INCOME
As filed with the Securities and Exchange Commission on
August 1, 1997
Registration No. 333-13511
=================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
PRE-EFFECTIVE AMENDMENT NO. 2 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) 792-9200
(Address of principal executive offices)
Jeffrey L. Keierleber
c/o Charthouse Suites Vacation Ownership, Inc.
250 Patrick Boulevard
Brookfield, Wisconsin 53045
(414) 792-9200
(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
____________________
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed
Title of Amount Proposed maximum Amount of
Securities being maximum offering aggregate registration
being registered registered price per Interest offering price fee
<S> <C> <C> <C> <C>
Vacation Interests
Classes A-F (with
Rental Pool $18,500 (A)-
arrangement) 150 Interests $60,000 (F) $4,248,000 $1,288*
/TABLE
<PAGE>
*Fee of $1,273 paid with the filing of Form S-11 on October 7,
1996 and the balance of the filing fee was paid on July 28, 1997.
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 this 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>
<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
Back Cover Pages of Prospectus 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 Management's Discussion
and Analysis of
Financial Condition and
Results of Operation
10. Management's Discussion and Management's Discussion
Analysis of Financial Condition and Analysis of
Financial Condition and
Results of Operation
11. General Information as The Company
to Registrant
12. Policy with Respect to The Company
Certain Activities
13. Investment Policies of Registrant The Company
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 Management
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
Investments Affiliates
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
Information Related Information
28. Interest of Named Experts Experts
and Counsel
29. Disclosure of Commission Liability and
Position on Indemnification Indemnification of
for Securities Act Liabilities Officers and Directors
<PAGE>
<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 July __, 1997
_______________
Charthouse Suites Vacation Interests
Holders of Charthouse Suites Vacation Interests (the "Interests")
have the rights and responsibilities set forth in the Charthouse
Suites Vacation License Plan (the "License Plan"), including the
right to rent or use a certain studio or suite 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, 2040. 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 Charthouse Suites Vacation Ownership, Inc.
(the "Company"). See "The Interests--Transferability of
Interests." If fewer than 76 Interests are sold by July 31,
1998, Company has the right 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 at least 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.
Substantial compensation and fees will be received by the Company
and its affiliates from the sale of the Interests and the
operation of the Chart House Suites hotel. See "Management" and
"Decade Properties, Inc." The Company and its affiliates will
have several conflicts of interest in connection with
transactions contemplated hereby. See "Conflicts of Interest of
Management and Affiliates."
_________________________________________________________________
SEE "RISK FACTORS" AT PAGE 10 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.
_________________________________________________________________
There is no market for the Interests being offered, 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 (36 Interests) $ 18,500 $ 1,295 $ 17,205
B Class - King Bed Studio (24 Interests) $ 21,500 $ 1,505 $ 19,995
C Class - Large Studio (36 Interests) $ 25,500 $ 1,785 $ 23,715
D Class - 1 Bedroom Suite (36 Interests) $ 36,500 $ 2,555 $ 33,945
E Class - 1 Bedroom Suite (With lanai)
(12 Interests) $ 39,500 $ 2,765 $ 36,735
F Class - Penthouse - (6 Interests) $ 60,000 $ 4,200 $ 55,800
Total Maximum Offering (150 Interests) $4,248,000 $297,360 $3,950,640
/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 $250,000.
_________________________________________________________________
In addition to the other matters discussed in the Prospectus, a
potential purchaser should consider:
> There is a lien or lien right against each Interest to
secure the payment of assessments or other fees for the use,
maintenance, upkeep, operation or repair of the Chart House
Suites hotel. An Interest Holder's failure to make these
payments may result in cancellation of the Interest and the right
to use the Unit Weeks. See "Annual Dues and Special
Assessments."
> The Company has the right to retain control of the
License Plan, even after a majority of the Interests have been
sold, although Holders will have the right to approve certain
increases in annual dues. See "The Interests."
> If purchasing solely for personal use, the purchase of an
Interest 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 Interest may be resold. See "The Interests."
> An investor can cancel his purchase without any penalty
or obligation within ten days from the date of signing the
contract, and until ten days after receiving the Time Share
Public Offering Statement (attached as Annex C), whichever is
later. See "License Payment Options."
> An investor who decides to cancel the Interest in the
allowed cancellation period must notify the Company in writing of
his intent to cancel. Notice of cancellation is effective on the
date sent to Charthouse Suites Vacation Ownership, Inc., 250
Patrick Blvd., Brookfield, WI 53045. Any attempt to obtain a
waiver of cancellation rights is unlawful. While closing
documents may be executed in advance, closing before expiration
of the ten-day cancellation period is prohibited.
> Pursuant to Section 721, Florida Statutes, the purchase
of an Interest includes a right to cancel if the accommodations
or facilities are no longer available. The License Plan
contemplates that Chart House Suites hotel 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, the Company will
obtain, at its own expense, equivalent accommodations for a
purchaser.
> Any resale of the Interest must be accompanied by certain
disclosures in accordance with Section 721.065, Florida Statutes.
See "The Interests" and the Time Share Public Offering Statement
attached as Annex C.
> This Prospectus and the related Time Share Public
Offering Statement attached as Annex C contain important matters
to be considered in acquiring an Interest. The statements
contained herein are only summary in nature. A prospective
purchaser should refer to the referenced annexes, exhibits and
the License Plan. You should not rely upon oral representations
as being correct. Refer to this document and accompanying
annexes and exhibits for correct representations other than those
contained in the contract and this Prospectus.
Decade Securities Corp.
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 August ___, 1997.
Until ________, all dealers effecting transactions in the
Interests, 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>
<PAGE>
TABLE OF CONTENTS
(The Annexes and Glossary of Terms Constitute
a Part of the Prospectus)
Page
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . 10
THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . 16
DESCRIPTION OF THE CHART HOUSE SUITES HOTEL. . . . . . . . . . 17
THE INTERESTS. . . . . . . . . . . . . . . . . . . . . . . . . 19
CHART HOUSE RESULTS. . . . . . . . . . . . . . . . . . . . . . 24
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS. . . . . . . . . . . . . . . . . . . 25
CERTAIN CHART HOUSE RENTAL POOL FINANCIAL INFORMATION. . . . . 30
CERTAIN OCCUPANCY INFORMATION. . . . . . . . . . . . . . . . . 32
ANNUAL DUES AND SPECIAL ASSESSMENTS. . . . . . . . . . . . . . 33
DIFFERENCES IN ALLOCATING RENTAL POOL AND ANNUAL DUES
AND SPECIAL ASSESSMENTS. . . . . . . . . . . . . . . . . . . . 35
PRO FORMA RESULTS WITH VARIOUS OCCUPANCY LEVELS. . . . . . . . 37
GUARANTEED RENTAL ARRANGEMENT. . . . . . . . . . . . . . . . . 40
LICENSE PAYMENT OPTIONS. . . . . . . . . . . . . . . . . . . . 42
SUMMARY OF INCOME AND COSTS TO HOLDERS . . . . . . . . . . . . 43
DETERMINATION OF OFFERING PRICE. . . . . . . . . . . . . . . . 45
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . 45
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . 45
HOW TO SUBSCRIBE . . . . . . . . . . . . . . . . . . . . . . . 46
SUMMARY OF PROMOTIONAL AND SALES MATERIAL. . . . . . . . . . . 46
CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . 47
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 47
DECADE PROPERTIES, INC.. . . . . . . . . . . . . . . . . . . . 48
CONFLICTS OF INTEREST OF MANAGEMENT AND AFFILIATES . . . . . . 49
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS. . . . . . . . . . . 50
CERTAIN FLORIDA TAX MATTERS. . . . . . . . . . . . . . . . . . 63
PRIOR PERFORMANCE OF JEFFREY KEIERLEBER AND AFFILIATES . . . . 66
LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS. . . . 76
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . 76
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
FINANCIAL STATEMENTS AND RELATED INFORMATION . . . . . . . . .F-1
GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . .F-2
ANNEX A - LICENSE PLAN . . . . . . . . . . . . . . . . .Annex A-1
ANNEX B - RULES AND REGULATIONS FOR CHART HOUSE
SUITES HOTEL . . . . . . . . . . . . . . . . . . . . . .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>
<PAGE>
SUMMARY
Charthouse Suites Vacation Interests
The following Summary is qualified in its entirety by
reference to the more detailed information contained elsewhere in
this Prospectus and the glossary of terms (the "Glossary"),
annexes and exhibits which are attached. Capitalized terms used,
but not defined in this Summary, are defined elsewhere in this
Prospectus, including the Glossary and annexes. Prospective
purchasers are urged to read and evaluate this Prospectus and the
Glossary, annexes and exhibits in their entirety. This
Prospectus contains forward-looking statements which involve
risks and uncertainties. The Charthouse Rental Pool's actual
results may differ significantly from the results discussed in
the Prospectus. Factors that might cause such a difference
include, but are not limited to, those discussed in "Risk
Factors."
Charthouse Suites Vacation Ownership, Inc., a Florida
corporation (the "Company"), hereby offers (the "Offering") 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, 2040, a category of studio or suite (collectively,
referred to as "suite") in the Chart House Suites hotel located
in Clearwater Beach, Florida. A Holder will receive rental
income from the rental of the suite through the Charthouse Rental
Pool, or upon 30 days notice to the Company, have the right to
withdraw and use one or more of the eight weeks ("Unit Weeks")
each year, or join RCI and utilize the RCI Exchange Program to
exchange Unit Weeks at the Chart House Suites hotel for vacation
weeks at approximately 2,000 RCI affiliated resorts located
around the world. No level of income from the Rental Pool is
guaranteed. See "Charthouse Results" and "Certain Charthouse
Rental Pool Financial Information."
The Interests The 150 Interests are vacation licenses which
consist of 36 A Interests for $18,500 each,
24 B Interests for $21,500 each, 36 C
Interests for $25,500 each, 36 D Interests
for $36,500 each, 12 E Interests for $39,500
each and six F Interests for $60,000 each.
Each class of Interests entitles a Holder to
rental proceeds from the Charthouse Rental
Pool or, upon request, use of a corresponding
Class of Unit Weeks in the Chart House Suites
hotel. In addition to the purchase price of
the Interests, Holders are required to pay
annual dues and, if any, special assessments
associated with the hotel operations. See
"The Interests."
Chart House Suites The Chart House Suites hotel is a four-story
Hotel hotel located on Clearwater Bay at 850 Bayway
Boulevard, Clearwater Beach, Florida 34630.
The hotel consists of 25 suites and features
a heated swimming pool, attached marina
(which is separately owned and operated by
the Company and which will not be part of the
Charthouse Rental Pool), laundry room, and
access to white sand beaches, recreation,
dining, nightlife and shopping. See
"Description of the Chart House Suites
Hotel."
Rights of Holders Owners of the Interests will acquire a
license right to rent or use Unit Weeks
corresponding to a certain category of a
suite in the Chart House Suites hotel. See
"The Company." Holders will not acquire an
ownership or equity interest in the Company
or the Resort Facility.
A Interests Rights The ownership of A Interests allows a Holder
use of a standard studio (with private
bathroom) overlooking the marina and
Clearwater Bay for two weeks in each season
until December 31, 2040. The A Interest
studios are approximately 360 square feet and
contain two queen-sized beds with room for up
to four adults. See "The Interests."
B Interests Rights The ownership of B Interests allows a Holder
use of a king bed studio (with private
bathroom) overlooking the marina and
Clearwater Bay for two weeks in each season
until December 31, 2040. The B Interest
studios 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 (with private bathroom)
overlooking the marina and Clearwater Bay or
the southern exposure for two weeks in each
season until December 31, 2040. The C
Interest studios are approximately 430 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 (with
private bathroom) overlooking the marina and
Clearwater Bay or the swimming pool or
southern exposure for two weeks in each
season until December 31, 2040. The D
Interest suites 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
private bathroom and a lanai) with a view of
the marina and Clearwater Bay for two weeks
in each season until December 31, 2040. The
E Interest suites 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, 2040.
The F Interest suite is approximately 1,875
square feet and has two queen-sized and one
king-sized beds with room for up to six
adults. See "The Interests."
Unit Weeks Retained Because each Interest has the right to eight
by Company Unit Weeks in each year, and there are 52 or
53 weeks in a year, four Unit Weeks (or five
Unit Weeks in certain years where there are
53 weeks in a year) of each suite shall
remain the property of the Company.
Therefore, the Company 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 the
right to income from the Charthouse Rental
Pool or exchange in the RCI Exchange Program
for those Unit Weeks. See "The Interests."
The dates of the Unit Weeks that will be
retained by the Company are shown in Annex E.
License Rights The licensee rights obtained by a Holder upon
purchase of the Interests are set forth in
the License Plan and the Rules and
Regulations for Chart House Suites Hotel,
which are set forth as Annexes A and B,
respectively. See "The Interests" for a
summary of the terms of the License Plan.
Payment of Purchase Holders may pay for the Interests either in
Price cash upon subscription or pay in installments
over part of the License term. If paying by
installment, a minimum of 30% 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 will have a right
to rescind their investment. Under the
installment payment program, the remaining
balance on the Interest will be payable in up
to 360 monthly installments before the first
day of each month, and the unpaid balance on
each license payment increases by up to 9%
annually (which has the effect of up to 9%
interest on the unpaid balance). See
"License Payment Options."
If a Holder pays on the installment method
with a 9% rate and the minimum down payment
of 30% (exclusive of any discounts, including
discounts for early purchases), the following
amounts would be due:
<PAGE>
<TABLE>
<CAPTION>
Total Total
Payments Payment
Total For Per Rental Day
of All Interest (if Interest Paid)
Monthly Per In
30% Down Maximum Payments Rental Full At Time
Offering Payment Balance Monthly (Over 360 Total Day (43 Of
Class Price Due Due Payment Months) Payments Years)* Subscription)*
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A $18,500 $5,550 $12,950 $104.20 $37,511.51 $43,061.51 $17.88 $7.68
B 21,500 6,450 15,050 121.10 43,594.45 50,044.45 20.78 8.93
C 25,500 7,650 17,850 143.63 51,705.05 59,355.05 24.65 10.59
D 36,500 10,950 25,550 205.50 74,009.19 84,959.19 35.28 15.16
E 39,500 11,850 27,650 222.48 80,092.14 91,942.14 38.18 16.40
F 60,000 18,000 42,000 337.94 121,658.94 139,658.94 58.00 24.92
</TABLE>
<PAGE>
* Assumes purchase as of January 1, 1998 and
use over the entire term and for the column
assuming financing the financing as shown in
the above table with the minimum down
payment.
For details, see "License Payment Options."
A Holder who chooses to make installment
payments must be current on all monthly
licensing payments and annual dues and, if
any, special assessments, in order to rent,
use or exchange the Unit Weeks. 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
reacquire and cancel the Interest, pursuant
to the terms of the License Plan. Upon
cancellation for failure to pay, a Holder
will have no further rights to use or rent of
suites in the Chart House Suites hotel or
refund for past amounts paid. A purchaser
will be liable for all amounts due under the
License Plan, unless the Interest is
reacquired by the Company and canceled. See
"License Payment Options."
Charthouse Rental Each Unit Week will automatically be placed
Pool in the Rental Pool, but upon 30 days written
notice to the Company, a Holder may withdraw
any or all of the Holder's allotted Unit
Weeks from the Rental Pool. Unless otherwise
permitted by the Company, a Holder may only
withdraw entire Unit Weeks from the Rental
Pool. Under the Rental Pool, Charthouse will
attempt to rent the suite to others on a
daily or other basis, and the Holder will
share pro rata (utilizing various rental pool
allocations for each Class of Interests) in
the rentals of all Unit Weeks that are placed
in the Rental Pool.
Under the License Plan, Holders of Interests
who participate in the Rental Pool will
receive income based upon ratios developed by
the Company. The ratios are based upon the
Company's assumed off-season nightly walk-in
rate for each Class of suites and upon the
actual number of Unit Weeks of each Class
that are participating in the Rental Pool.
The assumed walk-in nightly rental rates
represent the Company's estimate of
approximate suite rental value rates for each
Class of Interests and are fixed for all
Rental Pool allocations until December 31,
2040. These rates, however, have been
determined arbitrarily. Because Holders may
personally use the Interests or exchange them
in RCI's Exchange Program rather than leaving
them in the Rental Pool, actual participation
rental percentages will vary each Unit Week.
Assuming every Interest remains in the Rental
Pool, the following allocation percentages
would apply:
<PAGE>
<TABLE>
<CAPTION>
Off Total %
Number Season Gross Total % Per
of Number Nightly Potential Total % Per Unit Interest (8
Studios/ of Walk-in Daily Total % Per Week (52 Unit
Suites Interests Rate Revenue Per Class Suite Weeks) Weeks)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A 6 36 $70 $420 17.6101% 2.9350% 0.0564% 0.4515%
B 4 24 $75 $300 12.5786% 3.1447% 0.0605% 0.4838%
C 6 36 $85 $510 21.3836% 3.5639% 0.0685% 0.5483%
D 6 36 $120 $720 30.1887% 5.0314% 0.0968% 0.7741%
E 2 12 $130 $260 10.9015% 5.4507% 0.1048% 0.8386%
F 1 6 $175 $175 7.3375% 7.3375% 0.1411% 1.1289%
25 150 $2,385 100.000%
/TABLE
<PAGE>
If the Rental Pool had been operating for the
past three years and all Unit Weeks remained
in the Rental Pool for all Unit Weeks, the
following results (average among all Unit
Weeks in each class), after deduction of the
5% Rental Pool fee would have been:
<PAGE>
<TABLE>
<CAPTION>
For the Year Ended November 30,
For the 6 Months Ended
May 31, 1997 1996 1995 1994
(4 Unit Weeks) (8 Unit Weeks) (8 Unit Weeks) (8 Unit Weeks)
<S> <C> <C> <C> <C>
Class A $1,250 $2,007 $1,466 $331
Class B $1,339 $2,151 $1,571 $354
Class C $1,518 $2,437 $1,781 $401
Class D $2,142 $3,441 $2,514 $567
Class E $2,321 $3,728 $2,723 $614
Class F $3,124 $5,018 $3,666 $826
/TABLE
<PAGE>
See "Certain Financial Charthouse Rental Pool
Information" for more information as to the
assumptions utilized in the above
calculations.
There is a fee payable to Decade Properties,
Inc., an affiliate of the Company, equal to
5% of the Rental Pool revenue. Under the
License Plan, annual dues will reimburse
Decade Properties, Inc. for its actual costs
for operating the Rental Pool, even if a
Holder does not use the Rental Pool. The
Company intends to place its retained Unit
Weeks in the Rental Pool, although it
reserves the right to use or exchange the
Unit Weeks in the RCI Exchange Program. The
Company will annually have 100 Unit Weeks in
the Rental Pool and would have earned
approximately $23,376 for the six months
ended May 30, 1997 (arising from 50 Unit
Weeks), and approximately $35,939, $26,240
and $5,911 for the years ended November 30,
1996, 1995 and 1994, respectively (with 100
Unit Weeks, annually). See "The Interests."
The Company The Charthouse Suites Vacation Ownership,
Inc.'s offices are at 250 Patrick Boulevard,
Brookfield, Wisconsin 53045, Telephone 414-
792-9200. The Company is owned by Jeffrey
Keierleber, who is also the sole director and
President of the Company. Affiliates of the
Company owned by Jeffrey Keierleber will
provide management and consulting services to
the Company and administer the Rental Pool,
pursuant to agreements with the Company. See
"The Company."
Decade Decade Properties, Inc., an affiliate of the
Properties, Company, provides property management and
Inc. Rental Pool services pursuant to an agreement
with the Company. Decade Properties, Inc. is
owned by Jeffrey Keierleber and has provided
property management services to various
entities since 1980. As the property manager,
it will receive $2,500 a month, plus all
expenses (increasing annually by annual CPI
increases) payable from annual dues. See
"Decade Properties, Inc." If Decade
Properties, Inc. is ever removed as property
manager, 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,
2040. The Company cannot determine the
amounts that would be due upon early
termination as they depend upon the monthly
fee (which increases by annual increases by
CPI) and a rental fee of 5% of the Rental
Pool revenue. Additional background
information concerning Decade Properties,
Inc. is enclosed in the Prospectus. See
"Decade Properties, Inc." and "Conflicts of
Interest of Management and Affiliates."
Guaranteed Rental As an incentive to early purchasers, Holders
Arrangement or may elect to receive guaranteed rental
Cash Discount payments, at varying rates for each Class,
Program for their Unit Weeks for a specified number
of weeks. Under this guaranteed rental
arrangement, Holders who purchase [within six
months of the Effective Date of the
Registration Statement] may designate six
Unit Weeks and receive a guaranteed rental
rate. Holders 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. Holders purchasing [between nine
months and one year of the Effective Date of
the Registration Statement] may designate two
Unit Weeks. 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 paid
under this arrangement is a walk-in, nightly
off-season rate that has been arbitrarily
selected by the Company. See "Guaranteed
Rental Agreement" for a description of the
arrangement, the guaranteed rates and certain
conditions.
In lieu of the guaranteed rental arrangement,
early Holders may elect to receive a cash
discount to the subscription price by
surrendering rights to the guaranteed rental
arrangement. Holders purchasing [within six
months of the Effective Date of the
Registration Statement] may elect to receive
a 5% discount from the purchase price of an
Interest. Holders 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. Holders purchasing
[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. 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 Holders will be responsible for a
and Special proportionate share of the annual maintenance
Assessments and other related costs, expenses and
reserves of the Chart House Suites hotel.
For the year ended December 31, 1997 and
1998, 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
thereafter will be set by the Company based
upon the expenses of operating the hotel and
the Rental Pool and providing services, and
will be proportionately allocated to Holders
as set forth in the 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 License Plan provides for special
assessments under limited circumstances. In
connection with a vote for increases in
annual dues or special assessments, the
Company will vote the Unit Weeks for the
unissued Interests or the Unit Weeks for
canceled Interests and will be responsible
for its proportionate share of such costs.
Until a majority of Unit Weeks are held by
Holders, the Company may approve increases,
without limitation. See "Annual Dues and
Special Assessments."
Failure to Pay The License Plan provides that a Holder must
Annual Dues and pay his or her pro rata annual dues (and, if
Special applicable, special assessments) prior to
Assessments renting or using the Unit Week or exchanging
them 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 Rental Pool, or exchange the Unit
Weeks 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 (and special assessments, if any) owed
by the Holder. See "Annual Dues and Special
Assessments."
