411 East Wisconsin Avenue,
Milwaukee, Wisconsin 53202-4497. If you require any further
information, please telephone (collect) Michael J. Conlan at
(414) 277-5875.
In connection with this ruling request, if there are any
doubts concerning the prompt issuance of the ruling requested
herein, a conference at the National Office of the Internal
Revenue Service is requested.
We request that an advance copy of the ruling letter be sent
by facsimile transmission to Michael J. Conlan, the authorized
representative of Decade and Suites, at 414-277-5875. We waive
any disclosure violations resulting from the facsimile
transmission.
A $3,575 check for the user fee is enclosed, as required by
Section (2)(d) of Appendix A to Rev. Proc. 96-1, 1996-1 I.R.B. 8.
Also enclosed is a completed ruling checklist as set forth
in Appendix C to Rev. Proc. 96-1.
Respectfully submitted,
QUARLES & BRADY
Michael J. Conlan
Walter J. Skipper
Patricia A. Hintz
BY: _______________________________
Michael J. Conlan Under Power
of Attorney from Charthouse
Suites Vacation Ownership,
Inc.
MJC:jmh
cc: Ms. Marilyn Brookens
Internal Revenue Service
Office of Assistant Chief Counsel
Income Tax and Accounting
Branch 2
Benjamin Franklin Station
P.O. Box 7616
Washington, D.C. 20044
Enclosures: User Fee
Declaration
Section 6110(c) Deletions Statement
Form 2848
Ruling Checklist
<PAGE>
<PAGE>
DECLARATION
The undersigned, being the Secretary of Charthouse Suites
Vacation Ownership, Inc., a Florida corporation, declares under
penalties of perjury that he has examined the attached letter,
including accompanying documents, and to the best of his
knowledge and belief, the facts set forth therein are true,
correct and complete. The undersigned also certifies that he is
a corporate officer of such corporation, that he is authorized to
execute this statement on its behalf and that he has personal
knowledge of the facts presented in the request insofar as they
relate to such corporation.
July __, 1996 _____________________________________
Michael G. Sweet, Secretary,
Charthouse Suites Vacation
Ownership, Inc.
Consent
We consent to the reference to our firm under the caption
"Experts" and to the use of our report dated January 24, 1997, in
Pre-Effective Amendment No. 1 to the Registration Statement (Form
S-11 No. 33-13511) and related prospectus of Charthouse Suites
Vacation Ownership, Inc. for the Registration of 150 ownership
interests.
Waukesha, Wisconsin /s/ Ernst & Young LLP
January 27, 1997
[Letterhead of Virchow, Krause & Company, LLP]
Consent of Virchow, Krause & Company, LLP, Independent Auditors
We consent to the reference to our firm under the caption
"Experts" in the Registration Statement (Form S-11) and related
Prospectus of Chart House Suites Vacation Ownership Inc. for the
registration of 150 of its Charthouse Suites Vacation Investment
and Ownership Interests and to the incorporation by reference
therein of our report dated January 20, 1997, with respect to the
statements of operating revenues and certain expenses of Chart
House Suites included in its Proxy Statement, Appendix F-1 for
the years ended November 30, 1996, 1995 and 1994 filed with the
Securities and Exchange Commission.
Waukesha, Wisconsin
January 27, 1997