RCI Membership As of the date of this Prospectus, Holders
and Exchange may enroll in the RCI Exchange Program, upon
Program payment of membership fees to RCI. Upon
purchase of an Interest, the Company will pay
the costs of a Holder's one year membership
in RCI and any initiation fees. The RCI
Exchange Program allows members to deposit
one or more Unit Weeks and request an
exchange for a comparable 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 requests an exchange to an
RCI-affiliated resort. As of the date of
this Prospectus, there are approximately
2,000 RCI-affiliated resorts around the
world. Under this program a Holder may
exchange Unit Weeks, whether or not the
deposited Unit Week is used by another RCI
member.
As of the date of this Prospectus, the cost
of membership in RCI is $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 installment
payment 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 a contractual
agreement, which expires on August 15, 2002).
The Company assumes no liability or
responsibility to RCI's Exchange 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, although
it reserves the right to change the
designation or adopt a new or different
system of designation. See "The Interests-
Use Options."
Management of The Company will be responsible for
Charthouse management decisions of the Chart House
Suites hotel and advertising the hotel. An
advisory committee, composed of Holders and
their representatives, may be consulted for
advice as to the operation of the 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 Rental
Pool, or otherwise, although there can be no
assurances that a Holder will realize any
rental revenue. See "The Interests--Use
Options" and "Charthouse Results."
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.
An investment in the Interests is not
intended to be a tax advantaged investment.
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 and payment of license
costs (i.e., cost of the Unit Week) for the
corresponding Unit Week. There can be no
assurances that Interests can be sold at a
profit, or at all. The Interests should be
purchased for personal use or 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 The Company will control the operations of
Interest the Chart House Suites hotel and has retained
Decade Properties, Inc. to operate the Rental
Pool and act as property manager. None of
their agreements was determined by arm's
length negotiations, and Holders should
consider the conflicts of interest that could
arise over the terms of the agreements.
Jeffrey Keierleber is the sole shareholder,
sole director and President of both the
Company and Decade Properties, Inc. See
"Conflicts of Interest 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 revenue from the
Rental Pool. See "Risk Factors."
Purchase Under Chapter 721 of the Florida Statutes, a
Cancellation Holder may cancel a purchase, without penalty
Rights or obligation, within 10 days of the later of
the date of the execution of the Subscription
Agreement or receipt of the Florida Time
Share Public Offering Statement. Under
certain limited conditions and under the
Florida Statutes, a Holder may also cancel if
the accommodations or facilities, as
promised, are not available to Holders of any
states. See "Cancellation Rights."
Escrow Provisions Under the Escrow Agreement, funds received
for subscriptions of Interests will be held
in escrow by William Atkinson, an
unaffiliated Florida real estate broker,
until the purchase cancellation rights
(described above) have expired. During the
escrow period, funds will be maintained in a
financial institution and available for
refund upon a request for cancellation. See
"The Interests." After the purchase
cancellation rights have expired, the funds
will be remitted to the Company and used as
described in the "Use of Proceeds."
Minimum There is no requirement that any minimum
Subscriptions number of Interests be sold in the offering.
However, if fewer than 76 Interests are sold
by July 31, 1998, the Company has the right
to cancel the Interests upon the repayment of
the paid subscription amount to the Holders,
less amounts for certain payments or benefits
received by the Holder. Affiliates of the
Company may purchase Interests without
limitation as to amount. See "License 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, amounts owed
to Decade Properties, Inc. for the purchase
of the Chart House Suites hotel, amounts
retained for working capital purposes and
initial membership in RCI for the Holders.
See "Use of Proceeds."
Plan As of the date of the Prospectus, the
of Offering Interests are only available for sale in the
states of Florida and Wisconsin.
Suitability Potential purchasers should evaluate the
Standards benefits of the Interests, including the
ability to use or exchange 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 will not solicit
investments from purchasers unless they have
either (1) a net worth of more than $30,000
(exclusive of the value of home and
furnishings), or (2) annual income of more
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
License Plan, the Rules and Regulations for
Chart House Suites Hotel and the Rental Pool
agreement) must be executed. All
subscriptions are subject to acceptance by
the Company. See "How to Subscribe."
RISK FACTORS
An investment in Interests involves certain risks.
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.
Certain statements in this Prospectus that are not
historical fact constitute "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995. Discussions containing such forward-looking statements may
be found in the material set forth under "Summary," "Use of
Proceeds," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Pro forma Results," as
well as within the Prospectus generally. In addition, when used
in the Prospectus, the words "believes," "anticipates," "expects"
and similar expressions are intended to identify forward-looking
statements. Such statements are subject to a number of risks and
uncertainties. Actual results could differ materially from those
projected in the forward-looking statements as a result of the
risk factors set forth below, this inherent uncertainty of
estimates and assumptions utilized in preparing forward looking
information, and other matters set forth in the Prospectus
generally. The Company does not intend to provide any updates to
these forward-looking statements.
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 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." Costs and expenses incurred in connection with
personal use on most rental use are not deductible.
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 Rental Pool under the License Plan will
constitute a partnership for federal income tax purposes
consisting of those Holders that utilize the Rental Pool and the
Company if it places unsold Unit Weeks that it owns in the pool.
Accordingly, Holders that participate in the Rental Pool 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 were to successfully challenge the
classification of the Rental Pool as a partnership, and the
Rental Pool were to be taxed as an association, the Company, the
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 for this purpose.
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 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 Interests are not intended
to be a tax advantaged investment. The expected tax treatment of
the Interests under Code Section 280A is based on a private
ruling letter request submitted to the IRS on July 16, 1996, and
as thereafter revised on July 16, 1997. 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 and should consider their individual
factual circumstances. 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 July 31, 1998, Charthouse may 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 License Plan. See "Plan of Distribution."
Lack of Tangible Assets. By the purchase of an Interest,
Holders will acquire a license to rent through the Rental Pool
or, upon notice, use a suite in the Chart House Suites hotel on
the terms and conditions of the 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 Suites hotel, other than as set
forth in the 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 purchase insurance to cover the loss or damage to the
hotel, although if it is impossible to rebuild the hotel, a
Holder have a right to a share of the proceeds of insurance
policy. See "The Interests" and the License Plan attached as
Annex A.
Nature of the Hotel Market. The real estate market and the
hotel rates in Florida have historically been quite volatile.
Many factors, including the economy, interest rates, competition,
weather patterns and events, transportation costs, seasonality
and others, may affect the ultimate appreciation or depreciation
of the Interests and any income derived from a Holder's
participation in the 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 affect the resale price and the amount that must be paid
for annual dues or special assessments, if any. See "Annual Dues
and Special Assessments" and "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, 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.
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 September, November and May will have
the lowest occupancy and lowest value in the Rental Pool, or
otherwise. The months of February, March and April tend to have
higher occupancy, although the Company cannot assure any level of
rental income. See "Certain Occupancy Information." If a Holder
expects to rent the Unit Week through the Rental Pool, there can
be no assurances of any level of Rental Pool revenue. The costs
of operating the Rental Pool are a common expense covered by
annual dues and, therefore, a Holder will pay for the costs of
operating the Rental Pool even if not using it. Under the
License Plan, purchasers of partial Interests (i.e., Unit Week or
Unit Weeks) will not have an automatic right to participate in
the Rental Pool, but must pay for its cost as part of the annual
dues for their Unit Weeks. See "The Interests."
General Economic Conditions; Concentration in Time Share
Industry; Geographic Concentration of Investments. Any downturn
in economic conditions or any price increases (e.g., airfares)
related to the travel and tourism industry could depress
discretionary consumer spending and have an adverse effect on the
demand for and rental rates of the Units. Because the Company's
operations are conducted solely within the vacation industry, any
adverse changes affecting the vacation industry, such as an
oversupply of vacation units, a reduction in demand for vacation
units, changes in travel and vacation patterns, changes in
governmental regulations of the vacation industry and increases
in construction costs or taxes, as well as negative publicity for
the vacation industry, could have an adverse effect on the Rental
Pool. See "The Company."
Past Results. The Chart House Suites hotel has only been in
operation for approximately 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 $359 at 65% occupancy (average of Class A
through Class F Units). Weather and seasonality could affect the
results of the Rental Pool. While there can be no assurances,
the Company believes that the Unit Week rental income may
increase above $359 per Unit Week at 65% occupancy (on an average
basis of all Classes of Interests) because Chart House Suites
hotel is experiencing repeat business, and its marketing has
resulted in increased customer demand. However, Holders should
not assume any level of rental income or occupancy in deciding
whether to purchase an Interest. See "Chart House Results."
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 Suites Hotel Not Affiliated with Any National
Chain. The Chart House Suites hotel is not affiliated with a
national chain, but competes with national hotels located in
Clearwater Beach, Florida, including hotels with more resources
and amenities, such as restaurants, bars and beach-related
services. The absence of a national affiliation and additional
amenities has an adverse affect on the hotel's competitive
position and rates. 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 and to pay for the Company's share of annual dues and
special assessments, if any. See "Financial Statements."
RCI Exchange Program. RCI's Exchange Program is an
independent entity, which has no connection or financial interest
in the Chart House Suites hotel or the Company. The RCI Exchange
Program is a vacation exchange program offered by RCI. The
Company's agreement with RCI extends until August, 2002 and
provides for additional extensions, but is terminable earlier
under certain circumstances. There can be no assurances that the
Company's agreement will continue in effect or 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 License Plan 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
Interests--The RCI Exchange Program."
Vote of Unit Weeks. Under the 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 a majority of the Unit
Weeks. Special assessments in excess of certain limits cannot be
made without a vote of Unit Weeks. The Company will vote all
Unit Weeks represented by unsold Interests or the Unit Weeks
reacquired upon a default of an Interest. Until, and unless, a
majority of Units Weeks are held by others, 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, 1998.
See "Annual Dues and Special Assessments."
Reliance on Management. Pursuant to the terms of the
License Plan, Holders have no authority to control the management
and operations of the Chart House Suites hotel or the Company.
Control of management and operations of the Chart House Suites
hotel and the License Plan 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 License Plan. Accordingly, Holders will have no control
over changes in policies of Charthouse. The Company intends to
create an Advisory Board composed of Holders, but the Company has
ultimate responsibility for policies of Charthouse. See "The
Company." See License Plan and the Rules and Regulations for
Chart House Suites Hotel, attached as Annexes A and B,
respectively.
Absence of Independent Underwriter and Appraiser. No
appraisals or other independent valuations have been obtained for
purposes of determining the value of the 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."
Risks Associated With Customer Default. The Company bears
the risk of defaults by buyers who purchase their Interests on an
installment basis. If a buyer of an Interest defaults on the
purchase of such Interest during the payment schedule, the
Company will reacquire the Interest. In connection with the
Company taking back any such Interest, the associated marketing
costs will not have been recovered by the Company, and they must
be incurred again after the Interest has been returned to the
Company for resale. In addition, although the Company may have
recourse against the defaulted buyer of the Interest, no
assurances can be given that the Interest purchase price or any
commissions will be fully or partially recovered in the event the
buyer defaults under such financing arrangements. Although the
Company will bear the risks of default, Holders may be adversely
affected if these costs limit the Company's ability to fulfill
its obligations. See "The Interests."
Competition. The Company is subject to significant
competition from other entities engaged in the business of resort
development, sales and operation, including interval ownership,
condominiums, hotels and motels. Many of the world's most
recognized lodging, hospitality and entertainment companies have
begun to develop and sell vacation interests in resort
properties. Other major companies that now operate or are
developing or planning to develop vacation interest resorts
include Marriott Ownership Resorts, The Walt Disney Company,
Hilton Hotels Corporation, Hyatt Corporation, Four Seasons Hotels
& Resorts and Inter-Continental Hotels and Resorts. Many of
these entities possess significantly greater financial,
marketing, personnel and other resources than those of the
Company and may be able to generate greater rental results or
returns.
Regulation of Marketing and Sales of Vacation Interests;
Other Laws. The Company's marketing and sales of Interests and
other operations are subject to extensive regulation by the
federal government, Florida and by the states in which Interests
are marketed and sold. On a federal level, the Federal Trade
Commission has taken the most active regulatory role through the
Federal Trade Commission Act, which prohibits unfair or deceptive
acts or competition in interstate commerce. Other federal
requirements to which the Company is or may be subject appears in
the Truth-in-Lending Act and Regulation Z and the Equal
Opportunity Credit Act. In addition, many states have adopted
specific laws and regulations regarding the sale of interval
ownership programs. The laws of Florida require the Company to
file with a designated state authority for its approval a
detailed offering statement describing the Company and all
material aspects of the project and sale of Interests. The
Company is required to deliver an offering statement or public
report to all prospective purchasers of an Interest, together
with certain additional information concerning the terms of the
purchase. The Company believes that it is in material compliance
with all federal, state, local and foreign laws and regulations
to which it is currently subject. However, no assurances can be
given that the Company is, in fact, in compliance with all
applicable federal, state, local and foreign laws and
regulations. Any failure to comply with applicable laws or
regulations could have a material adverse effect on the Company.
Compliance with the laws or regulations, of any sort, will be a
common expense recovered from Interest Holders through annual
dues. See "Annual Dues and Special Assessments."
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. The
Company intends to prepare a succession plan. See "Management."
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 the
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. See "Chart House 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. See "The Company."
Lack of Arm's Length Negotiation in the Property Management
and Other Agreements. None of the agreements with affiliates,
including the property management agreement, was determined by
arm's length negotiations, and no independent approval will be
sought. The property management agreement provides for a monthly
fee of $2,500 and a 5% Rental Pool fee, plus reimbursement of all
expenses, and provides a termination fee equal to the amount
Decade Properties, Inc. would have earned over the life of the
agreement, which expires on December 31, 2040, in the event
Decade Properties, Inc. is removed as property manager for the
Company. See "Decade Properties, Inc." The License Plan
provides that Holders will reimburse, as a common expense covered
by annual dues, the costs and fees of the property manager for
its services, whether or not they use the Rental Pool. See
"Conflicts of Interest of Management and Affiliates."
Conflicts of Interest Arising From Benefits to Affiliates of
the Company. 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, amounts owed to
Decade Properties, Inc., costs of initial membership in RCI and
then for working capital. See "Use of Proceeds." Affiliates of
the Company may also benefit from the property management
agreements, Charthouse Rental Pool fees and other fees. See
"Conflicts of Interest of Management and Affiliates."
Company Control. The Company will control the operations of
the Chart House Suites hotel and the Charthouse Rental Pool, and
it 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, 2040. The
effect of this provision is to make it unlikely that Decade
Properties, Inc. could be removed as property manager. See
"Decade Properties, Inc."
Weekly Fluctuations in Rental Pool Results. The lodging
industry is seasonal in nature. Weekly Unit Week 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.
Resale of Interests. A Holder selling whole or partial
Interests (i.e., Unit Weeks) may face competition from the
Company as it sells the Interests, including Interests which have
been reacquired. The future value of Interests is uncertain, and
there can be no assurances that a Holder will be able to sell his
Interests at an appreciated amount, or even at the offering
price, if at all. There could be difficulties in trying to find
a real estate broker or other person 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. The Company may review potential
purchasers and evaluate whether they will be able to pay annual
dues as they become due. 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 own and manage the
Chart House Suites hotel. The Company has limited financial
resources, although it has received an oral commitment from its
sole shareholder to provide additional 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 delegate
and subcontract the operational duties to Decade Properties, Inc.
See "Decade Properties, Inc."
The Company currently has not issued, 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 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 License Plan, to repurchase or reacquire the
Interests. Except in connection with the purchase and 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 Plan 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,
if in accordance with the securities laws, may contain unaudited
financial statements) which describes the financial condition of
the 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 an affiliate of the Company since
1992. It is a four-story hotel overlooking Clearwater Bay,
Florida, bought in 1992 for approximately $600,000 and then
completely refurbished. Unless the offering is terminated (see
"Plan of Distribution"), the hotel will be purchased by the
Company for approximately $1,796,000, upon the earlier of the
sale of 76 Interests or by July 31, 1998. No appraisal has ever
been obtained. Attached to the Chart House Suites hotel grounds
is a marina that was also owned by Decade Properties, Inc.
Holders will have no rights to the Charthouse Marina, which is
owned by Decade Properties, Inc. or the Company, once the sale is
complete. The Chart House Suites hotel contains on its grounds a
heated in-ground 20 by 25 foot pool and laundry room 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. The Tampa Bay, Florida airport is
approximately 20 miles away, and St. Petersburg's airport is
approximately 12 miles away.
The Chart House Suites hotel is comprised of 25 rental units
located in one four-story building containing approximately
20,000 enclosed square feet. The attached marina has 27 boat
slips. The building and most of its improvements were built in
1971 as a common area for a nearby condominium and then converted
to a restaurant. 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. 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
locked doors, a bed or beds, hotel-like furniture, one or more
bathrooms and one or more televisions, including access to cable
television. The Chart House Suites hotel has a manager or front
desk staff available 24 hours a day and provides maid service.
Approximately 10 employees work at the Chart House Suites hotel.
Except as described above, there are no additional security
measures for the Holders.
As of July 31, 1997, the Company entered into an agreement
with Decade Properties, Inc. to acquire the Chart House Suites
hotel. Under the terms of the agreement, Charthouse will pay
approximately $1,796,000 for the hotel, personal property and
marina. As provided in the License Plan, if the Company does not
sell 76 Interests by July 31, 1998, it reserves the right to
cancel the Interests and return the paid-in amount (less amounts
for certain benefits received). The Company and Decade
Properties, Inc. have agreed to escrow the title until the sale
of 76 Interests. Accordingly, the Company has contractual rights
to acquire the Chart House Suites hotel, but will not complete
the sale until 76 Interests have been sold.
The Chart House Suites hotel is conveniently located within
a short stroll of a beautiful Clearwater public beach (one beach
on Clearwater Pass 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
in close proximity with other hotels and shops and adjacent to a
yacht club and other condominiums. 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
grounds 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 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 income.
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 are intended to
preserve the quiet enjoyment of the Chart House Suites hotel for
all users, but also to ensure that the appearance of the Chart
House Suites hotel is generally uniform and does not detract from
its value. Certain other requirements are established in the
Subscription Agreement and the Rules and Regulations for Chart
House Suites Hotel, attached as Annexes D and B, respectively.
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 believes
that room charges for the hotels in Clearwater Beach generally
range from 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 proximity of
the marina offers competitive advantages, as boaters 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 Suites hotel competes with other rental
accommodations on the bases of location, view and room quality,
as well as rental rates. Seasonability has, and will, affect the
occupancy of the hotel and the Rental Pool results.
<PAGE>
<PAGE>
THE INTERESTS
The following is a summary of the material terms of the
License Plan, and references to the License Plan are qualified in
their entirety to the text of the License Plan, which is attached
as Annex A.
Ownership of an Interest entitles purchasers to the right,
subject to the terms and conditions of the License Plan, to rent
or use the Chart House Suites hotel for eight weeks of each year
until December 31, 2040. 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 in Annex E. Upon subscription, a potential Holder
should submit his or her preference. All Unit Weeks (including
those owned by the Company) will automatically be placed in the
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 at least 30
days written notice (unless waived by the Company), to use the
Unit Weeks or to 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 Resort Facility. 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
Rental Pool, if any, or the right to use one of the 25 suites for
48 weeks out of every year. The Company does not intend to offer
the Chart House Suites hotel for sale to third parties, although
it reserves the right to do so, and such sale would be subject to
the rights of Holders under the License Plan. The Company 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. The Company intends to place the unsold Unit Weeks
it continues to hold in the Rental Pool, although, similar to all
Holders' rights, it reserves the right to use the Unit Weeks and
exchange these weeks in RCI Exchange Bank, even if there is
demand for these Unit Weeks in the Rental Pool, as well.
According to a March, 1997 article in Hotels, vacation
ownership is a $6 billion industry. The Company believes that
purchase of Interests will offer Holders a manner of
participating in this market.
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 private bathroom) overlooking the
marina and Clearwater Bay for two consecutive weeks in each
season until December 31, 2040. There are 36 A Interests
available in this offering for a cost of $18,500 per Interest.
The A Interest studios are approximately 360 square feet and
contains two queen-sized beds with room for four persons.
B Interest: Ownership of a B Interest allows a Holder use
of a king bed studio (with private bathroom) overlooking the
marina and Clearwater Bay for two weeks in each season until
December 31, 2040. There are 24 B Interests available in this
offering for a cost of $21,500 per Interest. The B Interest
studios are approximately 360 square feet in size and have room
for two persons.
C Interest: Ownership of a C Interest allows a Holder use
of a large studio (with private bathroom) overlooking the marina
and Clearwater Bay, or southern exposure (looking south over the
bay and other condominiums) for two consecutive weeks in each
season until December 31, 2040. There are 36 C Interests
available in this offering for a cost of $25,500 per Interest.
The C Interest studios are approximately 430 square feet and have
room for four persons.
D Interest: Ownership of a D Interest allows a Holder use
of a one bedroom, one private 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, 2040. There are 36 D Interests available in this offering
for a cost of $36,500 per Interest. The D Interest suites are
approximately 638-869 square feet and have room for four persons.
E Interest: Ownership of an E Interest allows a Holder use
of a one bedroom suite with one private bathroom (with a lanai),
and a view of the marina and the Clearwater Bay for two
consecutive weeks in each season until December 31, 2040. There
are 12 E Interests available in this offering at a cost of
$39,500 per Interest. The E Interest suites are approximately
815-982 square feet and have room for four persons.
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, 2040. There are 6 F
Interests in this Offering at a cost of $60,000 per Interest and
have room for six persons.
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 suites and weeks will be considered on a first come first
serve basis, but assignment of Unit Weeks and suites within a
Class of Interests is in the sole discretion of the Company.
For purposes of the 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 rights 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 ways in which
Holders, as of the date of the Prospectus, may utilize their
eight Unit Weeks per Interest:
Rental. If a Holder takes no action, Charthouse will seek
to rent the Holder's Unit Weeks through the Rental Pool. Holders
may also withdraw their Unit Weeks from the Rental Pool and seek
to rent the Unit Weeks to others, either personally or through
rental agents. Unless waived by the Company, Holders must give
the Company at least 30 days notice prior to the start of the
Unit Week of their desire to remove their Unit Week from the
Rental Pool. Rental Pool proceeds will be allocated
proportionately among Holders of all Classes of Interests that
have Unit Weeks in the Rental Pool using the formula shown below.
The ability of the 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 part of the common expenses for Holders will
include the reimbursement of any costs incurred in providing
Rental Pool services. Holders can contract individually with an
affiliate of the Company, or another rental agent, for separate
rental of their individual suite, although their share of annual
dues will continue to include the costs of operating the
Charthouse Rental Pool. See "Charthouse Results" and "Certain
Charthouse Rental Pool Financial Pro Forma Information."
Personal Use. A Holder may, upon 30 days written notice to
Charthouse (unless waived), withdraw entire Unit Weeks from the
Rental Pool, and Holders are free to use, assign, grant, gift or
otherwise use their eight Unit Weeks per Interest of reserved
vacation suites and services at the Chart House Suites hotel.
Unless waived by the Company, only entire Unit Weeks may be
withdrawn for personal use. Pursuant to the License Plan and the
Rules and Regulations for the Chart House Suites Hotel, Holders
are responsible for their conduct and liable for any resulting
damages due as a result of their use or the use by their
permitted users, including any rental arranged other than through
the Rental Pool. License Plan and Rules and Regulations for
Chart House Suites Hotel, attached as Annexes A and B,
respectively.
RCI Exchange Program. As of April 1997, Chart House Suites
hotel has qualified as an affiliated resort of the RCI Exchange
Program. As long as the Holder remains a member of the RCI
Exchange Program, 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. The Company
will pay for the initiation and first year membership fees for
each purchaser of an Interest. 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 August, 2002. The
deposit may be made between two weeks and two years before the
use of the Unit Week. The Holder must pay all annual fees
associated with the deposited Unit Week (i.e., annual dues and
special assessments, if any, and, if paying on the installment
basis, the license payment directly to the Company) 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 at 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 2,000 worldwide
affiliated resorts. Requested weeks must be comparable to those
deposited. All the Charthouse's weeks have been designated
"red," or the seasonal designation indicating greatest member
demand, although RCI has reserved the right to reconsider the
designation or change systems. 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 charges $103 for
each domestic exchange and $133 for each international exchange.
Rates are subject to change. Other fees may apply, and all fees
are determined solely by RCI. Neither the Company 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 has advised the Company
that RCI currently has approximately 2,000,000 members. The
terms and conditions of membership are defined an agreement that
is entered between RCI and its members. Participation in RCI by
a Holder is voluntary.
Under the terms of the agreement with RCI, the Agreement is
terminable, at RCI's option, upon 60 days notice if the Company
does not attain and maintain 50 RCI members. Therefore, the
ability to exchange properties through RCI may be canceled if a
sufficient number of Holders do not maintain their RCI
membership. The RCI Agreement is also terminable by RCI if the
Company (i) becomes insolvent, (ii) initiates a bankruptcy
proceeding, (iii) becomes a party to reorganization for its
debts, (iv) has a receiver appointed, (v) is a party to a
dissolution or liquidation proceeding, (vi) transfers a
controlling ownership interest in the Company without RCI's
consent, (vii) attempts to assign or sublease all or a portion of
its rights or duties, or (viii) the Company materially breaches
its agreement with RCI or any representation or warranty of the
Company to RCI ceases to be true.
Transferability of Interests. A Holder may transfer his
entire Interest without the prior consent of the Company,
provided the Holder is current on payment of all dues,
assessments and installment license payments. A purchaser of an
entire Interest may automatically participate in the Rental Pool.
Under applicable Florida Law, a Holder will have to provide
disclosure required by Section 721.065 in order to resell
Interests. This disclosure requires information concerning
annual dues and a copy of the License Plan.
A Holder may also transfer partial Interests in increments
of one or more Unit Weeks with the consent of the Company (which
will not unreasonably withheld) provided the Holder is current on
all payment of all annual dues, special assessments and license
installment payments for that Unit Week are fully paid. 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., one or more Unit
Weeks) may not automatically participate in the Rental Pool,
although annual dues will include the costs of operating the
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 License Plan attached as
Annex A.
Cancellation. Each Holder is given the right, pursuant to
Chapter 721, Florida Statutes, to cancel the Holder's
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. A notice of cancellation is
effective on 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 Plan at any time
after the accommodations or facilities are no longer available,
as provided in the License Plan and the Time Share Public
Offering Statement, attached as Annexes A and C, respectively.
The 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. In the event of any
temporary unavailability, the Company will promptly send a
written notice of the temporary unavailability notifying Holders
of their alternatives.
Under the 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
Rental Pool, and any guaranteed rental arrangement payments. 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 $ 70.00 per night $490
B King Bed Studio $ 75.00 per night $525
C Studio $ 85.00 per night $595
D 1 Bedroom $120.00 per night $840
E 1 Bedroom $130.00 per night $910
F Penthouse $175.00 per night $1,225
Therefore, once Holders have held the Interests after a
certain period of time, the cancellation right will result in a
return of no proceeds. Under the License Plan, Holders'
cancellation rights will expire as follows:
Class Expiration Date After Purchase
A 4.72 yr.
B 5.12 yr.
C 5.36 yr.
D 5.43 yr.
E 5.43 yr.
F 6.12 yr.
Holders should not assume that the Charthouse Rental Pool
will return these rates.
Under the License Plan, the Company may rescind the License
Plan and return the net proceeds if 76 Interests are not sold by
July 31, 1998. See "Plan of Distribution."
<PAGE>
<PAGE>
CHART HOUSE RESULTS
The following is a summary of the results of the Chart House
Suites hotel.
<PAGE>
<TABLE>
<CAPTION>
For the Six
Months Ended For the Years Ended November 30
May 31, 1997 1996 1995 1994
(unaudited) (audited) (audited) (audited)
<S> <C> <C> <C> <C>
Rental Income $282,215 $452,981 $327,031 $ 72,687
Other Income 8,675 14,220 14,090 4,154
Total Operating Revenues $290,890 $467,201 $341,121 $ 76,841
Total Salaries 68,525 127,377 93,648 38,243
Total Direct Expenses 80,622 150,287 141,411 111,056
Total Maintenance
and Repair Expenses 2,958 25,114 37,570 30,917
Total Expenses $152,105 $302,778 $272,629 $180,216
Excess (Deficiency)
of Operating
Revenues Over
Certain Expenses $138,785 $164,423 $ 68,492 $(103,375)
Average Unit Week $ 425 $ 331 $ 249 $ 56
Rental Revenue of
All Interests,
After Subtracting
5% Rental Pool Fee
(assuming 52 Unit
Weeks in a Year)
/TABLE
<PAGE>
The above summary for 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, and certain office and administrative expenses.
Based upon the current level of total expenses for the six
months ended May 31, 1997, the break-even rate for the Company is
$33.33 per suite per day (on average). Because rates vary, a
break even rate in occupancy cannot be determined.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations The financial statements included
herein present the Chart House Suites hotel operations for
approximately 37 months, from its opening on April 21, 1994,
through May 1997. The comparative presentation of operations
reflects the operation of 25 Units during each period presented.
Operating revenues for the initial 7.3 months ended November
30, 1994, averaged $105 per room per Unit Week. The average Unit
Week operating revenue increased to $262 during the year ended
November 30, 1995; $359 during the year ended November 30, 1996,
and $470 during the six months ended May 31, 1997. The 1997
increase, however, was achieved during the Winter and Spring
months when hotel rates and occupancy are generally expected to
be higher than at other times of the year, and therefore, such
results are not expected to be indicative of those to be achieved
for an entire year ended November 30, 1997.
The increases in operating revenues from inception are
attributable to both increases in the rental revenues charged for
occupied rooms and increased occupancy. The average daily room
revenue for occupied rooms increased from $53 in 1994 to $67 in
1995, to $77 in 1996, to $89 in 1997. The average occupancy
during these periods increased from 26% in 1994, to 54% in 1995,
to 65% in 1996 and to 68% in 1997.
Expenses for the initial 7.3 months in 1994 averaged $247
per Unit Week. The average Unit Week expenses decreased to $210
in 1995, and then increased to $233 in 1996 and $254 in 1997. A
large part of this increase was due to the average salary expense
per Unit Week, which increased from $53 in 1994 to $72 in 1995,
$98 in 1996 and $114 in 1997. The housekeeping staff, certain
front desk expenses and management fees are variable expenses.
Consequently, salary expenses generally increase as occupancy
increases.
Average direct expenses per Unit Week were $152 in 1994,
decreased to $109 in 1995, then increased to $116 in 1996 and
$134 in 1997. The direct expenses during the initial 1994 period
include costs associated with opening and initially higher
advertising expense for the hotel, which resulted in higher
average expenses than those experienced in the other periods.
Repair and maintenance expenses averaged $42 per Unit Week
in 1994, compared to $29 in 1995, $19 in 1996 and $5 in 1997.
Many costs associated with furniture, equipment and other
interior items were incurred in stages after the opening of the
hotel and have decreased over each period.
As a result of the foregoing, the operating expenses
exceeded operating revenue by $141 per Unit Week in 1994. In
1995, operating revenue exceeded operating expenses by $53 per
Unit Week, increasing to $126 in 1996 and $231 in 1997.
<PAGE>
<PAGE>
The daily revenue for hotel studios and suites by class for
the comparative periods was:
<PAGE>
<TABLE>
<CAPTION>
1997 1996 1995
Type of Low Average High Low Average High Low Average High
Unit
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A $45 $73 $119 $44 $63 $100 $38 $57 $98
Class B $45 $75 $119 $45 $63 $100 $40 $61 $104
Class C $50 $78 $119 $45 $67 $115 $43 $56 $110
Class D $70 $112 $165 $50 $96 $155 $50 $80 $150
Class E $75 $119 $165 $55 $118 $155 $50 $101 $155
Class F* $97 $119 $250 $68 $87 $200 $65 $82 $194
All Classes $89 $77 $67
(Average)
*Primarily rented on a monthly basis.
/TABLE
<PAGE>
The average daily occupancy for hotel studios and suites by
class for the comparative periods was:
Type of Unit 1997 1996 1995
Class A 78% 77% 63%
Class B 74% 69% 58%
Class C 71% 69% 51%
Class D 50% 45% 38%
Class E 61% 61% 59%
Class F 90% 91% 97%
All Classes (Average) 68% 65% 54%
<PAGE>
<PAGE>
The average daily revenue collected for occupied studios and
suites fluctuates throughout the year. The range of the average
daily revenue by class of rental unit by week fluctuated as
follows:
Type of Unit 1997 1996 1995
Class A $56-92 $49-79 $49-75
Class B $64-89 $55-96 $53-81
Class C $64-89 $51-75 $31-78
Class D $101-126 $86-113 $67-102
Class E $104-134 $105-128 $84-129
Class F $73-176 $68-143 $67-131
All Classes $76-105 $67-95 $57-90
(Average)
The average monthly occupancy range for each class of hotel
rental unit was:
Type of Unit 1997 1996 1995
Class A 66-93% 35-92% 31-88%
Class B 49-92% 52-94% 37-84%
Class C 51-92% 41-95% 21-82%
Class D 29-75% 14-91% 19-73%
Class E 42-84% 30-95% 34-93%
Class F 63-100% 58-100% 84-100%
All Classes 52-87% 42-90% 39-81%
(Average)
Occupancy data for 1994 is not available. The difference in
occupancy levels is primarily related to seasonal fluctuations.
<PAGE>
<PAGE>
Historical average occupancy levels at the Chart House
Suites hotel were as follows:
Month 1997 1996 1995
January 62% 53% 51%
February 87% 90% 81%
March 85% 90% 80%
April 63% 74% 58%
May 57% 66% 51%
June 53% 72% 44%
July 66% 58%
August 61% 42%
September 63% 39%
October 54% 51%
November 54% 43%
December 52% 42%
Liquidity
The Chart House Suites hotel operating revenue exceeded
operating expenses in every period, except for the initial period
ended November 30, 1994. The Chart House Suites hotel was not
subject to any mortgage debt during all periods presented,
although once the Company buys the hotel, it will owe
approximately $1.796 million. Day-to-day operating expenses were
paid from operating revenue collected. Future operating expenses
of the hotel are anticipated to be met by the annual dues paid by
the Holders of the Interests.
There are no long-term material capital expenditures,
obligations or other demands or commitments that might impair the
liquidity of the hotel or its costs.
Capital Resources
As of June 30, 1997, no material commitments existed to make
major capital expenditures, other than the purchase of the hotel.
Pursuant to the terms of the License Plan, Holders will be
subject to special assessment for any capital expenditures, but
will not be responsible for amounts arising from the purchase of
the Chart House hotel.
Prospective Forward-Looking Information
It is reasonably likely that historical financial
information will not necessarily be indicative of future
operating results. To the extent that Unit Weeks are used by
Holders, there likely will be an increased future revenue per
Unit Week available for rental because fewer rooms will be
available for rental.
In addition, it is anticipated that the average daily
collected revenue per Unit Week in the Rental Pool will increase
over the historically reported collected revenue to the extent
that owners of Interests do not place their Unit Weeks into the
Rental Pool (this assumes that the public demand to rent hotel
units remains constant). With fewer hotel units available for
rent each day, it would be more likely that a higher room rent
could be charged for the inventory of hotel studios and suites
available each day. A lower supply of hotel studios and suites
creates less pressure to discount room in order to obtain
occupancy.
The historically reported financial information indicates
that a trend towards higher collected revenue for hotel studios
and suites and a trend towards higher occupancy. Management
believes that these trends will continue from repeat customers
and word-of-mouth advertising.
Environmental Matters
The Company and the hotel results are subject to various
laws and governmental regulation concerning environmental matters
and employee safety and health in the United States. U.S.
federal environmental legislation having particular impact on the
hotel includes the Toxic Substances Control Act; the Resources
Conservation and Recovery Act; the Clean Air Act; the Clean Water
Act; the Safe Drinking Water Act and the Comprehensive
Environmental Response, Compensation and Liability Act (also
known as Superfund). The Company and the Chart House Suites
hotel are also subject to the Occupational Safety and Health
Administration ("OSHA") concerning employee safety and health
matters. The United States Environmental Protection Agency
("EPA"), OSHA and other federal agencies have the authority to
promulgate regulations that have an impact on the hotel's
operations.
In addition to these federal activities, various states have
been delegated certain authority under the federal statutes.
Many state and local governments have adopted environmental and
employee safety and health laws and regulations, some of which
are similar to federal requirements. State and federal
authorities may seek fines and penalties for violation of these
laws and regulations.
Management of the hotel is committed to a long-term
environmental protection program that reduces emissions of
hazardous materials into the environment, as well as to the
remediation of identified existing environmental concerns.
Management is not aware of any hidden or unapparent
conditions of the property, subsoil or structural conditions
which would render the Chart House Suites hotel more or less
valuable. Management is not aware of the existence of
potentially hazardous materials used in the construction or
maintenance of the building, such as urea-formaldehyde foam
insulation and/or the toxic waste. Management is not aware of
any groundwater contamination, underground methane gas or radon
gas. Management believes that the hotel does not produce air
emissions or waste water of environmental concern. Management is
not aware of any underground storage tanks. Management is not
aware of any incidents of spills, dumping or discharges at the
property or the presence of hazardous substances. The hotel did
not have any expenditures in 1994, 1995 or 1996 for environmental
capital projects or for operation and maintenance of
environmental protection facilities. Management estimates that
during 1997 and 1998 no material amount will be spent on capital
projects for environmental protection.
Impact of Inflation
Although inflation has slowed in recent years, it is still a
factor in the economy, and the Company continues to seek ways to
mitigate its impact. To the extent permitted by competition, in
general, the hotel passes increased costs on by increasing asking
hotel rates over time. Management believes that the ability to
increase rental rates should offset any adverse effects from
inflation on the hotel's cost of operations. Operating revenue
reported on the hotel's financial statements have varied in the
last three years from $77,000 in 1994 (partial year), to $341,000
in 1995, and $467,000 in 1996. The increasing revenue is due to
increases in the hotel rates collected and in the occupancy rate.
Inflation had no material effect on the results of
operations in 1996, 1995 and 1994.
CERTAIN CHARTHOUSE RENTAL POOL FINANCIAL INFORMATION
The following summary unaudited financial information sets
forth the summary financial information of the Company as
adjusted to give effect to the operation of the Rental Pool. The
only additional expense assumed is the assumed Rental Pool fee of
5%. The summary unaudited financial information does not purport
to be indicative of the results that would have been obtained,
results that may be obtained, or the per Interest average
results. Actual results will vary week by week. The following
should be read in conjunction with the financial information and
accompanying notes.
CHARTHOUSE RENTAL POOL
INCOME STATEMENT (UNAUDITED)
<PAGE>
<TABLE>
<CAPTION>
For the
six
Months For the Years Ended November 30,
Ended
May 31, 1997 1996 1995 1994
<S> <C> <C> <C> <C>
Rental Income $282,215 $452,981 $327,031 $72,687
Less Property Management Fee (5.0%) (14,111) (22,649) (16,352) (3,634)
268,104 430,332 310,679 69,053
Other Income 8,675 14,220 14,090 4,154
Total Revenues $276,779 $444,552 $324,769 $73,207
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
ALLOCATION OF CHART HOUSE RENTAL REVENUES ON AVERAGE AMONG
CLASSES OF INTERESTS
Allocated Income (Using Off-Season Rates and
Gross Potential Income) (Unaudited)
For the Years Ended November 30,
For the six
Total Off Months
Annual Season Daily Ended
Number Rental Nightly Gross may 31,
of Days Walk- Potential 1997 1996 1995 1994
Rooms/ Per In Rental (26 Unit (52 Unit (52 Unit (52 Unit
Suites Class Rate Income Weeks) Weeks) Weeks) Weeks)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A 6 2,190 $70 $420 $48,741 $78,286 $57,192 $12,892
Class B 4 1,460 $75 $300 $34,815 $55,918 $40,852 $9,208
Class C 6 2,190 $85 $510 $59,186 $95,061 $69,448 $15,654
Class D 6 2,190 $120 $720 $83,556 $134,204 $98,044 $22,100
Class E 2 730 $130 $260 $30,173 $48,463 $35,404 $7,981
Class F 1 365 $175 $175 $20,308 $32,620 $23,829 $5,372
25 9,125 $2,385 $276,779 $444,552 $324,769 $73,207
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION PER INTEREST FOR EACH CLASS OF INTERESTS (AVERAGE)
___________Class Total (Unaudited)__________ ______________Per Interest_____________
For the For the
Number six Months six Months
of Ended For the Years Ended Ended For the Years Ended
Interests May 31, November 30, May 31, November 30,
1997 1996 1995 1994 1997 1996 1995 1994
(24 Unit (48 Unit (48 Unit (48 Unit
Weeks) Weeks) Weeks) Weeks)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A 36 $44,992 $72,264 $52,793 $11,900 $1,250 $2,007 $1,466 $331
Class B 24 $32,137 $51,617 $37,709 $8,500 $1,339 $2,151 $1,571 $354
Class C 36 $54,633 $87,749 $64,105 $14,450 $1,518 $2,437 $1,781 $401
Class D 36 $77,129 $123,881 $90,502 $20,400 $2,142 $3,441 $2,514 $567
Class E 12 $27,852 $44,735 $32,681 $7,367 $2,321 $3,728 $2,723 $614
Class F 6 $18,746 $30,110 $21,997 $4,958 $3,124 $5,018 $3,666 $826
150 $255,489 $410,356 $299,787 $67,575
</TABLE>
<TABLE>
<CAPTION>
INCOME STATEMENT
For the
six Months
Ended For the Years Ended November 30,
May 31, 1997 1996 1995 1994
(Unaudited) (Audited) (Audited) (Audited)
<S> <C> <C> <C> <C>
Rental Income $282,215 $452,981 $327,031 $ 72,687
Other Income 8,675 14,220 14,090 4,154
Total Revenues 290,890 467,201 341,121 76,841
Total Salaries 68,525 127,377 93,648 38,243
Total Direct Expenses 80,622 150,287 141,411 111,056
Total Maintenance and Repair Expenses 2,958 25,114 37,570 30,917
152,105 302,778 272,629 180,216
Excess (Deficiency) of Operating
Revenues Over Certain Expenses $138,785 $164,423 $ 68,492 ($103,375)
</TABLE>
<PAGE>
Allocation Week-by-Week
For example, if only two Unit Weeks are left in the Rental
Pool, one Class A and one Class E, and the total rental revenue
was $1,000 (after consideration of the 5% Rental Pool fee), the
following allocation would result:
Off Season Percentage of
Nightly Rental Pool for
Category Walk-in Rate the Unit Week Total Rental Allocation
Class A 70 35% $ 350
Class E 130 65% 650
200 100% $1,000
This amount would then be paid after the end of the quarter to
the particular Holders.
CERTAIN OCCUPANCY INFORMATION
The following unaudited information sets forth the financial
results and percentage occupancy for the six months ended May 31,
1997, and for the years ended November 30, 1996 and 1995,
respectively. The Company's records do not allow it to present
occupancy information and weekly rate information for the year
ended November 30, 1994. The Company does not believe the 1994
information or results are material as the Chart House Suites
hotel was only beginning operations and did not have any prior
operating history.
CHART HOUSE SUITES HOTEL
RESULTS BY CLASS OF INTERESTS
For the Six
Months Ended For the Years Ended
May 31, November 30,
1997 1996 1995
Average Occupancy
Class A 78% 76% 63%
Class B 74% 69% 58%
Class C 71% 69% 51%
Class D 50% 45% 38%
Class E 61% 61% 59%
Class F* 90% 91% 97%
Average Unit Week
Rental Amount
(Collected)
Class A $509 $438 $397
Class B $526 $470 $426
Class C $545 $440 $390
Class D $783 $670 $563
Class E $835 $823 $709
Class F* $834 $608 $574
*Primarily rented on a monthly basis.
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 Expenses") 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). As of the date of the Prospectus,
no special assessments are contemplated.
Under the License Plan, future annual dues and special
assessments (unless assessed against a specific or group of
Holders as set forth in the License Plan,) will be allocated
based upon the following formula:
Total Per
Interest
(Eight Unit
Weeks)* Total
Class A Interest .5027% 19.6045%
(all Unit Weeks)
Class B Interest .5027% 13.0696%
(all Unit Weeks)
Class C Interest .5424% 21.1522%
(all Unit Weeks)
Class D Interest .7540% 29.4067%
(all Unit Weeks)
Class E Interest .8069% 10.4901%
(all Unit Weeks)
Class F Interest .9657% 6.2769%
(all Unit Weeks)
Total 4.074% 100.000%
* The Company will bear a proportionate share of the annual
dues and special assessments attributable to any unsold or
reacquired Interests and the Unit Weeks retained by it.
Each Holder shall be responsible for a 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). For purposes of
such a vote, the Company will vote Unit Weeks associated with
unissued Interests or Unit Weeks canceled and reacquired 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 is not bound
to follow the advice or recommendations offered therefrom. The
Company anticipates that if it acquires the hotel, property taxes
may increase by $12,231 (or approximately $75 per Interest).
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, 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 License Plan. See the License
Plan attached as Annex A.
In addition, Charthouse may levy special assessments, as set
forth in the License Plan, 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 does not exceed 5% of
the budgeted gross expenses of Chart House Suites hotel for the
calendar year; (b) 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 Chart House
Suites hotel for the calendar year in which the assessment is
levied; or (c) the assessment is a special assessment against a
Holder 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.
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, special assessments, or installment payments, and, under
the License Plan, Charthouse will may rent the suite and retain
all income. Under such circumstances, any income received will
not offset payments due from the Holder, and the Holder will not
be allowed to rent or use the suite until the complete shortfall,
with interest, is paid to the Company.
DIFFERENCES IN ALLOCATING RENTAL POOL AND ANNUAL DUES
AND SPECIAL ASSESSMENTS
Under the License Plan, Holders who participate in the
Rental Pool will receive income based upon ratios based upon the
Company's arbitrary off-season nightly walk-in rate for each
Class of suite and upon the actual number of Unit Weeks for each
Class that is participating in the Rental Pool. While arbitrary,
these ratios represent the Company's estimate of approximate
rental value rates for each Class of Interests, and the relative
percentages are fixed for all Rental Pool allocations until
December 31, 2040. Because Holders may personally use the
Interests or exchange them in RCI's Exchange Program, actual
participation rental percentages will vary. Assuming every
Interest remains in the Rental Pool for the entire year, the
following allocation percentages would apply:
<PAGE>
<TABLE>
<CAPTION>
Off Total %
Number Season Gross Total % Per
of Number Nightly Potential Total % Per Unit Interest
Studios/ of Walk-in Daily Total % Per Week (52 (Eight
Suites Interests Rate Revenue Per Class Room Weeks) Unit Weeks)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A 6 36 $70 $420 17.6101% 2.9350% 0.0564% 0.4515%
Class B 4 24 $75 $300 12.5786% 3.1447% 0.0605% 0.4838%
Class C 6 36 $85 $510 21.3836% 3.5639% 0.0685% 0.5483%
Class D 6 36 $120 $720 30.1887% 5.0314% 0.0968% 0.7741%
Class E 2 12 $130 $260 10.9015% 5.4507% 0.1048% 0.8386%
Class F 1 6 $175 $175 7.3375% 7.3375% 0.1411% 1.1289%
25 150 $2,385 100.000%
</TABLE>
<PAGE>
The actual percentage allocation among Classes of Interests will
vary in relation to how many suites are actually placed into the
Rental Pool each Unit Week.
Under the License Plan, annual dues are based upon rates
established by the Company's arbitrary conclusion as to what it
costs to clean, maintain and operate the suite. For example, the
Company believes that the costs will be similar for Class A and B
Interests, although, on average and historically, B Interests
suites have generated greater per night rental income.
Accordingly, the annual dues and special assessments, if any,
will be allocated as follows:
<PAGE>
<TABLE>
<CAPTION>
Total %
Total Total % Per
Number Annual Per Total % Interest
of Number Annual Dues Total % Per Room Per Week (Eight
Studios/ of Dues Per (52 Unit Class (52 (52 Unit (52 Unit Unit
Suites Interests Week Weeks) Unit Weeks) Weeks) Weeks) Weeks)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A 6 36 $190 $59,280 19.6045% 3.2674% 0.0628% 0.5027%
Class B 4 24 $190 $39,520 13.0696% 3.2674% 0.0628% 0.5027%
Class C 6 36 $205 $63,960 21.1522% 3.5254% 0.0678% 0.5424%
Class D 6 36 $285 $88,920 29.4067% 4.9011% 0.0943% 0.7540%
Class E 2 12 $305 $31,720 10.4901% 5.2451% 0.1009% 0.8069%
Class F 1 6 $365 $18,980 6.2769% 6.2769% 0.1207% 0.9657%
25 150 $302,380 100.000%
</TABLE>
<PAGE>
As a result of these formulas, the allocation of income will
vary week by week depending upon whether Holders leave their Unit
Weeks in the Rental Pool. The annual dues will remain a fixed
ratio. For comparison, and assuming all Interests remained in
the Rental Pool, the following average income and annual dues
allocations would result:
<PAGE>
<TABLE>
<CAPTION>
Rental Pool Participation Annual Dues Allocations
Interest (all Eight Unit Weeks) (all Eight Unit Weeks)
Total %
Per Interest Total %
Total % Eight Unit Total % Per Interest
Per Class Weeks Per Class Eight Unit Weeks
<S> <C> <C> <C> <C>
Class A 17.6101% 0.4515% 19.6045% 0.5027%
Class B 12.5786% 0.4838% 13.0696% 0.5027%
Class C 21.3836% 0.5483% 21.1522% 0.5424%
Class D 30.1887% 0.7741% 29.4067% 0.7540%
Class E 10.9015% 0.8386% 10.4901% 0.8069%
Class F 7.3375% 1.1289% 6.2769% 0.9657%
100.000% 4.225% 100.000% 4.074%
</TABLE>
<PAGE>
<PAGE>
PRO FORMA RESULTS WITH VARIOUS OCCUPANCY LEVELS
The following tables set forth different levels of pro forma
income to Holders, assuming all Unit Weeks are in the Rental Pool
and the suites are rented for the established off-season, nightly
walk-in rate, assuming different levels of occupancy. The
Company does not know what rate will be obtained, what occupancy
or what will be distributed. Based upon past results, the "off-
season, nightly walk-in rate" has not been consistently obtained.
The following tables do not represent a prediction of actual
results and may not be relied on for that purpose.
<PAGE>
<TABLE>
<CAPTION>
CHARTHOUSE SUITES VACATION OWNERSHIP, INC.
PRO FORMA REVENUE FROM RENTAL POOL
________________ASSUMED 100% OCCUPANCY PER WEEK________________
Off Allocated Allocated
Number Rental Season Gross Rental Rental
of Total Pool Nightly Revenue Income Income
Studios/ Rental Occupancy Walk-In In Rental by Unit Eight Unit
Suites Days 100.00% Rate Pool by Class Weeks
<S> <C> <C> <C> <C> <C> <C> <C>
Class A 6 42 42 $70 $2,940.00 $490.00 $3,920.00
Class B 4 28 28 $75 $2,100.00 $525.00 $4,200.00
Class C 6 42 42 $85 $3,570.00 $595.00 $4,760.00
Class D 6 42 42 $120 $5,040.00 $840.00 $6,720.00
Class E 2 14 14 $130 $1,820.00 $910.00 $7,280.00
Class F 1 7 7 $175 $1,225.00 $1,225.00 $9,800.00
25 175 175 $16,695.00
</TABLE>
<TABLE>
<CAPTION>
CHARTHOUSE SUITES VACATION OWNERSHIP, INC.
PRO FORMA REVENUE FROM RENTAL POOL
________________ASSUMED 90% OCCUPANCY PER WEEK________________
Off Allocated Allocated
Number Rental Season Gross Rental Rental
of Total Pool Nightly Revenue Income Income
Studios/ Rental Occupancy Walk-In In Rental by Unit Eight Unit
Suites Days 90.00% Rate Pool by Class Weeks
<S> <C> <C> <C> <C> <C> <C> <C>
Class A 6 42 37.80 $70 $2,646.00 $441.00 $3,528.00
Class B 4 28 25.20 $75 $1,890.00 $472.50 $3,780.00
Class C 6 42 37.80 $85 $3,213.00 $535.50 $4,284.00
Class D 6 42 37.80 $120 $4,536.00 $756.00 $6,048.00
Class E 2 14 12.60 $130 $1,638.00 $819.00 $6,552.00
Class F 1 7 6.30 $175 $1,102.50 $1,102.50 $8,820.00
25 175 157.50 $15,025.50
</TABLE>
<TABLE>
<CAPTION>
CHARTHOUSE SUITES VACATION OWNERSHIP, INC.
PRO FORMA REVENUE FROM RENTAL POOL
________________ASSUMED 80% OCCUPANCY PER WEEK________________
Off Allocated Allocated
Number Rental Season Gross Rental Rental
of Total Pool Nightly Revenue Income Income
Studios/ Rental Occupancy Walk-In In Rental by Unit Eight Unit
Suites Days 80.00% Rate Pool by Class Weeks
<S> <C> <C> <C> <C> <C> <C> <C>
Class A 6 42 33.60 $70 $2,352.00 $392.00 $3,136.00
Class B 4 28 22.40 $75 $1,680.00 $420.00 $3,360.00
Class C 6 42 33.60 $85 $2,856.00 $476.00 $3,808.00
Class D 6 42 33.60 $120 $4,032.00 $672.00 $5,376.00
Class E 2 14 11.20 $130 $1,456.00 $728.00 $5,824.00
Class F 1 7 5.60 $175 $980.00 $980.00 $7,840.00
25 175 140.00 $13,356.00
</TABLE>
<TABLE>
<CAPTION>
CHARTHOUSE SUITES VACATION OWNERSHIP, INC.
PRO FORMA REVENUE FROM RENTAL POOL
________________ASSUMED 70% OCCUPANCY PER WEEK________________
Off Allocated Allocated
Number Rental Season Gross Rental Rental
of Total Pool Nightly Revenue Income Income
Studios/ Rental Occupancy Walk-In In Rental by Unit Eight Unit
Suites Days 70.00% Rate Pool by Class Weeks
<S> <C> <C> <C> <C> <C> <C> <C>
Class A 6 42 29.40 $70 $2,058.00 $343.00 $2,744.00
Class B 4 28 19.60 $75 $1,470.00 $367.50 $2,940.00
Class C 6 42 29.40 $85 $2,499.00 $416.50 $3,332.00
Class D 6 42 29.40 $120 $3,528.00 $588.00 $4,704.00
Class E 2 14 9.80 $130 $1,274.00 $637.00 $5,096.00
Class F 1 7 4.90 $175 $857.50 $857.50 $6,860.00
25 175 122.50 $11,686.50
</TABLE>
<TABLE>
<CAPTION>
CHARTHOUSE SUITES VACATION OWNERSHIP, INC.
PRO FORMA REVENUE FROM RENTAL POOL
________________ASSUMED 50% OCCUPANCY PER WEEK________________
Off Allocated Allocated
Number Rental Season Gross Rental Rental
of Total Pool Nightly Revenue Income Income
Studios/ Rental Occupancy Walk-In In Rental by Unit Eight Unit
Suites Days 50.00% Rate Pool by Class Weeks
<S> <C> <C> <C> <C> <C> <C> <C>
Class A 6 42 21.00 $70 $1,470.00 $245.00 $1,960.00
Class B 4 28 14.00 $75 $1,050.00 $262.50 $2,100.00
Class C 6 42 21.00 $85 $1,785.00 $297.50 $2,380.00
Class D 6 42 21.00 $120 $2,520.00 $420.00 $3,360.00
Class E 2 14 7.00 $130 $910.00 $455.00 $3,640.00
Class F 1 7 3.50 $175 $612.50 $612.50 $4,900.00
25 175 87.50 $8,347.50
</TABLE>
<TABLE>
<CAPTION>
CHARTHOUSE SUITES VACATION OWNERSHIP, INC.
PRO FORMA REVENUE FROM RENTAL POOL
________________ASSUMED 25% OCCUPANCY PER WEEK________________
Off Allocated Allocated
Number Rental Season Gross Rental Rental
of Total Pool Nightly Revenue Income Income
Studios/ Rental Occupancy Walk-In In Rental by Unit Eight Unit
Suites Days 25.00% Rate Pool by Class Weeks
<S> <C> <C> <C> <C> <C> <C> <C>
Class A 6 42 10.50 $70 $735.00 $122.50 $980.00
Class B 4 28 7.00 $75 $525.00 $131.25 $1,050.00
Class C 6 42 10.50 $85 $892.50 $148.75 $1,190.00
Class D 6 42 10.50 $120 $1,260.00 $210.00 $1,680.00
Class E 2 14 3.50 $130 $455.00 $227.50 $1,820.00
Class F 1 7 1.75 $175 $306.25 $306.25 $2,450.00
25 175 43.75 $4,173.75
</TABLE>
<PAGE>
The Company does not know what rates will be obtained or
distributed. Based upon past results, the "off-season nightly
walk-in rate" has not been consistently obtained because of
discounts, seasonality and otherwise. The above does not
consider the 5% Rental Pool fee.
<PAGE>
<PAGE>
GUARANTEED RENTAL ARRANGEMENT
The following is condensed information concerning the material
terms of the Guaranteed Rental Arrangement by Charthouse.
References 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. Such amounts will be paid within
45 days of the end of the quarter for the particular Unit Week.
These rates are the off-season nightly walk-in rates (as of the
date of this Prospectus):
<PAGE>
<TABLE>
<CAPTION>
Guaranteed Total (Assuming Total (Assuming Total (Assuming
Rate Six Weeks) Four Weeks) Two Weeks)
<S> <C> <C> <C> <C>
Class A $ 70.00 per night $2,940 $1,960 $980
Class B $ 75.00 per night $3,150 $2,100 $1,050
Class C $ 85.00 per night $3,570 $2,380 $1,190
Class D $120.00 per night $5,040 $3,360 $1,680
Class E $130.00 per night $5,460 $3,640 $1,820
Class F $175.00 per night $7,350 $4,900 $2,450
</TABLE>
<PAGE>
Holders should not assume that the Rental Pool will generate
such rates. 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. The Company does not know
what rate will be obtained, what occupancy or what will be
distributed. Based upon past results, the "off-season nightly
walk-in rate" has not been consistently obtained, taking
discounts, corporate rates, and season fluctuations into
accounts.
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 Unit Weeks to the Company
and have paid the corresponding annual dues for the Unit Week.
(3) The Company will have the exclusive right to use,
exchange or rent the suite for the designated Unit 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) The Rental Pool fee of 5% will be owed, 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 Discount (described below) at the time of
subscription to purchase the Interests.
Cash Discount
The Cash Discount allows Holders 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 Cash Discount, Holders 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 Guaranteed Rental 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 in lieu of the Guaranteed
Rental Arrangement. Holders 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 in
lieu of the Guaranteed Rental Arrangement.
_________Cash Discount_________
Class 5% 3% 1-1/2%
A $ 925 $ 555 $277.50
B $1,075 $ 645 $322.50
C $1,275 $ 765 $382.50
D $1,825 $1,095 $547.50
E $1,975 $1,185 $592.50
F $3,000 $1,800 $900.00
<PAGE>
<PAGE>
Right to Amend
The Company reserves the right to amend the Guaranteed
Rental Arrangement and Cash Discount, 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.
Holders can also use financing from other parties to pay for the
Interests.
Installment Payments. Holders may also pay in installments
up to 360 months. Holders utilizing this option must pay at
least 30% 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 up to 9% per year
on the unpaid balance owing for the Interest (which has the
affect of up to 9% interest on the unpaid balance). The Company
will offer rates below 9% to Qualifying Decade Investors. See
"Plan of Distribution." If a Holder fails to make any
payment when due, then such Holder will be in default, and to the
extent such default continues, he or she will forfeit all rights,
use or otherwise, in the Chart House Suites hotel suite or studio
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 acquire and cancel the Interest, pursuant to the terms of the
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-day
cancellation period has been completed.
<PAGE>
<TABLE>
<CAPTION>
Example of Amounts of Installment Payments
Cash
Total Price
Total Payments Per
30.00% Maximum of All Per Rental Rental
Cash Down Balance Monthly Monthly Total Day 43 Day 43
Class Price Payment Due Payment Payments Payments Years Years
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
A $18,500 $5,550 $12,950 $104.20 $37,511.51 $43,061.51 $17.88 $7.68
B 21,500 6,450 15,050 121.10 43,594.45 50,044.45 20.78 8.93
C 25,500 7,650 17,850 143.63 51,705.05 59,355.05 24.65 10.59
D 36,500 10,950 25,550 205.58 74,009.19 84,959.19 35.20 15.16
E 39,500 11,850 27,650 222.48 80,092.14 91,942.14 38.18 16.40
F 60,000 18,000 42,000 337.94 121,658.94 139,658.94 58.00 24.91
</TABLE>
<PAGE>
SUMMARY OF INCOME AND COSTS TO HOLDERS
Upon subscription, a Holder will have to pay (1) at least
30% of the purchase price of the Interest, and (2) the
corresponding Florida taxes due, including an additional Florida
documentary tax for indebtedness due if the installment method is
utilized and the Subscription Agreement is executed in Florida.
See "Certain Florida Tax Considerations." Assuming no cash
discounts are applicable, the following will be due upon
subscription:
Purchase Plan
Class of Interest Minimum Due Florida Taxes
A $18,500 $5,550 $129.50
B 21,500 6,450 150.50
C 25,500 7,650 178.50
D 36,500 10,950 255.50
E 39,500 11,850 276.50
F 60,000 18,000 420.00
In order to use the Unit Weeks, a Holder will also have to
be current on all annual dues and, if applicable, special
assessments and installment payments for the Interests. See
"Annual Dues and Special Assessments." Under the Subscription
Agreement, Holders agree to pay the annual dues on a monthly
basis. Annual dues until December 31, 1998 will be as follows:
Annual Dues per Total Annual Dues Monthly Annual
Class Unit Week (Per Interest) Dues
A $190 $1,520 $126.67
B 190 1,520 126.67
C 205 1,640 136.67
D 285 2,280 190.00
E 305 2,440 203.33
F 365 2,920 243.33
The Company intends to provide Holders the option to have
monthly annual dues amounts withdrawn from his or her checking
account. If applicable, special assessments could also be
assessed.
If a Holder pays for his or her Interest on the installment
method, there will also be monthly installment payments due.
Assuming the Holder pays installment payments with 9% interest
factor submits the minimum down payment and has no cash
discounts, the following monthly payment would be due:
30% Cost For
Down Maximum Interest Per
Offering Payment Balance Monthly Rental Day
Class Price Due Due Payment (43 Years)
A $18,500 $5,550 $12,950 $104.20 $17.88
B 21,500 6,450 15,050 121.10 20.78
C 25,500 7,650 17,850 143.63 24.65
D 36,500 10,950 25,550 205.50 35.28
E 39,500 11,850 27,650 222.48 38.18
F 60,000 18,000 42,000 337.94 58.00
* Assumes purchase on January 1, 1998, and continued
ownership until December 31, 2040.
A Holder may be able to generate rental from the Rental Pool
and, if appropriate, the Guaranteed Rental Arrangement. Based
upon past results, the following would have been distributed on
average:
<PAGE>
<TABLE>
<CAPTION>
Average of Distributions per Interest
Guaranteed For the Six For the Years Ended November 30,
Rental Months Ended
Arrangement May 31,
Per Unit 1997 (Four 1996 (Eight 1995 (Eight 1994 (Eight
Class Week) Unit Weeks) Unit Weeks) Unit Weeks) Unit Weeks)
<S> <C> <C> <C> <C> <C>
A $490 $1,250 $2,007 $1,466 $331
B $520 $1,339 $2,151 $1,571 $354
C $595 $1,518 $2,437 $1,781 $401
D $840 $2,142 $3,441 $2,514 $567
E $910 $2,321 $3,728 $2,723 $614
F $1,225 $3,124 $5,018 $3,666 $826
</TABLE>
<PAGE>
The Company is unable to forecast what results will actually
be obtained, and different results may occur. The foregoing
example is based on historical Chart House results and does not
include the 5% Rental Pool fee. Actual results may differ
significantly.
<PAGE>
<PAGE>
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
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 assurances 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
$4,248,000 (exclusive of offering expenses estimated at $250,000
and sales commissions of $297,300). Guaranteed Rental
Arrangement payments are estimated to be a maximum of $601,020
(assuming everyone purchases in the first six months and does not
select the cash discount). The Company intends to pay this
obligation from rental income generated from the Charthouse
Rental Pool for the Unit Weeks it has available for rental. In
the event those funds are not sufficient, the Company believes it
still will have sufficient working capital 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
property and retain as working capital.
The Company intends to use the net proceeds in the following
order: (i) to pay offering, RCI membership and other costs
(estimated at $350,000), (ii) to pay taxes on taxable revenue
from the sale of the Interests (the Company cannot estimate this
amount because it depends upon when amounts for Interests are
received), (iii) to repay the cost of the Chart House Suites
hotel (estimated at approximately $1,800,000) and (iv) to use for
working capital.
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 7% of the offering price on all sales, even if
financed. 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 7% of the gross
proceeds of such sales. 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 will only
accept purchasers from Holders with either (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 will be held
in escrow, pursuant to the escrow agreement with William
Atkinson, a Florida real estate broker, 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. After the escrow period, funds
will be remitted to the Company for its use. See "Use of
Proceeds." Under the Soliciting Dealer Agreement. The Company
is offering sales representatives bonus Unit Weeks for the sale
of three Interests or more.
The Company has reserved the right to repurchase all
Interests if fewer than 76 Interests are sold by July 31, 1998.
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 and amounts
received from renting the suite or using the suite from the
Rental Pool. Holders will also be refunded any prepayments for
annual dues for periods after July 31, 1998. If the Company
exercises the right, it will send written notice to the Holders
by August 31, 1998 and forward any amounts owing, along with an
unaudited schedule of the calculated net amounts owing to
Holders.
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 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.
Interests may be purchased by Qualifying Decade Investors
net of any sales charge and/or, if utilizing the installment
method for Interests, at a lower rate of assumed interest. A
Qualifying Decade Investor means a person who owns a partnership
interest in an entity in which Jeffrey Keierleber is an affiliate
of or the general partner.
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 7% 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 under the
License Plan and the Rules and Regulations for Chart House Suites
Hotel 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 30% of the net subscription for the Interests, after
consideration of all discounts, plus any applicable taxes.
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 (including all annexes) and the Time Share Public
Offering Statement (attached as Annex C).
<PAGE>
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the
Company, as of June 30, 1997. The table should be read in
conjunction with the Company's 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. For additional information on the
Company see the enclosed financial statements and footnotes.
MANAGEMENT
Directors and Executive Officers
Following is information with respect to directors and
executive officers of the Company.
Name Age Position with the Company
Jeffrey Keierleber 44 President, Treasurer and Sole
Director
Michael G. Sweet 47 Secretary
The following provides additional information on officers
and others who may provide services to the Company pursuant to
agreements. It is anticipated that officers will not spend more
than 10% of their time on matters relating to the Company.
Jeffrey Keierleber, (age 44) President, Treasurer and sole
Director of the Company, graduated with a B.B.A. in 1975 and an
M.B.A. in 1977 from the University of Wisconsin system. Since
that time, Mr. Keierleber has worked 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 Series 22 and 63 securities licenses from the
NASD. 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 public
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 47) Secretary of the Company, is a
Certified Public Accountant and is the Secretary of the 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. He is a member of both the American Institute of
Certified Public Accountants and the Wisconsin Institute of
Certified Public Accountants.
Steven Cooper (age 53), 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 32), is the General Manager of Holiday
Inn Harborside Landing Hotel/Marina (also owned by an affiliate
of Jeffrey Keierleber) in Indian Rocks Beach, Florida and Chart
House marina in Clearwater Beach, Florida. He supervises and
manages the day-to-day operations of both Holiday Inn Harborside
and Chart House. 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 49) is Regional Manager of 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
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.
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 advice 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
have been selected. It is intended that all members will serve
for one-year terms, without compensation, and that they may be
reappointed without limitation.
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 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 Holiday Inn
Harborside, 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,
2040 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 in operating the Rental Pool. 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 and Rental Pool fees
that would have been owed through December 31, 2040 in the event
Decade Properties, Inc. is removed as the property manager. The
Company is unable to calculate how much would be owed in such
event.
CONFLICTS OF INTEREST OF MANAGEMENT AND AFFILIATES
Services To Be Provided by Decade Properties Inc.
Decade Properties Inc., is a licensed real estate broker and
is engaged in real estate management business. Decade
Properties, Inc. will be providing rental pool and property
management services.
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. There are no limits on
the amount of reimbursement.
Charthouse
The Company will only receive revenue or income up to
payments for its Interests, including installment payments for
Holders that decide to pay over up to 360 months, and any revenue
from the Charthouse Rental Pool for its Unit Weeks or the sale of
its Unit Weeks.
Competition
Affiliates of the Company own another hotel, affiliated with
Holiday Inns, which might compete with the Chart House Suites
hotel. The Company believes that each hotel attracts a different
class of tourist, with Chart House attracting individuals who
want to rent in Clearwater Beach and the others who will lodge
approximately 5 miles from Clearwater Beach in a larger
nationally affiliated hotel. It is probable that the two hotels
could compete, and Investors should consider the possible
conflicts of interest that arise from operating two hotels within
5 miles.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
Set forth below is a summary of certain federal income tax
considerations related to the offering. In the opinion of Quarles &
Brady, in its capacity as tax counsel to the Company, the discussion
which follows summarizes the material United States federal income tax
consequences of the purchase, ownership and disposition of Interests.
Except as otherwise stated in the summary that follows, tax counsel has
rendered an opinion on each specific federal income tax consequence.
This summary is based on the Internal Revenue Code of 1986, as
amended (the "Code"), and on judicial decisions, U.S. Treasury
regulations (the "Regulations"), and IRS rulings and other
administrative materials interpreting the Code, all of which are subject
to change, possibly on a retroactive basis. The authorities on which
this summary is based are subject to various interpretations, and the
opinions of tax counsel are not binding on the IRS or the courts, either
of which could take a contrary position. Except as noted with respect
to characterization of an Interest as a dwelling unit under Section 280A
of the Code, no rulings have been or will be sought from the IRS with
respect to the transactions described herein. Accordingly, there can be
no assurance that the IRS will not challenge the opinions expressed
herein or that a court will not sustain such a challenge.
The discussion below is general and does not address all federal
income tax considerations that may be relevant to a particular Holder of
an Interest. In addition, except as specifically stated herein, this
summary does not address the federal income tax consequences of the
purchase, ownership or disposition of Interests by foreign investors or
by investors that may be subject to special tax treatment (such as
banks, thrift institutions, real estate investment trusts, regulated
investment companies, insurance companies, other financial institutions
and tax-exempt organizations). In addition, 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.
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 RESPECT TO THE TAX CONSEQUENCES OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF INTERESTS 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 License Plan
Subject to the discussion below of "Entity Status of Rental Pool,"
in the opinion of tax counsel, it is more likely than not that the
license that a Holder will acquire from the 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 an
entity for federal income tax purposes.
A separate entity exists for tax purposes under Section 301.7701-
1(a)(2) of the Regulations if the participants in a joint venture or
other contractual arrangement (1) carry on a trade, business, financial
operation, or venture, and (2) divide the profits therefrom. Holders
may keep their Unit Weeks in the 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, certain Holders who purchase
Interests during the applicable time period may elect the Guaranteed
Rental Arrangement. Annual dues 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. Subject to the discussion below of "Entity Status
of Rental Pool," in the opinion of tax counsel, it is more likely than
not that the license that a Holder will acquire from the License Plan
creates a separate contractual relationship between the Company and each
Holder, and the sum of such separate relationships does not create an
entity for federal income tax purposes.
Entity Status of Rental Pool
The Rental Pool involves a sharing of gross revenues (less the 5%
rental fee) among various Holders. The IRS may contend that the Rental
Pool constitutes a joint venture or other contractual arrangement
engaged in a trade, business, financial operation or venture for joint
profit whose participants consist of those Holders that utilize the pool
and the Company if it places unsold Unit Weeks that it owns in the
rental pool. Although the issue is not free of doubt, tax counsel is of
the opinion that it is more likely than not that the IRS could
successfully make such a contention.
If an entity is created by the Rental Pool, the federal income tax
consequences to a Holder of an Interest will depend on whether the
entity is classified as a corporation or a partnership. If the entity
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 each Holder that participates in the Rental
Pool will be subject to tax on his or her allocable share of the
entity's income and gain. However, deduction of expenses related to a
Holder's Interest is subject to many important limitations discussed
below.
If the deemed entity is classified as a corporation or as a
"publicly traded partnership," each Holder that participates in the
rental pool will be treated as a shareholder of a corporation and (1)
the taxable income of the entity will 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 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
may not develop.
An entity engaged in a trade or business for profit is classified
as partnership if (1) it has at least two members, and (2) it is not
classified as a corporation. An entity is classified as a corporation
if it is described as a corporation under federal or state law. In
addition, an entity may elect to be taxed as an association taxable as
a corporation if the entity has at least two members.
The Company does not intend to seek a ruling from the IRS that the
relationships created by the Rental Pool create an entity engaged in a
trade, business, financial operation or venture for joint profit for
federal income tax purposes. In addition, the Company does not intend
to file an election to treat the relationships created by the Rental
Pool as a corporation taxable as an association. Consequently, in the
opinion of tax counsel, any deemed entity will be taxed as a
partnership. 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
Rental Pool, or that changes in the tax laws will not significantly
modify the statements expressed herein. Prospective Holders should
consult with, and must depend on, their own tax advisor concerning
detailed application of partnership tax rules to their specific tax
situations.
Returns of Rental Pool
The 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
Rental Pool are audited, any adjustments to items will be made to the
Rental Pool level in unified proceedings before the IRS and the courts,
rather than in separate proceedings involving each Holder. There can be
no assurance that the rental pool will not be audited and that
adjustments will not be made.
Income Tax Characterization of Interests
The IRS has declined to issue a ruling on whether an Interest will
be classified as a license, a lease or a conveyance of real property for
federal income tax purposes.
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 generally
does not have a right to occupy specific premises during a determinable
period of time. In contrast, the IRS noted that both a conveyance of
real property and a lease grant a right to occupy a defined physical
area or specific premises for a fixed or determinable time.
Because of the uncertainty of the law in this area and because
characterization of an Interest may vary depending upon the type of
Interest purchased, tax counsel is unable to express an opinion as to
whether an Interest will be classified as a license, a lease or a
conveyance of real property. Holders must consult with, and depend
upon, their own tax advisors with specific reference to their own tax
situations in determining the characterization of an Interest.
Taxation of Holders
Regardless of whether an Interest is characterized as a license,
lease or conveyance of real property, 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
Rental Pool. A Holder's right to deduct, and the extent to which he or
she may deduct, expenses associated with ownership of an Interest,
including any allocable share of deductions and losses from the Rental
Pool, will vary and may depend on (1) how the Interest is used by the
Holder, and (2) how similar Interests are used by other Holders.
Personal Use of Interest
Generally, if a Holder makes personal use of his or her Interest,
any expenses incurred in connection with the acquisition, ownership, and
disposition of the Interest will not be deductible for federal income
tax purposes regardless of whether the Interest is characterized as a
license, a lease or conveyance of real property. In certain
circumstances, as discussed in the immediately succeeding paragraphs, 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 regardless of whether the
Interest is characterized as a license, lease or conveyance of real
property because such interest will be characterized as "personal
interest" under Code Section 163(h). The interest expense, however,
will be deductible as "qualified residence interest" under Code Section
163(h) if an Interest is treated as a "qualified residence." If an
Interest is a license or a lease for income tax purposes, it will not be
treated as a "qualified residence." If an Interest is characterized as
a conveyance of real property for income tax purposes, it may be treated
as a "qualified residence" under certain circumstances. However, tax
counsel believes it is unlikely that the IRS would characterize an
Interest as a conveyance of real property. Holders should consult with
and must depend upon their own tax advisors in determining whether an
Interest is a "qualified residence" for purposes of Section 163(h).
Alternatively, if a Holder finances the acquisition of an Interest
with debt qualifying as "home equity indebtedness" under Code Section
163(h), the interest expense associated with such debt will be
deductible for tax purposes regardless of whether an Interest is
characterized as a license, lease or conveyance of real property.
Holders should consult with and must depend upon 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 a Holder rents all or part of his or her Unit Weeks, including
rentals through the 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 rights obtained under
an Interest constitute a "dwelling unit" (Code Section 280A); (2)
whether the rental activity is engaged in with the intent of making a
profit (Code Section 183); (3) 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); (4) whether the
rental activity is a "passive activity" (Code Section 469); and (5)
whether the "at-risk" rules apply (Code Section 465). The impact of the
characterization of an Interest as a license, lease or conveyance of
real property on these determinations is separately discussed with
respect to each limitation rule in the succeeding sections.
Section 280A.
Code Section 280A, which applies to a "dwelling unit" used by a
taxpayer as a residence, limits the deduction of allocable 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, trusts, 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 likely that Interests held by other
Holders would be aggregated with the Interest held by a particular
Holder, with the result that even a Holder that never uses an Interest
for personal purposes would, nevertheless, have otherwise deductible
expenses reduced pursuant to Code Section 280A causing such Holder to be
unable to fully offset rental income by allocable expenses.
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." Further, it is unlikely that the determination
of what constitutes a "dwelling unit" is dependent upon the
characterization of an Interest as a license, lease or conveyance of
real property. Because of the uncertainty in characterizing an Interest
as a license, lease or conveyance of real property and because of the
uncertainty of the law in connection with Code Section 280A, 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.
Even if an Interest and the accompanying rights under the License
do not constitute a "dwelling unit" within the meaning of Code Section
280A, a Holder may still be unable to deduct expenses incurred in
connection with the renting of all or part of his or her Unit Weeks.
Deduction of such expenses may be further limited depending upon: (1)
whether the rental activity is engaged in with the intent of making a
profit (Code 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 (Code Section 212) or whether the expenses are incurred in
connection with a trade or business (Code Section 162); (3) whether the
rental activity is a "passive activity" (Code Section 469); and (4)
whether the "at-risk" rules apply (Code Section 465).
Section 183
Regardless of whether an Interest is characterized as a license,
lease or conveyance of real property and subject to the limitations
imposed by Code Section 280A if an Interest constitutes a "dwelling
unit," Code Section 183 will allow a Holder to deduct losses incurred in
connection with the renting of his or her Unit Weeks, including rentals
through the 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 (and are also subject to
the Code Section 280A limitations as previously described if an Interest
constitutes a "dwelling unit"). Losses disallowed under Section 183 are
not merely suspended but are permanently denied.
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. (See "Personal Use of
Interest" for a discussion of those expenses that may otherwise be
deductible.) 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 (1) allocation of expenses to the specific categories of
expenses described in this paragraph, and (2) 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 contrary 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 may wish to 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 express an opinion 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 Code Section 280A disallowance rules if an Interest constitutes
a "dwelling unit" and subject to the limitations discussed below, the
expenses incurred in connection with acquiring, holding and renting an
Interest. Except as otherwise noted, the limitations apply regardless
of the characterization of an Interest as a license, lease or conveyance
of real property. Expenses, other than those which are deductible even
if the Interest is used for personal use, must be reduced
proportionately by the extent of the personal use of the Interest by the
Holder.
Under Code Sections 162 and 62(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 62(a)(4), a
taxpayer may deduct, in computing 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. Consequently, if an Interest is treated as property held
for use in a trade or business or property held for the production of
rents or royalties, a Holder is entitled to deduct in computing adjusted
gross income expenses incurred in connection with acquiring, holding and
renting an Interest, regardless of whether the Interest is characterized
as a license, lease or conveyance of real property.
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 to successfully challenge a Holder's treatment of an Interest as
such and consequently disallow the deduction of certain expenses.
If an Interest, which is not held for personal use or for use in a
trade or business, is not treated 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 or for the
production of rents or royalties, 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, for the production of rents or royalties, or for use in a trade
or business has significant tax consequences. Unfortunately, this
determination is not easily made since 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 express an opinion concerning the
determination of whether a Holder's Interest is held for use in a trade
or business, held for the production of rents or royalties or held for
the production of income. Holders are advised to consult with and must
rely upon their individual tax advisors for assistance in making this
determination.
Passive Activity Income and Loss
In addition to the limitations imposed by Code Sections 280A, 183,
162 and 212, 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 specifically 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, the term "trade or
business" is more expansive than under the general standard of Code
Section 162. Under 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 an Interest whether the
Interest is characterized as a license, lease or conveyance of real
property because, under the terms of the 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
an Interest will likely 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 or
business or whether the taxpayer has materially participated. A rental
activity is any activity where payments are principally for the use of
tangible property. If an Interest is characterized as a lease or
conveyance of real property, it is likely that the renting of an
Interest will be considered a rental activity because payments will be
received principally for the use of tangible property. If an Interest
is characterized as a license rather than a lease or a conveyance of
real property, it initially appears that the renting of an Interest
should not be considered a rental activity because the Interest is not
tangible 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 an
Interest 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 is unlikely that it will matter if the
renting of an Interest 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, Code Section 465 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 disallowed, if any, under Code Section 465, Code
Sections 280A and 183 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.
For tax years beginning after December 31, 1978, Code Section 465
generally applies to any activity engaged in by the taxpayer in carrying
on a trade or business or for the production of income. Consequently,
regardless of whether an Interest is characterized as a license, a lease
or a conveyance of real property, Code Section 465 will likely apply and
may 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."
As stated above, tax counsel believes it is unlikely that an
Interest would be characterized as a conveyance of real property.
However, if an Interest is characterized as a conveyance of real
property, 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 based upon acquisition cost and determined under the Modified
Accelerated Cost Recovery System ("MACRS") in accordance with Code
Section 168. Any deduction, however, will be subject to disallowance
under the limitations previously described herein pursuant to Code
Sections 280A, 183, 162, 212, 469 and 465 and subject to reduction for
any personal use of the Interest by the Holder.
MACRS is mandatory for most tangible (real and personal)
depreciable property placed in service after December 31, 1986. Under
MACRS, the cost of eligible property is depreciated over a 3, 5, 7, 10,
15, 20, 27.5, 31.5, or 39 year period depending upon the type of
property, by using statutory recovery methods and conventions. The cost
of residential rental and nonresidential real property is recovered
using the straight-line method and the mid-month convention.
Residential rental property is depreciated over 27.5 years and
nonresidential real property is depreciated over 39 years.
For purposes of computing depreciation, acquisition cost does not
include contingent costs. Consequently, because a Holder that pays for
his or her Interest over the term of the Interest has the right to
terminate the License at any time with no obligation to make additional
installment payments, it is likely that such Holder's acquisition cost
would include only amounts actually paid for an Interest. As a result,
a Holder would likely be required to redetermine basis as payments are
made over the term of the Interest. Under such circumstances, it is
unclear how annual depreciation expense would be calculated under MACRS.
Such Holders should consult with and must depend upon their own tax
advisors in computing any allowable depreciation expense.
If an Interest is characterized as a license or a lease, 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 based
on the acquisition cost of the Interest. Any deduction, however, will
be subject to disallowance under the limitations previously described
herein concerning Code Sections 280A, 183, 162, 212, 469 and 465. A
ratable portion of the acquisition cost will be amortized each tax year
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 at any time and incur no obligation to make
further payments upon cancellation, it is likely that the acquisition
cost would not include any amount that has not been paid (or, in the
case of an accrual basis taxpayer, is not yet due and payable). As a
result, a Holder's acquisition cost would probably include only amounts
actually paid for an Interest. As a result, a Holder would likely be
required to redetermine acquisition cost as payments are made over the
term of the Interest. In such circumstances, it is unclear how annual
amortization expense would be calculated. Such Holders should consult
with and must depend upon their own tax advisors in computing any
allowable depreciation expense.
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 a license,
a lease or a conveyance of real property, a Holder will not be able to
expense acquisition costs under Code Section 179.
Gain or Loss on Sale of Interest
No loss will be allowed in connection with the sale of an Interest
held for personal use. A Holder will be liable for federal and
applicable state and local income taxes on any gain realized on the sale
or other disposition of his or her Interest regardless of whether the
Interest is held for personal use, held for use in a trade or business
or held for the production of income. 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 or a
Section 1231 asset in the hands of the Holder. A Holder should consult
his or her own tax advisors in determining whether his or her Interest
is a capital asset or a Section 1231 asset.
If an Interest is held partly for personal use and partly for use
in a trade or business or partly for the production of income, an
apportionment of the gain or loss will be required and each portion will
be taxed in accordance with the principles stated herein.
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 280A does not apply to a corporation unless the
corporation elects Subchapter S treatment. Code Section 183 does not
apply to corporate Holders. 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 believes that it is likely that an Interest will be held to be
an "entertainment facility" within the meaning of Code Section 274
regardless of its characterization as a license, a lease or a conveyance
of real property.
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 advice
from their own tax counsel before purchasing an Interest.
Registration of Tax Shelters
In general, certain persons who sell interests in a "tax shelter"
to investors are required to register the tax shelter with the IRS. It
is not contemplated that an investment in an Interest will constitute a
"tax shelter" for purposes of the registration requirements.
Tax-Exempt Investors
The tax consequences of the purchase, ownership and disposition of
an Interest by tax-exempt entities (collectively, "Exempt Holders") may
result in the Exempt Holder recognizing "unrelated business taxable
income" ("UBTI") which would be subject to federal income taxation and
result in certain other adverse tax consequences. UBTI is income (with
specific exemptions) derived from an activity regularly carried on by a
tax-exempt entity (or by a partnership or other entity of which it is a
member) that is not substantially related to the entity's exempt
purpose. Thus, to the extent the purchase, ownership or disposition of
an Interest is unrelated to an Exempt Holder's exempt purpose, income
derived from an Interest may constitute UBTI. Notwithstanding the
foregoing, income that is interest income, dividend income or gain from
the sale or exchange of property is generally excluded from UBTI, except
to the extent that such income is derived from debt-financed property.
It has generally been the position of the IRS, however, that interest,
dividends, or rents earned by a partnership may not be excluded from
UBTI by an exempt organization even though such items of income (if
earned directly by the exempt organization) would be excluded from UBTI.
In general, debt-financed property is any property which is held to
produce income and with respect to which there is an "acquisition
indebtedness" at any time during the taxable year or during the
preceding 12 months if the property is disposed of during the tax year.
In considering the purchase of an Interest, an exempt organization
should consider whether the investment complies with the documents and
instruments governing the Exempt Holder, whether the investment will
result in UBTI to the Exempt Holder, whether the investment provides
sufficient liquidity to the Exempt Holder, especially given the fact
that there will not be a market in which the Interests can be sold or
otherwise transferred, and whether the investment is prudent.
The discussion contained herein is not a complete treatise on the
ownership of an Interest by a tax-exempt entity. There are numerous
issues involved and consequently, tax-exempt entities should consult
with and must rely upon their own tax advisors concerning the
application of federal income tax laws.
Foreign Investors
Federal income taxation of foreign Holders (including foreign
corporations) is a highly complex matter that may be affected by many
considerations, including any applicable tax treaty provisions.
Generally, any foreign Holder who participates in the Rental Pool will
be required to file a federal income tax return and will be subject to
U.S. federal income tax on the share of income allocated to him or her
less reductions for allowable deductions. Furthermore, the Code
requires the Company to withhold income tax from a foreign Holder's
share of rental pool gross receipts.
The discussion contained herein is not a complete treatise on the
ownership of an Interest by a foreign Holder. There are numerous issues
involved in ownership by a foreign Holder and consequently, foreign
Holders should consult with and must rely upon their own tax advisors
concerning the application of federal income tax laws.
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
Set forth below is a summary of certain Florida tax considerations
related to the offering. In the opinion of Quarles & Brady, in its
capacity as Florida tax counsel to the Company, the discussion which
follows summarizes the material provisions of the state and local taxes
specifically enumerated.
This summary is based on the Florida Statutes (the "Statutes"), the
Florida Administrative Code (the "Code") and on judicial and
administrative authorities interpreting the Statutes and the Code, all
of which are subject to change, possibly on a retroactive basis. The
authorities on which this summary is based are subject to various
interpretations, and the opinions of tax counsel are not binding on the
State of Florida Department of Revenue (the "Department") or the courts,
either of which could take a contrary position. Furthermore, except as
noted herein, no rulings have been or will be sought from the Department
or from local taxing authorities with respect to the transactions
described herein. Accordingly, there can be no assurance that the
Department or local taxing authorities will not challenge the opinions
expressed herein or that a court will not sustain such a challenge.
This summary covers only 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.
Holders should consult with and must depend upon their own tax advisors
concerning the application of state and local tax laws with reference to
their own tax situations.
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. The Department has advised that this excise
tax will apply at the time of the sale of an Interest because an
Interest transfers an interest in a hotel room under Florida law. The
tax will be imposed on the full 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 on the full subscription price
regardless of whether a Holder elects to pay for an Interest over the
term of the Interest. The purchaser of an Interest will be liable for
this excise tax as follows:
Tax Payable (Exclusive
Subscription Price ____of Any Discounts)___
Class A Interest $18,500 $129.50
Class B Interest 21,500 150.50
Class C Interest 25,500 178.50
Class D Interest 36,500 255.50
Class E Interest 39,500 276.50
Class F Interest 60,000 420.00
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 Company has advised tax counsel that it intends to
accept all subscription agreements for the purchase of Interests in
Wisconsin. The Department has advised tax counsel that this excise tax
will not be imposed on the subscription price of an Interest if the
subscription agreement for the Interest is accepted by the Company in
Wisconsin.
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. The tax is imposed on written
obligations to pay money that are made, executed or delivered in
Florida. It also taxes security agreements that are filed or recorded
in Florida. The Subscription and Purchase Agreement contains a written
promise to pay for those Holders that choose to pay for an Interest over
time. The Subscription and Purchase Agreement also contains a
Purchaser's default clause that relieves a purchaser of all obligations
under certain circumstances. Because the written promise to pay money
is not fixed and absolute at the time of execution, the Department has
advised that the sale of an Interest is not subject to this excise tax
unless the Interest is recorded 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.
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 discretionary county surtax of one percent, and (3) a
tourist development tax of four percent. The Department has advised tax
counsel that the purchase of an Interest will not be subject to the
combined sales tax because there is no provision in the Florida sales
tax that taxes the sale of a security. With respect to annual dues, the
Department has advised that such amounts will not be considered rental
consideration and therefore not subject to the combined sales tax
because the purchase of an Interest is a payment for the purchase of an
interest in real property and for a right to receive rental income and
is not a lease or license to use real property within the meaning of the
Florida sales tax provisions.
The Department has also advised tax counsel that the rental of a
Holder's allotted Unit Weeks under the Rental Pool will be the rental of
transient accommodations subject to the combined sales tax. The
Department has advised that the Company, as agent for the Holder of an
Interest, may register as a dealer and remit the applicable Florida
state sales tax and the discretionary county surtax due on behalf of
individual Holders on receipts from the rental of suites in the Rental
Pool. However, the tourist development tax is administered by Pinellas
County and must be remitted directly to the county tax collector. It is
uncertain whether Pinellas County will allow the Company to collect and
remit the tourist development tax on behalf of individual Holders on
receipts from the rental of suites in the 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 Florida state sales tax and the discretionary
county surtax on payments collected in connection with the rental of
Holders' suites under the Rental Pool. The Company, however, has not
received a ruling that would allow the Company to collect and remit the
tourist development tax directly to the Pinellas County tax collector on
behalf of participants in the 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 to the appropriate taxing authorities.
<PAGE>
<PAGE>
PRIOR PERFORMANCE OF JEFFREY KEIERLEBER AND AFFILIATES
Since 1980, Jeffrey Keierleber and/or affiliates have
sponsored a number of limited partnerships formed to develop, own
and operate a variety of residential and commercial properties.
Units of limited partnership interest in the partnerships have
been sold both in public and private offerings.
Jeffrey Keierleber and/or affiliates served as general
partner of 28 limited partnerships formed to invest primarily in
residential and commercial real property and to make junior
mortgage loans secured by real estate. From April 1980 to August
1989 these programs in the aggregate raised approximately
$66,136,060 from a total of approximately 6,179 individual and
corporate investors and have purchased 33 properties for
aggregate cash and debt of approximately $124,913,000.
Approximately 97% of the properties, based on cost represents
investments in residential properties (4,479 rental units) and
approximately 3% represents investments in shopping centers,
office buildings and undeveloped land. Twenty-two of the
properties (53% based on the cost), are located in Wisconsin; 10
of the properties (42% based on cost) are located in Florida; and
one property (5% based on cost) is located in Georgia. All of
the properties were existing when purchased. As of July 1, 1997,
47% of the properties (based on purchase price) have been sold.
None of the partnerships described above have investment
objectives similar to those of the Interests offered hereby.
The information presented in this section represents the
historical experience of the real estate programs managed by
Jeffrey Keierleber and his affiliates during the last ten years.
INVESTORS IN CHARTHOUSE SUITES VACATION INTERESTS SHOULD NOT
ASSUME THAT THEY WILL EXPERIENCE RETURNS SIMILAR TO THOSE
EXPERIENCED BY INVESTORS IN THE PRIOR REAL ESTATE PROGRAMS
DESCRIBED BELOW. (See also the "Prior Performance Tables").
Jeffrey Keierleber and/or his affiliates are general
partners of three partnerships, which sold real estate limited
partnership interests from 1986 through 1989: Decade's Land
Opportunity Fund ("DLOF"), Decade Companies Income Properties - a
limited partnership ("DCIP") and Decade's Monthly Income &
Appreciation Fund - a limited partnership ("DMIAF").
DCIP and DMIAF were formed to invest in equity ownership
primarily of residential and commercial real property. As of
July 1, 1997, these programs, in the aggregate, had raised
approximately $24,063,810 from approximately 2,577 individual and
corporate investors and have purchased six properties, all of
which are apartment complexes, during the last ten years for
aggregate cash and debt of approximately $41,304,000. Four of
the properties owned by these partnerships are located in
Florida, and two of the properties are located in Wisconsin. All
of the properties were existing when purchased. Three of these
properties have since been exchanged for other properties.
One non-public partnership, Decade's Land Opportunity Fund,
was formed to invest in a 38-acre parcel of undeveloped land in
New Berlin, Wisconsin. This program raised $1,000,000 from 52
individual investors and purchased the parcel of land for cash in
the amount of $522,500.
Neither Jeffrey Keierleber nor any of his affiliates, have,
within the past five years, been the subject of any criminal
conviction or pending proceeding, any order preventing them from
engaging in securities distributions or certain business
practices, or any conviction for violation of federal or state
securities laws, or except as indicated in this paragraph, any
bankruptcy or insolvency proceeding.
Set forth below is a summary as of July 1, 1997, of the
three prior real estate limited partnerships which sold Interests
in the last 10 years.
Public Nonpublic
Real Estate Real Estate
Programs Programs Total
Total Amount
of Money Raised
from Investors $24,063,810 + $1,000,000 = $25,063,810
Total Number
of Investors 2,577 + 52 = 2,629
Aggregate
Purchase Price
of Property
Acquired $41,304,000 + $ 522,500 = $41,826,500
All three of the prior real estate programs sponsored by the
affiliates of Jeffrey Keierleber in the last ten years have
invested in various forms of real estate. The following are
analyses by location and by types of properties purchased by
prior programs.
Existing properties constitute 100% of the properties by
purchase price, acquired by prior public and programs. The
nonpublic program purchase unimproved land. As of July 1, 1997,
three properties owned by a public partnership have been sold or
exchanged for other properties.
In February, 1990, the 235-unit apartment complex known as
Laguna Vista Apartments purchased by DCIP in December, 1996 for
$5,200,000 was exchanged with a nonaffiliated buyer for Town
Place Apartments with an exchange value of $6,220,000.
In August, 1993, the 168-unit apartment complex known as
Woodbridge Apartments purchased by DCIP in June, 1992 for
$4,400,000 was exchanged with a nonaffiliated buyer for Pelican
Sound Apartments with an exchange value of $5,400,000.
In April, 1994, the 200-unit apartment complex known as
Ashley Pointe Apartments purchased by DCIP in January, 1990 for
$4,493,000 was sold to a nonaffiliated buyer for cash totaling
$3,070,000.
Of the three programs sponsored by the General Partner and
Affiliates in the last ten years to acquire or finance the
acquisition of real estate, two can be considered public programs
under federal securities laws.
The following table sets forth summary information regarding
property acquisitions of public and nonpublic programs sponsored
by the General Partner or Affiliates within the last ten years.
None of these had investment objectives identical to those of
Charthouse Suites Vacation Ownership, Inc.
Property Purchased by Location
Number of Properties
Public Nonpublic Percent
Programs Programs Total of Total
Midwest 2 1 3 43%
Southeast 4 0 4 57%
Total 6 1 7 100%
Purchase Price of Properties
Public Nonpublic Percent
Programs Programs Total of Total
Midwest $12,801,000 $522,500 $13,323,500 32%
Southeast $28,503,000 $ 0 $28,503,000 68%
Total $41,304,000 $522,500 $41,826,500 100%
The following information concerns limited partnerships
previously sponsored by Mr. Keierleber and/or Affiliates and
formed to invest in or to finance the acquisition or refinance
the ownership of real estate.
The information set forth below is provided in a format
complying with regulatory requirements and is not necessarily
comparable from one partnership to another, as a result of the
varying order of priority of investment objectives, changes
inherent in the real estate market and changes in the tax laws
and the application thereof. In considering the following
discussion, prospective investors should note that persons who
purchase Interests will not acquire any ownership interest in the
partnerships to which the following relates, and its inclusion in
this Prospectus does not imply or indicate in any manner that the
Company will make any investment comparable to those discussed.
Because the primary investment will be in the license right to
Unit Weeks in a hotel, the cash flow, income tax treatment and
distributions and returns will differ substantially from those of
the partnerships discussed below.
Affiliates of Mr. Keierleber are general partners of the
following described partnerships, whose securities were not
registered under the Securities Act of 1933 (except for DCIP and
DMIAF), and all of which (with the exception of DLOF) are engaged
in the business of investing in and operating apartment complexes
properties. As a general partner, the Affiliates are
contingently liable for the obligations of the partnerships,
except to the extent that such obligations are non-recourse debt
have recourse only to the property by which the debt is secured.
The presently existing obligations of the prior partnerships for
which Mr. Keierleber and/or Affiliates has contingent
responsibility are primarily normal operating expenses, and it is
not believed that these responsibilities will materially affect
his ability to satisfy his responsibilities to the Company and
the Holders of the Interests.
THE INFORMATION IN THIS SECTION REPRESENTS THE HISTORICAL
EXPERIENCE OF PROGRAMS MANAGED BY MR. KEIERLEBER AND/OR
AFFILIATES. INVESTORS IN THE CHARTHOUSE SUITES VACATION
INTERESTS SHOULD NOT ASSUME THAT THEY WILL EXPERIENCE RETURNS
SIMILAR TO THOSE EXPERIENCED BY INVESTORS IN THE PRIOR REAL
ESTATE PROGRAMS DESCRIBED BELOW. NONE OF THE PRIOR PARTNERSHIPS
ARE HOLDING UNINVESTED FUNDS OTHER THAN AS NECESSARY OPERATING
RESERVES.
DECADE'S LAND OPPORTUNITY FUND is a $1,000,000 Wisconsin
limited partnership formed on April 20, 1989 to acquire a 38-acre
parcel of land in New Berlin, Wisconsin. An Affiliate of Jeffrey
Keierleber is the general partner of this partnership, which has
52 partners who each made an investment of at least $10,000. The
land was acquired for a total cost of $522,500.
Of the aggregate price of the properties acquired by
partnerships through private offerings of which Mr. Keierleber
and/or Affiliates was a sponsor in the last ten years, 100% was
undeveloped land.
The two other partnerships organized under the "Decade" name
are both Wisconsin limited partnerships with virtually identical
investment objectives. Decade Companies, an affiliate of Mr.
Keierleber, is the general partner of each. Unless otherwise
stated, a minimum purchase of three units representing a $3,000
investment was required of each limited partner. None of the
partnerships listed below, nor any partnerships or joint ventures
in which Mr. Keierleber is personally involved independently of
the partnerships, has acquired from or sold property to the
General Partner or any associates or Affiliate thereof.
Decade Companies Income Properties ("DCIP") is an
$18,000,000 Wisconsin limited partnership formed on June 6, 1985
with 1,879 limited partners. Individual limited partners were
required to invest $3,000, IRA limited partners were required to
invest $2,000 and pension/profit-sharing plan limited partners
were required to invest at least $25,000 in the program. The
partnership owns a 379-unit apartment complex known as Pelican
Sound in St. Petersburg, Florida, for which it paid $12,000,000
(of which $5,400,000 was provided through the exchange of
Woodbridge Apartments), a 316-unit apartment complex known as The
Meadows II in Madison, Wisconsin, for which it paid $10,050,000
and a 200-unit apartment complex known as Town Place in
Clearwater, Florida, for which it paid $7,610,000 (of which
$6,220,000 was provided through the exchange of Laguna Vista
Apartments).
Decade's Monthly Income & Appreciation Fund ("DMIAF") is a
$6,058,810 Wisconsin limited partnership formed on August 11,
1987 with 698 limited partners. Individual limited partners were
required to invest $3,000, IRA limited partners are required to
invest $2,000 and pension/profit sharing plan limited partners
were required to invest at least $25,000 in the program. The
partnership owns an 88-unit apartment complex known as The
Meadows I in Madison, Wisconsin, for which it paid $2,751,000.
The purchase price of the properties purchased by the
foregoing public partnerships total $23,411,000, of which 100%
was devoted to the purchase of residential properties.
The following table summarizes the results to investors in
the two partnerships, which have either sold their assets,
liquidated investments or refinanced property. The returns shown
include tax benefits and liabilities at the highest applicable
federal tax bracket, and all distributions of each. No
assurances can be given that purchases of Interests will receive
returns similar to those shown below.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
PROPERTY LIQUIDATIONS
Purchase
Price Sales Price
Partnership Property and Date and Date
<S> <C> <C> <C>
DCIP Laguna Vista $5,200,000 $6,220,000
Apartments-235 units 12/86 02/90
DCIP Woodbridge $4,400,000 $5,400,000
Apartments-168 units 06/92 08/93
DCIP Ashley Pointe $4,493,000 $3,070,000
Apartments-200 units 01/90 04/94
</TABLE>
<TABLE>
<CAPTION>
REFINANCING
Purchase Date Tax-Free
Partnership Property Date Refinanced Distribution
<S> <C> <C> <C> <C>
DCIP The Meadows II Apartments 01/89 11/89 0%
316 Units
DCIP Town Place Apartments 02/90 06/92 0%
240 Units
DMIAF The Meadows I Apartments 01/89 11/95 0%
88 Units
DCIP Town Place Apartments 02/90 05/96 0%
240 Units
</TABLE>
<PAGE>
PRIOR PERFORMANCE TABLES
See also the narrative disclosure at "Prior Performance of
Jeffrey Keierleber and Affiliates" in the Prospectus for
additional information regarding the partnerships.
The information presented in this section provides selected
information as to the public and non-public real estate programs
managed by Jeffrey Keierleber and affiliates.
HOLDERS OF INTERESTS SHOULD NOT ASSUME THAT THEY WILL
EXPERIENCE RETURNS, IF ANY, COMPARABLE TO THOSE EXPERIENCED BY
INVESTORS IN SUCH PRIOR REAL ESTATE PROGRAMS. HOLDERS OF
INTERESTS WILL NOT ACQUIRE ANY OWNERSHIP INTEREST IN ANY OF THE
PARTNERSHIPS TO WHICH THE FOLLOWING TABLES RELATE.
THE INCLUSION IN THIS PROSPECTUS OF THE FOLLOWING TABLES
DOES NOT IMPLY OR INDICATE IN ANY MANNER THAT THE COMPANY WILL
MAKE ANY INVESTMENTS COMPARABLE TO THOSE DISCUSSED IN THE TABLES
WITH RESPECT TO THE TYPE OF PROPERTY, CASH FLOW, INCOME TAX
DEDUCTIONS AVAILABLE TO INVESTORS OR OTHER FACTORS; NOR DOES IT
IMPLY OR INDICATE THAT THEY WILL EXPERIENCE RETURNS, IF ANY,
COMPARABLE TO THOSE EXPERIENCED BY INVESTORS IN THE PARTNERSHIPS
REFERRED TO HEREIN.
NONE OF THE PARTNERSHIPS, PUBLIC OR NON-PUBLIC, TO WHICH
THESE TABLES RELATE, HAD THE SAME INVESTMENT OBJECTIVE AS THE
VACATION INTERESTS.
TABLE I, EXPERIENCE IN RAISING AND INVESTING FUNDS. If
relevant, this table would set forth general information as of
December 31, 1996, for the last three years relating to the
experience of Jeffrey Keierleber and/or Affiliates in raising
funds, such as the gross amount of capital raised, the length of
time required to raise the stated amount, and information with
respect to the experience of Jeffrey Keierleber and/or Affiliates
in investing funds. In this regard, information is given as to
the amount of offering expenses, acquisition expenses, percent of
capital invested in properties, and other matters. Table I is
not applicable because Jeffrey Keierleber and Affiliates have not
raised funds during the last three years and therefore Table I is
omitted.
TABLE II, COMPENSATION TO SPONSOR, sets forth the various
fees paid to Jeffrey Keierleber and/or Affiliates from the
proceeds raised in each offering and from operations for the last
three years as of December 31, 1996.
TABLE III, OPERATING RESULTS OF PRIOR PROGRAMS. If
relevant, this table would set forth the yearly unaudited
operating results of prior partnerships including a Summary of
Operations, Computation of Tax Basis, Computation of Cash
Generated and Distribution Data per $1000 Investment for each of
the partnerships completing their offerings during the last five
years as of December 31, 1996. Table III is omitted because no
offerings were completed during the last five years.
TABLE IV, RESULTS OF COMPLETED PROGRAMS, describes the
results of five non-public real estate limited partnerships that
have completed operations during the last five years ended July
1, 1997. None of these partnerships had the same investment
objectives as the Interests.
TABLE V, SALES OR DISPOSALS OF PROPERTIES, describes the
disposition of nine properties held by four non-public
partnerships in the last three years ended July 1, 1997.
<PAGE>
<PAGE>
TABLE II
COMPENSATION TO SPONSOR
Other Programs
(Fourteen)
Date offering commenced Various
Dollar amount raised $44,328,810
Amount paid to sponsor from
proceeds of offering:
Underwriting fees $0
Acquisition fees $0
Dollar amount of cash generated
from operations before deducting
payments to sponsor $16,977,341
Amount paid to sponsor from operations:
Property management fees $ 2,910,308
Partnership management fees $ 99,445
Reimbursements $ 6,928,901
Leasing commissions $ 0
Interest Expense $ 644,920
Dollar amount of property sales and refinancing
before deducting payments to sponsor
-- cash $28,376,341
-- notes $ 0
Amount paid to sponsor from property sales
and refinancing:
Real estate commissions $ 0
Incentive fees $ 0
Acquisition Fees $ 242,237
Mortgage Brokerage Fees $ 232,600
Closing Cost Reimbursement $ 7,200
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
TABLE IV
RESULTS OF COMPLETED PROGRAMS
Decade Decade
Wisconsin Sunbelt
Decade Decade Decade Properties Properties
Program Name 80-II 80-III 80-XII III Largo
<S> <C> <C> <C> <C> <C>
Dollar Amount Raised $600,000 $850,000 $2,500,000 $1,116,220 $1,890,000
Number of Properties
Purchased 16 28 1 1 1
Date of Closing of
Offering 02/13/81 05/18/81 12/31/84 07/29/82 11/25/83
Date of First Sale
of Property 11/10/89 03/28/90 12/03/93 06/30/94 08/11/93
Date of Final Sale
of Property 04/08/96 09/04/92 12/03/93 06/30/94 08/11/93
Tax and Distribution Data per $1,000 Investment
Federal Income Tax Results:
Ordinary Income (Loss)
--From Operations ($3,027) ($1,851) ($1,236) ($1,533) ($2,336)
--From Recapture $119 $149 $207 $265 $221
Capital Gain (Loss) $1,908 $1,747 $1,312 $2,030 $1,115
Deferred Gain $0 $0 $0 $0 $0
Capital $0 $0 $0 $0 $0
Ordinary $0 $0 $0 $0 $0
Cash Distributions to Investors
Source (On GAAP Basis)
--Investment Income $0 $45 $283 $762 $0
--Return of Capital $0 $1,000 $530(1) $1,000 $0
Source (On Cash Basis)
--Sales $0 $1,045 $813 $1,700 $0
--Refinancing $0 $0 $0(1) $62 $0
--Operations $0 $0 $0$0 $0
--Other $0 $0 $0 $0 $0
Receivable on Net Purchase
Money Financing $0 $0 $0 $0 $0
_________________________
(1) A distribution of limited partner interests in Decade Companies Income Properties to Holders of Decade 80-XII was
made with $470 of refinancing proceeds treated as a return of capital.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
SELLING PRICE, NET OF CLOSING COSTS
AND GAAP ADJUSTMENTS
CASH MORTGAGE PURCHASE ADJUSTMENTS
DATE RECEIVED BALANCE MONEY RESULTING
OF NET OF AT TIME MORTGAGE FROM
DATE SALE CLOSING OF TAKEN BY APPLICATIONS
PROPERTY ACQUIRED (1) COSTS SALE PROGRAM OF GAAP TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
2 RESIDENTIAL UNITS,
MILWAUKEE, WI 01/31/81 08/31/94 $81,089 $0 $0 $0 $81,089(2)
2 RESIDENTIAL UNITS,
MILWAUKEE, WI 01/31/81 07/28/95 $77,473 $0 $0 $0 $77,473(3)
2 RESIDENTIAL UNITS,
HARTLAND, WI 12/31/80 04/08/96 $76,248 $0 $0 $0 $76,248(4)
2 RESIDENTIAL UNITS,
MILWAUKEE, WI 04/30/82 09/30/94 $149,921 $0 $0 $0 $149,921(5)
2 RESIDENTIAL UNITS,
MILWAUKEE, WI 04/30/82 10/17/94 $79,883 $0 $0 $0 $79,883(6)
2 RESIDENTIAL UNITS,
MILWAUKEE, WI 03/31/82 11/29/94 $76,945 $0 $0 $0 $76,945(7)
2 RESIDENTIAL UNITS,
MILWAUKEE, WI 04/30/82 12/12/95 $77,235 $0 $0 $0 $77,235(8)
2.5 UNDEVELOPED ACRES,
NEW BERLIN, WI 08/16/89 08/20/96 $49,145 $0 $0 $0 $49,145(9)
76 APARTMENT UNITS,
MIDDLETON, WI 06/30/82 06/30/94 $2,569,545 $1,061,165 $0 $0 $3,630,710(10)
</TABLE>
<TABLE>
<CAPTION>
COST OF PROPERTIES INCLUDING CLOSING AND RELATED COSTS
EXCESS
TOTAL (DEFICIENCY) OF
ACQUISITION PROPERTY OPERATING
ORIGINAL COST, CAPITAL CASH RECEIPTS
MORTGAGE IMPROVEMENT, CLOSING OVER CASH
PROPERTY FINANCING AND SOFT COSTS TOTAL EXPENDITURES
<S> <C> <C> <C> <C>
2 RESIDENTIAL UNITS, MILWAUKEE, WI $87,878 $676 $88,554 ($7,465)
2 RESIDENTIAL UNITS, MILWAUKEE, WI $70,944 $14,999 $85,943 ($8,470)
2 RESIDENTIAL UNITS, HARTLAND, WI $80,000 $2,088 $82,088 ($5,840)
2 RESIDENTIAL UNITS, MILWAUKEE, WI $74,601 $4,958 $79,559 $70,362
2 RESIDENTIAL UNITS, MILWAUKEE, WI $73,387 $10,749 $84,136 ($4,253)
2 RESIDENTIAL UNITS, MILWAUKEE, WI $73,213 $10,923 $84,136 ($7,191)
2 RESIDENTIAL UNITS, MILWAUKEE, WI $75,719 $15,173 $90,892 ($13,657)
2.5 UNDEVELOPED ACRES, NEW BERLIN, WI $0 $42,915 $42,915 $6,230
76 APARTMENT UNITS, MIDDLETON, WI $1,450,000 $1,266,658 $2,716,658 $914,052
(1) NO SALES OF PROPERTIES ARE RELATED TO PARTIES
(2) OF THE $55,183 OF GAIN RECOGNIZED, $53,602 WAS CAPITAL GAIN AND $2,121 WAS ORDINARY INCOME
(3) OF THE $57,157 OF GAIN RECOGNIZED, $56,602 WAS CAPITAL GAIN AND $1,095 WAS ORDINARY INCOME
(4) OF THE $54,911 OF GAIN RECOGNIZED, $52,607 WAS CAPITAL GAIN AND $2,304 WAS ORDINARY INCOME
(5) OF THE $133,547 OF GAIN RECOGNIZED, $125,869 WAS CAPITAL GAIN AND $7,678 WAS ORDINARY INCOME
(6) OF THE $65,234 OF GAIN RECOGNIZED, $60,144 WAS CAPITAL GAIN AND $5,090 WAS ORDINARY INCOME
(7) OF THE $64,580 OF GAIN RECOGNIZED, $59,637 WAS CAPITAL GAIN AND $4,943 WAS ORDINARY INCOME
(8) OF THE $63,817 OF GAIN RECOGNIZED, $54,151 WAS CAPITAL GAIN AND $9,666 WAS ORDINARY INCOME
(9) ALL OF THE $6,585 OF GAIN RECOGNIZED WAS CAPITAL GAIN
(10) OF THE $1,442,706 OF GAIN RECOGNIZED, $1,280, 799 WAS CAPITAL GAIN AND $161,907 WAS ORDINARY INCOME
</TABLE>
<PAGE>
<PAGE>
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 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
its director and each of its officers. The indemnification
agreements will require, among other things, that the Company
indemnify its director and officers to the fullest extent
permitted by law and advance to the director and officers all
related expenses, subject to reimbursement if it is subsequently
determined that indemnification is not permitted. Under these
agreements, the Company also must indemnify and advance all
expenses incurred by its director and officers seeking to enforce
their rights under the indemnification agreement and cover the
director and officers under the Company'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 the director, officers or
persons controlling the Company 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, the Company
will cause the party seeking indemnification to apprise the 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" and "Certain Florida 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 materially adverse effect 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.
EXPERTS
The balance sheet of the Company, dated as of June 30, 1997,
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 hotel
for the fiscal years ending November 30, 1994 through 1996 have
been audited by Virchow, Krause & Company, independent auditors,
and they are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
<PAGE>
<PAGE>
FINANCIAL STATEMENTS AND RELATED INFORMATION
Charthouse Suites
Vacation Ownership, Inc.
Balance Sheet
June 30, 1997
with Report of Independent Auditors
<PAGE>
<PAGE>
Charthouse Suites Vacation Ownership, Inc.
Balance Sheet
June 30, 1997
Contents
Report of Independent Auditors . . . . . . . . . . . . . . . .1
Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . .2
Notes to Balance Sheet . . . . . . . . . . . . . . . . . . . .3
<PAGE>
<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 June 30,
1997. 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 June 30, 1997, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Milwaukee, Wisconsin
July 25, 1997
<PAGE>
<PAGE>
Charthouse Suites Vacation Ownership, Inc.
Balance Sheet
June 30, 1997
Assets
Cash $ 1,710
Prepaid expenses 8,290
Total assets $ 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>
<PAGE>
Charthouse Suites Vacation Ownership, Inc.
Notes to Balance Sheet
June 30, 1997
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 (through an Offering) to
rent or use the Chart House Suites Hotel (the Hotel) located
in Clearwater, Florida. The Company intends to sell A, B,
C, D, E and F Class Interests (the Interests). 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, 2040, 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:
Number of Price Per
Class of Interest Interests Interest
A Interest 36 $18,500
B Interest 24 21,500
C Interest 36 25,000
D Interest 36 36,500
E Interest 12 39,500
F Interest 6 60,000
Amounts received by the Company in connection with the sale
of the license interests will be recorded as income over the
contractual life of the license agreement, using the
straight-line method. Assuming the maximum number of
Interests are sold, the gross proceeds from the sale will be
approximately $4,248,000 exclusive of offering expenses. If
fewer than 76 Interests are sold by July 31, 1998, the
Company has an option to cancel the licenses and return the
entire subscription amount, reduced by certain payments or
benefits received, to investors.
<PAGE>
<PAGE>
Charthouse Suites Vacation Ownership, Inc.
Notes to Balance Sheet (continued)
1. Organization, Description of Business, and Planned
Offering (continued)
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 Charthouse Suites Vacation License
Plan with Decade Properties Inc. (Decade, an affiliate of
the Company) 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 30% of the subscription price
and entering into a subscription agreement for the remainder
of the subscription price to be payable over a maximum of
360 monthly installments with increased licensing payments
up to a maximum 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 unit weeks 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.
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 June 30, 1997, the
sole shareholder had paid $10,000 of the subscribed amount.
<PAGE>
<PAGE>
Charthouse Suites Vacation Ownership, Inc.
Notes to Balance Sheet (continued)
3. Transactions with Related Parties
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 sell the hotel to the Company (see Note 7) and
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, 2040, 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 defined expenses. The Property
Management Agreement provides for a payment to Decade equal
to the present value (using an 8% 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 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 June 30, 1997, $174,634 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.
<PAGE>
<PAGE>
Charthouse Suites Vacation Ownership, Inc.
Notes to Balance Sheet (continued)
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 June 30, 1997, 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.
Pro Forma Acquisition (Unaudited)
On June 30, 1997, the Company entered into an agreement to
acquire the Hotel from Decade for approximately $1.8
million. The purchase is contingent upon the Offering
achieving the sale of the 76 interests. Decade will provide
financing for the whole purchase price of approximately $1.8
million through an unsecured demand note payable with
interest only payable monthly at 8%. The following
unaudited pro forma balance sheet as of June 30, 1997,
reflects the acquisition of the Hotel from Decade that will
occur subsequent to June 30, 1997, as if such transactions
had occurred as of June 30, 1997.
<PAGE>
<PAGE>
Charthouse Suites Vacation Ownership, Inc.
Notes to Balance Sheet (continued)
7. Pro Forma Acquisition (Unaudited) (continued)
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Balance Sheet
June 30, 1997
(unaudited)
Historical Pro-Forma
Charthouse Charthouse
Suites Vacation Suites Vacation
Ownership, Ownership,
Inc. Acquisition Inc.
<S> <C> <C> <C>
Assets
Cash $ 1,710 $ 1,710
Prepaid expenses 8,290 8,290
Investment in real estate $1,811,900(A) 1,811,900
Total assets $ 10,000 1,811,900 $1,821,900
Liabilities and Shareholder's equity
Note payable to affiliate $1,811,900(A) $1,811,900
Common stock, par value $.01 per
share, authorized 100,000
shares, issued 1,000 shares 10 10
Paid-in capital 99,990 99,990
100,000 100,000
Less: Stock subscription receivable 90,000 90,000
Total shareholder's equity 10,000 10,000
Total liabilities and shareholder's equity $ 10,000 $1,811,900 $1,821,900
(A) To reflect the acquisition of the Charthouse Hotel and the financing provided from Decade Properties, Inc.
</TABLE>
<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>
CHART HOUSE SUITES
Clearwater, Florida
STATEMENT OF OPERATING REVENUES
AND CERTAIN EXPENSES
For the six months ended May 31, 1997
(unaudited)
<PAGE>
<PAGE>
CHART HOUSE SUITES
TABLE OF CONTENTS
For the six months ended May 31, 1997
(unaudited)
Statement of Operating Revenues and Certain Expenses 3
Note to Financial Statement 5
CHART HOUSE SUITES
STATEMENT OF OPERATING REVENUES AND CERTAIN EXPENSES
For the six months ended May 31, 1997
(unaudited)
OPERATING REVENUES
Total rental income $282,215
OTHER INCOME
Telephone 4,810
Miscellaneous/other 1,972
Sales tax income 336
Interest income 1,557
Total Other Income 8,675
Total Operating Revenues 290,890
CERTAIN EXPENSES
Salaries
Salaries-administration 2,843
Salaries-housekeeping 12,152
Manager on-site 11,897
Operations/front desk 13,285
Salaries-maintenance/grounds 9,598
Payroll taxes (included above) ----
Management fee 18,750
Total Salaries 68,525
Direct Expenses
Insurance 6,246
Maintenance services/supplies 3,110
Electric-units 6,805
Propane gas 3,492
Water/sewer 6,359
Trash removal 1,320
Cable television 1,454
Grounds 760
Sales and marketing 11,580
Telephone 4,398
Laundry/cleaning supplies 4,447
Real estate tax 13,800
Administrative miscellaneous 16,851
Total Direct Expenses $ 80,622
REPAIR AND MAINTENANCE EXPENSES
Roof $ ----
Painting ----
Furniture/equipment/interior 1,974
Pool maintenance ----
Pavement ----
Other maintenance 984
Total Repair and Maintenance Expenses 2,958
Total Expenses 152,105
EXCESS OF OPERATING REVENUES
OVER CERTAIN EXPENSES $138,785
CHART HOUSE SUITES
NOTE TO FINANCIAL STATEMENT
For the six months ended May 31, 1997
(unaudited)
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. The hotel opened for business on April 21,
1994.
Basis of Accounting
The accompanying statement of operating revenues and certain
expenses reflects 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>
<PAGE>
GLOSSARY
"Annual Assessment" means the share of funds required for
the payment of Common Expenses, which is assessed annually
against a Licensee by the Company.
"Articles" means the Articles of Incorporation of the
Company.
"Assigned Unit" means the Unit of a certain category of
hotel suite or studio assigned to a Licensee by the Company at
the time of conveyance of a License, which the Licensee may
occupy during the Licensee's "Assigned Unit Week" (as hereinafter
defined).
"Assigned Unit Week" means the Unit Week assigned to a
Licensee by the Company at the time of conveyance of a License.
"Board" means the Board of Directors of the Company.
"By-Laws" means the By-Laws of the Company.
"Charthouse Rental Pool" means the income generated from the
rental of Unit Weeks placed in pool the plus miscellaneous income
from operating the Chart House Suites hotel such as telephone
income.
"Common Amenities" means the Resort Facility's swimming
pool, administrative office and laundry facilities. The Common
Amenities may be expanded from time to time, in the sole
discretion of the Company, in the manner provided for in the
License Plan. Licensees of the Resort Facility do not acquire
any direct ownership in the Common Amenities. However, the
Common Amenities are available for reasonable use by Licensees.
"Common Areas" means those portions of the Resort Facility
which are not included in the Units or Common Amenities.
"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 and the Common Amenities, including, but not limited
to, real estate taxes, costs of carrying out the powers and
duties of the Company and costs of fire and extended
coverage insurance; and
2. Any other expenses designated as "Common Expenses"
in accordance with applicable law by the Company, in its
sole discretion, or as set forth in the License Plan.
"Company" means Charthouse Suites Vacation Ownership, Inc.,
a Florida corporation, its grantees, successors and assigns.
"Holder" means the owner of a License, as reflected on the
books and records of the Company.
"Interests" means Class A, B, C, D, E and/or F Charthouse
Suites Vacation Interests described in the Prospectus and the
License Plan.
"License" means the ownership of a time share license which
is an estate for years, terminating on December 31, 2040 as
described in the Plan.
"Licensee" means a person to whom the Company has conveyed
of record of a License, his heirs, successors and assigns.
"License Plan" means the Charthouse Suites Vacation License
Plan, as amended from time to time. See Annex A.
"Resort Facility" means the property described on Exhibit
"A" attached to the 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
does not include the attached marina, which remains the sole and
exclusive property of Decade Properties, Inc., or its grantees,
successors and assigns.
"Rental Pool" means the arrangement under which rental and
certain other revenues attributable to Units available for rental
in a Unit Week are aggregated and shared among Licensee making
their Units available for rental during that Unit Week through
the Rental Pool.
"Rules and Regulations" means the Rules and Regulations for
Chart House Suites Hotel. See Annex B.
"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 the Company 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 the Company in its sole discretion; provided, however, that
the Service Period will not normally be less than three hours nor
more than seven hours.
"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.
"Suite" means a suite or studio at the Chart House Suites
hotel as described in detail in the License Plan.
"Unit" means a part of the Resort Facility which is subject
to exclusive possession of a Licensee.
"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
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 (the
"Developer").
WHEREAS, the Developer is the escrowed owner in fee simple
of the real property described on Exhibit "A" attached hereto
(the "Property"); and
WHEREAS, the Developer desires to sell Vacation Interests
(the "Interests"), which shall entitle the holder to the income
arising from rental or, upon the proper notice, the license right
to use for eight weeks in each calendar year (two weeks in each
season), a studio or suite of a certain category in Charthouse
Suites located upon the Property, until December 31, 2040,
pursuant to the terms of a Subscription and Purchase Agreement
for Charthouse Suites Vacation 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 studios or 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 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, 2040, 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 Chart House Suites hotel
property described on attached Exhibit A, all improvements
thereon (including the 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 or
its successor.
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 studios or 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 the
Developer. The Resort Facility does not include the Marina. The
Developer has been formed to facilitate the sale of Interests to
use the Resort Facility.
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 Unit, 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, 2040. 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 or studio 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 with
Studio: two queen-sized beds overlooking the
marina and Clearwater Bay, for two weeks
in each season until December 31, 2040.
Units 201, 202, 301, 302, 401 and 402 in
Chart House Suites hotel are the studios
applicable to the Class A Interests.
Class B The ownership of B Interests allows the
Interest"King Licensee use of a spacious king studio
Studio: with one king-sized bed overlooking the
marina and Clearwater Bay, for two weeks
in each season until December 31, 2040.
Units 103, 104, 105 and 106 in Chart
House Suites hotel are the studios
applicable to the Class B Interests.
Class C The ownership of C Interests allows the
Interests"Large Licensee use of a large studio with two
Studio: queen-sized beds overlooking Clearwater
Bay, the marina or southern exposure,
for two weeks in each season until
December 31, 2040. Units 101, 102, 206,
207, 305 and 306 in Chart House Suites
hotel are the studios 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, 2040. Units 204, 303, 304,
307, 403 and 404 in Chart House 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 lanai): with lanai, with a view of Clearwater
Bay, for two weeks in each season until
December 31, 2040. Units 203 and 205 in
Chart House 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, 2040. Unit 405 in Chart
House 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 may determine from time to time,
unless the Developer consents 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 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 Managing Entity, or Developer or any other representative or
employee of the Managing Entity, 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
Per Interest
Total By Class
Per Class (8 Unit Weeks)
Class A Interest - 19.6045% .5027%
Class B Interest - 13.0696% .5027%
Class C Interest - 21.1522% .5424%
Class D Interest - 29.4067% .7540%
Class E Interest - 10.4901% .8069%
Class F Interest - 6.2769% .9657%
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, 1998, 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 - $190.00
Class B - $190.00
Class C - $205.00
Class D - $285.00
Class E - $305.00
Class F - $365.00
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, the Developer 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 or studio during such
Licensee's assigned Unit Weeks if the Licensee is not current in
the payment of Annual Assessments or payments for Interests 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 and Allocation of Income. In the
event a Licensee has cancellation rights under Chapter 721, F.S.
or the Plan is canceled because 76 Interests are not sold by July
31, 1998, in order to calculate the benefit for calculating the
anticipated return, the amount shall be:
Dollar Amount Benefit
Per Night
Interest A $ 70.00
Interest B $ 75.00
Interest C $ 85.00
Interest D $120.00
Interest E $130.00
Interest F $175.00
In allocating the Charthouse Rental Pool Income for the Unit
Weeks that are not removed from the rental pool, the Income shall
be allocated to participating Unit Weeks, based upon 52 weeks in
a year, as follows:
<PAGE>
<TABLE>
<CAPTION>
Off
Season Gross
Number Number Nightly Potential Total % Total % Per
of of Walk-in Daily Total % Total % Per Week Interest 8
Class Rooms Interests Rate Revenue Per Class Per Suite (52 Weeks) Weeks
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A Interest 6 36 $70 $420 17.6101% 2.9350% 0.0564% 0.4515%
B Interest 4 24 $75 $300 12.5786% 3.1447% 0.0605% 0.4838%
C Interest 6 36 $85 $510 21.3836% 3.5639% 0.0685% 0.5483%
D Interest 6 36 $120 $720 30.1887% 5.0314% 0.0968% 0.7741%
E Interest 2 12 $130 $260 10.9015% 5.4507% 0.1048% 0.8386%
F Interest 1 6 $175 $175 7.3375% 7.3375% 0.1411% 1.1289%
</TABLE>
<PAGE>
<PAGE>
The Developer or Managing Partner shall calculate the results and
forward the net funds collected on a quarterly basis.
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 cost of the Interest 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 (in
addition, any income from the rental pool, will become the
Developer's property) until any delinquencies are paid in full.
The Developer shall have the right to proceed against the
Interest holder at low or in equity for amounts owing or unpaid
as due.
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 or payment for the Interest 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 (and any income from the rental pool, which will forever
become the sole Developer's property). Such denial of use shall
also extend to those parties claiming under the Licensee
(including any exchange programs, if applicable). 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 up
to 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 posted rate in the
suite, 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 or studio 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, which must be paid
immediately or the Holdover Licensee shall be in default and
subject to the provisions of this Article.
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, 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.
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,
and rent loss coverage, 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
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 Developer 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, 2040 and the
denominator is 43. The Developer 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, 2040 and
the other portion to the Developer for the value of the
Developer'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 Developer 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 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 with such rules and
regulations.
ARTICLE XIV
AMENDMENTS TO THE PLAN
This Plan may be amended with the consent of the Developer
and 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.
ARTICLE XV
TERMINATION
A. Notwithstanding any provision to the contrary, in the
event that less than 76 Interests are sold by the Developer by
July 31, 1998, 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 Developer shall
calculate benefits as provided in Article IV. 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
REMAINDER INTEREST
By acceptance of a License subject to this Plan, each
Licensee acknowledges the Developer's remainder interest (the
"Remainder Interest") in that the License to each Licensee
consists of a license which terminates on December 31, 2040, or
such earlier date as provided herein.
The Remainder Interest is transferable by the Developer, 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: ____________________ Its: _________________________
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
RULES AND REGULATIONS
FOR
CHART HOUSE 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 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 Chart House 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 Chart House Suites
hotel operations by an Holder, nor shall anything be stored
in the affiliated areas 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 Chart House Suites hotel which will increase the
rate of insurance on the Chart House Suites hotel 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 Chart House
Suites hotel, 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 Chart House 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 Chart House Suites hotel, 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 Charthouse Suites
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 Chart House Suites hotel,
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 Chart House Suites 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 Chart House Suites
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 Charthouse Suites Vacation
License Plan, nothing shall be altered or constructed in or
removed from the Chart House Suites hotel.
9. Nothing shall be done in any Suite or in any other part of
the Chart House Suites hotel which will impair the
structural integrity of the Chart House Suites hotel or
which would structurally change the Chart House Suites
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 Chart House Suites hotel. The Chart House
Suites 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 Chart House Suites hotel.
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 Chart House Suites hotel, other
than rental of Suites, use of the Suite as sales offices and
for other business purposes permitted by the Charthouse
Suites Vacation License Plan, including, but not limited to,
those business purposes related to the common areas.
14. No public hall of the Chart House Suites hotel 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 Charthouse Suites 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
Chart House Suites hotel, 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
Chart House Suites hotel 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 Chart House
Suites hotel, 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 Chart House Suites hotel. 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
Chart House Suites hotel 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 Chart House Suites hotel.
22. The Chart House Suites hotel 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 Chart House Suites hotel. Holders shall
only have access to the Chart House Suites hotel 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
Pinnelas 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 Chart House
Suites 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 Chart
House Suites 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 roller skates are strictly
prohibited anywhere in the Chart House Suites hotel.
<PAGE>
<PAGE>
ANNEX C
TIME SHARE PUBLIC OFFERING STATEMENT
PUBLIC OFFERING STATEMENT
FOR
CHARTHOUSE SUITES VACATION INTERESTS
THIS PUBLIC OFFERING STATEMENT CONTAINS IMPORTANT MATTERS TO BE
CONSIDERED IN ACQUIRING A TIME SHARE 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 VACATION LICENSE PLAN, THIS PUBLIC
OFFERING STATEMENT OR THE PROSPECTUS.
<PAGE>
<PAGE>
INDEX TO PUBLIC OFFERING STATEMENT
TEXT AND EXHIBITS
TAB # PUBLIC OFFERING STATEMENT
0 Public Offering Statement Text
1 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 Non-Disturbance 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 VACATION 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 . . . 10
B. CLUB MEMBERSHIP OR RECREATIONAL LEASE, AS
APPLICABLE. . . . . . . . . . . . . . . . . . . . . 11
C. TERM OF PLAN. . . . . . . . . . . . . . . . . . . . 11
D. RESPONSIBLE ENTITIES. . . . . . . . . . . . . . . . 12
1. The Entities . . . . . . . . . . . . . . . . . 12
2. Judgments and Pending Lawsuits . . . . . . . . 14
E. RESORT/COMPONENT SITE . . . . . . . . . . . . . . . 14
1. The Resort Accommodations and Facilities . . . 14
a. Restrictions on Use. . . . . . . . . . . . 16
(1) Occupancy and Use Restrictions. . . . 16
b. Private Use. . . . . . . . . . . . . . . . 18
c. Rules and Regulations. . . . . . . . . . . 18
2. Phasing. . . . . . . . . . . . . . . . . . . . 19
3. Recreational Facilities. . . . . . . . . . . . 19
4. Financial Arrangements for Promised
Improvements . . . . . . . . . . . . . . . . . 20
5. Utilities. . . . . . . . . . . . . . . . . . . 20
6. Insurance. . . . . . . . . . . . . . . . . . . 20
7. Leasing of Units/Sale of Whole Units . . . . . 22
8. Disclosures Regarding Real Property. . . . . . 23
9. Description of Developer Financing . . . . . . 23
10. Control of Association . . . . . . . . . . . . 23
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 . . 25
3. Status of Title Underlying Each
Resort/Component Site. . . . . . . . . . . . . 25
4. Restrictions Upon Rental or Resale . . . . . . 26
5. Special Risk Factors . . . . . . . . . . . . . 26
H. EXCHANGE PROGRAM OPPORTUNITIES. . . . . . . . . . . 27
I. SERVICE, MAINTENANCE OR RECREATIONAL CONTRACTS OR
LEASES THAT MAY BE CANCELED BY LICENSEES. . . . . . 28
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
studio or 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
at 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 owned by Charthouse Suites Vacation Ownership,
Inc. 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, and 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 Charthouse 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),
be 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 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, 2040, 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 Vacation License Plan, as amended from time to
time.
Q. "Resort Facility" means the property described on Exhibit
"A", attached to the Charthouse 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 the Developer 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 (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.
T. "Special Assessment" means a share of funds required for
the payment of Common Expenses or other expenses, which from time
to time is assessed against a Licensee in addition to the Annual
Assessment.
U. "Time Share License" or "License" means the ownership of
a time share license, which is an estate for years, terminating on
December 31, 2040.
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 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.
<PAGE>
<PAGE>
II. REQUIRED DISCLOSURES
A. THERE IS A LIEN OR LIEN RIGHT AGAINST EACH 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 CANCELLATION
OF THE RIGHT TO USE THE UNIT.
For a more complete description, please refer to Article
V of the Charthouse 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 Charthouse Vacation
License Plan, attached as Exhibit "A19" to the Public Offering
Statement.
C. THE PURCHASE OF A TIME SHARE 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 MAY BE
RESOLD.
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 TIME SHARE
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 ACCORDANCE WITH THE PLAN AND 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
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 TIME SHARE IN THE EVENT THAT LESS THAN 76
INTERESTS (OF ANY CLASS) ARE SOLD BY THE DEVELOPER BEFORE JULY 31,
1998.
III. PUBLIC OFFERING STATEMENT TEXT
This Summary does not purport to be a complete description of
the Charthouse Suites Vacation 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, 2040, a studio or suite of a certain
category in the Chart House Suites hotel located in Clearwater
Beach, Florida. The Licensee will have the flexibility to use one
or more of the eight unit weeks each year, place one or more unit
weeks in the Charthouse rental pool and receive net earnings
arising from renting suites, if any, or join RCI Exchange Program
and utilize the RCI Exchange Program to exchange vacation weeks at
the Chart House Suites hotel for vacation weeks at approximately
2,000 RCI affiliated resorts located around the world.
A. THE TIME SHARE PLAN
1. The Plan
The name of units of the Time Share Plan is Charthouse
Suites Vacation Interest, and all accommodations and facilities are
located at 850 Bayway Blvd., Clearwater Beach, Florida. The Resort
Facility is owned in escrowed fee simple by the Developer, without
any outstanding mortgages, except a note to Decade Properties,
Inc., a related party. The deed is held in escrow by the
Developer's law firm. If 76 Interests are not sold by July 31,
1998 and the Plan is canceled, the property may be returned to
Decade Properties, Inc. 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, including the
Developer, its successors and assigns. The Common Amenities shall
be located on the property and are described in the Charthouse
Vacation License Plan, but do not include the marina.
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, 2040, 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 unit weeks
each calendar year (two weeks in each season) terminating on
December 31, 2040. 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
studio or 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--Standard The ownership of A Interests
Studio: allows the Licensee use of a
standard studio with 2 queen-
sized beds overlooking the
marina and Clearwater Bay, for
two weeks in each season until
December 31, 2040. Units 201,
202, 301, 302, 401 and 402 in
Chart House Suites hotel are
the studios applicable to the
Class A Interests. The studios
have approximately 364 square
feet.
Class B Interests--King Bed The ownership of B Interests
Studio: allows the Licensee use of a
studio with 1 king-sized bed
overlooking the marina and
Clearwater Bay, for two weeks
in each season until
December 31, 2040. Units 103,
104, 105 and 106 in Chart House
Suites hotel are the studios
applicable to the Class B
Interests. The studios have
approximately 360 square feet.
Class C Interests--Large The ownership of C Interests
Studio: allows the Licensee use of a
large studio with 2 queen-sized
beds overlooking Clearwater
Bay, the marina or southern
exposure, for two weeks in each
season until December 31, 2040.
Units 101, 102, 206, 207, 305
and 306 in Chart House Suites
hotel are the studios
applicable to the Class C
Interests. The studios have
approximately between 430 and
436 square feet.
Class D Interests--1 Bedroom The ownership of D Interests
Suite: allows the 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, 2040.
Units 204, 303, 304, 307, 403
and 404 in Chart House Suites
hotel are the suites applicable
to the Class D Interests. The
suites have approximately
between 638 and 869 square
feet.
Class E Interests--1 Bedroom The ownership of E Interests
Suite (with lanai): allows the Licensee use of a
one-bedroom suite with lanai
with a view of Clearwater Bay,
for two weeks in each season
until December 31, 2040. Units
203 and 205 in Chart House
Suites hotel are the suites
applicable to the Class E
Interests. The suites have
approximately between 815 and
982 square feet.
Class F Interest-- Penthouse: The ownership of F Interests
allows the 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, 2040.
Unit 405 in Chart House 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. Except for the holder of F
Interests, 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 the Developer, successors,
grantees and assigns. 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", attached to this Public Offering Statement.
<PAGE>
<PAGE>
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 Charthouse 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
Per Interest
Total of Category (8 Unit Weeks)
Class A Interest - 19.6045% .5027%
Class B Interest - 13.0696% .5027%
Class C Interest - 21.1522% .5424%
Class D Interest - 29.4067% .7540%
Class E Interest - 10.4901% .8069%
Class F Interest - 6.2769% .9657%
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. Amount shall be
paid monthly before use of the Unit Week, as provided by the
Managing Entity.
For the period through and including December 31, 1998, 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 - $190.00
Class B - $190.00
Class C - $205.00
Class D - $285.00
Class E - $305.00
Class F - $365.00
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
studio or 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 and
including 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 Charthouse 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 is 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 Plan, and,
specifically, there are no other recreational leases or club
memberships associated with this Charthouse 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, 2040. Notwithstanding any provision to the contrary,
in the event that less than 76 Interests are sold by the Developer
by July 31, 1998, 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 provides
for 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
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 Charthouse 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 Non-Disturbance
and Notice to Creditors is recorded and shall continue for a period
of 43 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 Charthouse 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
Charthouse 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
Charthouse Vacation License Plan upon the
request of the Division.
The compensation payable to the managing entity by
Licensees in Charthouse Suites Vacation Interests shall be equal to
$2,500 per month plus reimbursement of all expenses and out of
pocket costs incurred by providing services. Increases in
compensation may take place annually, pursuant to agreement in
writing between Charthouse Suites Vacation Ownership, Inc. and the
managing entity, which is based on increases in the 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 Charthouse 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) Unit Week 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, 2040. 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:
<PAGE>
<PAGE>
Class A Interests-- The ownership of A Interests allows the
Standard Studio: Licensee use of a standard studio with 2
queen-sized beds overlooking the marina
and Clearwater Bay, for two weeks in each
season until December 31, 2040. Units
201, 202, 301, 302, 401 and 402 in Chart
House Suites hotel are the studios
applicable to the Class A Interests.
Class B Interest-- The ownership of B Interests allows the
King Sized Bed Licensee use of a spacious king studio
Studio: with 1 king-sized bed overlooking the
marina and Clearwater Bay, for two weeks
in each season until December 31, 2040.
Units 103, 104, 105 and 106 in Chart
House Suites hotel are the studios
applicable to the Class B Interests.
Class C Interests-- The ownership of C Interests allows the
Large Studio: Licensee use of a large studio with 2
queen-sized beds overlooking Clearwater
Bay, the marina or southern exposure, for
two weeks in each season until
December 31, 2040. Units 101, 102, 206,
207, 305 and 306 in Chart House Suites
hotel are the studios applicable to the
Class C Interests.
Class D Interests--1 The ownership of D Interests allows the
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, 2040. Units 204, 303, 304,
307, 403 and 404 in Chart House 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, 2040. Units 203 and 205 in
Chart House 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, 2040. Unit 405 in Chart
House 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 for the Interests or for 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 or 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 Charthouse
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,
they are to be used and occupied on a mutual and non-exclusive
basis by Licensees in the Resort Facility. 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
<PAGE>
<PAGE>
c. Laundry Room
(1) 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, 2040. 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 Charthouse 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, 2040 and the denominator is 53. 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 studio or 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.
<PAGE>
<PAGE>
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 (70%) 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 terms, 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 Charthouse 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 as 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, 1997 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, 1998,
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 - $190.00
Class B - $190.00
Class C - $205.00
Class D - $285.00
Class E - $305.00
Class F - $365.00
Until December 31, 1998, 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 Charthouse 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 Charthouse Vacation License Plan and
this Public Offering Statement. In such event, the Charthouse
Vacation License Plan provides that a Licensee will receive the
price of their Interest (exclusive of assessments) less any
benefits received. The Charthouse 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. Sales and document taxes imposed by the Florida
Department of Revenue.
e. The only additional charges to which a Licensee
shall be subject to 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
Escrowed title to the Resort Facility and title to the
Common Amenities is vested in the Developer and by Decade
Properties, Inc., as held by the Developer's escrow agent. 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 Non-Disturbance 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 Non-
Disturbance 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
Charthouse 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 Charthouse 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, and (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 Charthouse Vacation License 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 time share 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 receipt of the subscription area
for 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" 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" and not those of the
Developer, and further, that RCI" is an independent company not
affiliated or connected with the Developer in any way. Developer
has agreed to pay to RCI", on behalf of Licensee, the first year's
exchange membership dues. All future membership or exchange dues
assessed by RCI" 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 Exchange Program, upon
payment of membership fees to RCI. Upon subscription, the Company
intends to pay the costs of a Licensee's one year subscription in
RCI. RCI Exchange Program allows members to deposit a week or more
of vacation time at the Chart House 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 Chart House Suites hotel, up to 24 months in
advance, and then requests an exchange from one of the
approximately 2,000 RCI affiliated resorts around the world. Under
this program, a Licensee may exchange weeks, whether or not the
deposited Chart House Suites hotel weeks are used by another RCI
member. RCI 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 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 Exchange Program. Under the terms of the
RCI 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 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.
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
Charthouse 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 Charthouse 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
Charthouse 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 Chart
House 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 $ 70.00 per night $2,940
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 studio or 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 owed for amounts received.
(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 on
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>
EXHIBIT "1"
CHARTHOUSE SUITES VACATION INTERESTS
MEMBERSHIP AGREEMENT OR RECREATIONAL LEASE
<PAGE>
<PAGE>
NOT APPLICABLE
<PAGE>
<PAGE>
EXHIBIT "2"
CHARTHOUSE SUITES VACATION INTERESTS
RECEIPT FOR TIME SHARE DOCUMENTS
<PAGE>
<PAGE>
INCLUDED IN SUBSCRIPTION AGREEMENT
<PAGE>
<PAGE>
EXHIBIT "A2"
CHARTHOUSE SUITES VACATION INTERESTS
COOPERATIVE DOCUMENTS
<PAGE>
<PAGE>
NOT APPLICABLE
<PAGE>
<PAGE>
EXHIBIT "A3"
CHARTHOUSE SUITES VACATION INTERESTS
DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS
<PAGE>
<PAGE>
NOT APPLICABLE
<PAGE>
<PAGE>
EXHIBIT "A4"
CHARTHOUSE SUITES VACATION INTERESTS
ASSOCIATION ARTICLES OF INCORPORATION
<PAGE>
<PAGE>
[TO BE ADDED]
<PAGE>
<PAGE>
EXHIBIT "A5"
CHARTHOUSE SUITES VACATION INTERESTS
ASSOCIATION BY-LAWS
<PAGE>
<PAGE>
[TO BE ADDED]
<PAGE>
<PAGE>
EXHIBIT "A6"
CHARTHOUSE SUITES VACATION INTERESTS
UNDERLYING LEASE
<PAGE>
<PAGE>
NONE
<PAGE>
<PAGE>
EXHIBIT "A7"
CHARTHOUSE SUITES VACATION INTERESTS
MANAGEMENT AGREEMENT AND RELATED CONTRACTS
<PAGE>
<PAGE>
[TO BE ADDED]
<PAGE>
<PAGE>
EXHIBIT "A8"
CHARTHOUSE SUITES VACATION INTERESTS
ESTIMATED OPERATING BUDGET
<PAGE>
<PAGE>
CHARTHOUSE SUITES VACATION OWNERSHIP, INC.
ESTIMATED OPERATING BUDGET
from January 1, 1997 to December 31, 1997
INCOME YEAR (approximately)
MONTH
Maintenance Fees-Unit Owners $302,380 $25,198
Telephone 10,500 875
Miscellaneous
(Rentals/Services/Fees/etc) 1,500 125
$314,380 $26,198
TOTAL INCOME
EXPENSES
SALARIES
Salaries Administration 13,512 1,126
Salaries Housekeeping 30,655 2,554
Manager on Site 22,560 1,880
Pool & Recreation -- --
Security -- --
Operators/Front Desk 20,539 1,712
Maintenance Salaries 8,640 720
Payroll Taxes (included above)
Management Fee 30,000 2,500
TOTAL SALARIES 125,906 10,492
DIRECT EXPENSES
Insurance 13,300 1,108
Maintenance Services/
Supplies 8,158 680
Electric - Units 15,494 1,291
Electric-Club House/
Office/Recreational 8,670 722
Water/Sewer 1,718 143
Trash Removal 3,024 252
Utilities Cable TV 2,558 213
Lawn Maintenance 14,360 1,197
Sales & Marketing 9,836 820
Telephone 20,828 1,736
Laundry/Linen Supplies 29,116 2,426
Real Estate Tax 1,560 130
Postage --
Annual T.S. Division Fee --
Administrative Misc. 18,283 1,524
TOTAL DIRECT EXPENSES 146,905 12,242
RESERVED FOR DEFERRED EXPENSES
Roof $2,000 $ 156
Painting 4,000 333
Furniture/Fixtures/
Equipments 19,000 1,583
Pool Maintenance 1,200 100
Pavement 1,200 100
Reserved for Others 4,569 381
TOTAL RESERVES $31,969 $ 2,663
TOTAL EXPENSES 295,780 24,648
TOTAL INCOME MINUS MAINTENANCE FEE
TOTAL EXPENSES
TOTAL MAINTENANCE FEE (EXPENSES-INCOME)
<PAGE>
<PAGE>
NOTES TO BUDGET FOR
CHARTHOUSE SUITES VACATION OWNERSHIP, INC.
NOTE 1: By definition, a Budget is an estimate of expenses. However,
actual expenses incurred may be either more or less than the
estimated expenses set forth in the Budget. The Developer and
Charthouse Suites Vacation Ownership, Inc. cannot and do not
make any representation or warranty that actual expenses will
not increase as a result of inflation, increase in costs or
other such events. Furthermore, if the estimated expenses in
certain categories of the Budget, for example: water or
electricity, are greater than the actual expenses incurred for
those categories, then the excess will be used to offset
deficits occurring in the categories of the Budget where
actual expenses exceed the estimated expenses.
NOTE 2: The property taxes assessed against the Resort Facility and/or
Time Share Interests will be paid by Charthouse Suites
Vacation Ownership, Inc. or management entity.
NOTE 3: The Board of Directors of Charthouse Suites Vacation
Ownership, Inc. shall purchase insurance for the Resort
Facility in accordance with the insurance provisions of the
Vacation License Agreement.
NOTE 4: The Developer has undertaken to guarantee the Budget for the
Resort Facility as of January 1, 1996 through December 31,
1996. In this regard, the Developer shall guarantee that
assessments during the guarantee period shall not be made
against any Licensee of a Time Share Interest, other than the
Developer, exclusive of real estate taxes and insurance, in
excess of certain amounts for each time share interest. The
Developer will pay expenses in excess of those collectible
from purchasers pursuant to Section 721.07(5)(x)(5), Florida
Statutes.
NOTE 5: The following items are required to be in the Budget pursuant
to Florida Statutes, however there is no budgeted expense as
all of these items are "not applicable":
A. Rent for Recreational Facilities
B. Taxes upon Time Share Property
C. Taxes upon Leased Areas
D. Operating Capital
RESERVE
ANALYSIS
1997
REMAINING EST. EST. YEARLY
FUND TYPE USEFUL USEFUL 12/31/96 REPLACE. ASSESSMENT
Roof 15 years 15 years 0 30,000 2,000
Painting 7 years 7 years 0 28,000 4,000
Furniture/
Fixtures/
Equipment 7 years 7 years 0 133,000 19,000
Pool
Maintenance 20 years 20 years 0 24,000 1,200
Pavement 20 years 20 years 0 24,000 1,200
Reserved
for Others 10 years 10 years 0 45,690 4,569
<PAGE>
<PAGE>
EXHIBIT "A9"
CHARTHOUSE SUITES VACATION INTERESTS
FLOOR AND PLOT PLANS
<PAGE>
<PAGE>
[TO BE ADDED]
<PAGE>
<PAGE>
EXHIBIT "A10"
CHARTHOUSE SUITES VACATION INTERESTS
LEASE OF FACILITIES TO BE USED ONLY BY LICENSEES
<PAGE>
<PAGE>
Not Applicable
<PAGE>
<PAGE>
EXHIBIT "A11"
CHARTHOUSE SUITES VACATION INTERESTS
LEASES OF FACILITIES TO BE USED BY LICENSEES AND OTHERS
<PAGE>
<PAGE>
NOT APPLICABLE
<PAGE>
<PAGE>
EXHIBIT "A12"
CHARTHOUSE SUITES VACATION INTERESTS
FORM OF TIME SHARE PERIOD LEASE FOR LEASEHOLD OFFER
<PAGE>
<PAGE>
NOT APPLICABLE
<PAGE>
<PAGE>
EXHIBIT "A13"
CHARTHOUSE SUITES VACATION INTERESTS
DECLARATION OF SERVITUDE OF PROPERTIES
<PAGE>
<PAGE>
NOT APPLICABLE
<PAGE>
<PAGE>
EXHIBIT "A14"
CHARTHOUSE SUITES VACATION INTERESTS
STATEMENT OF CONDITION
<PAGE>
<PAGE>
NOT APPLICABLE
<PAGE>
<PAGE>
EXHIBIT "A15"
CHARTHOUSE SUITES VACATION INTERESTS
STATEMENT OF INSPECTION
<PAGE>
<PAGE>
[Not Applicable]
<PAGE>
<PAGE>
EXHIBIT "A16"
CHARTHOUSE SUITES VACATION INTERESTS
LICENSE AGREEMENT
<PAGE>
<PAGE>
EXHIBIT "A17"
CHARTHOUSE SUITES VACATION INTERESTS
EXECUTED AGREEMENTS FOR ESCROW PAYMENTS
<PAGE>
<PAGE>
[Need to add]
<PAGE>
<PAGE>
EXHIBIT "A18"
CHARTHOUSE SUITES VACATION INTERESTS
SUMMARY OF RESTRICTIONS ON USE OF ACCOMMODATIONS AND FACILITIES
<PAGE>
<PAGE>
[Need to add Rules and Regulations]
<PAGE>
<PAGE>
EXHIBIT "A19"
CHARTHOUSE SUITES VACATION INTERESTS
OTHER DOCUMENTS CREATING THE TIME SHARE PLAN
<PAGE>
<PAGE>
EXHIBIT "A20"
CHARTHOUSE SUITES VACATION INTERESTS
OTHER CONTRACTS OR LEASES SIGNED BY LICENSEES
<PAGE>
<PAGE>
NOT APPLICABLE
<PAGE>
<PAGE>
EXHIBIT "A21"
CHARTHOUSE SUITES VACATION INTERESTS
NON-DISTURBANCE AND NOTICE TO CREDITORS
<PAGE>
<PAGE>
EXHIBIT "A22"
CHARTHOUSE SUITES VACATION INTERESTS
NOTICE OF ELECTION TO BE DEEMED A MEMBER RESORT
<PAGE>
<PAGE>
NOT APPLICABLE
<PAGE>
<PAGE>
EXHIBIT "A23"
CHARTHOUSE SUITES VACATION INTERESTS
FORM OF VACATION LICENSE
<PAGE>
<PAGE>
NOT APPLICABLE
<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* ____________________
________________________________________________
(Complete this box only if there is more than one purchaser)
________________________________________________
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 Interest 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 Hotel Room $18,500) _____
B (King Studio Hotel Room $21,500) _____
C (Large Studio Hotel Room $25,500) _____
D (1 Bedroom Suite $36,500) _____
E (1 Bedroom Suite with Lanai $39,500) _____
F (Penthouse $60,000) _____
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 Interest
("Interest") in Charthouse as follows:
a. Purchase Price of Interest
(from previous page) $_____
b. If applicable, Cash Discount
Applied as part of Down Payment $_____
c. Net Purchase Price $_____
d. Total Minimum 30% of line c $_____
e. Florida State Taxes Due on
Subscription ($.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, line c) $_____
g. Total Due Upon Subscription
(Total of lines d, e, f) $_____
h. Total Remaining Owned for Interests $_____
i. If Installment Method Used, First
Payment Due Beginning ___________,
199__, in the Amount of _________,
Along With Annual Dues of _______,
Due Beginning ____________, 199__. $_____
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 date and 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 up to 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
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 Unit 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 a
Vacation Interest in Chart House hotel 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 Charthouse Suites Vacation Ownership, Inc.,
whose address is 250 Patrick Avenue, Brookfield, Wisconsin,
53045.
3. Charthouse Vacation 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 June 30, 1998. 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, the underlying mortgage
to Decade Properties, Inc., 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 Chart House hotel,
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 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 majority 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 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 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 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 . . . . . . . . . . . . . . . . . . . . . . . . . 10
The Company. . . . . . . . . . . . . . . . . . . . . . . . . . 16
Description Of The Chart House Suites Hotel. . . . . . . . . . 17
The Interests. . . . . . . . . . . . . . . . . . . . . . . . . 19
Charthouse Results . . . . . . . . . . . . . . . . . . . . . . 24
Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . 25
Certain Charthouse Rental Pool Financial Pro Forma Information 30
Certain Occupancy Information. . . . . . . . . . . . . . . . . 32
Annual Dues and Special Assessments. . . . . . . . . . . . . . 33
Differences in Allocating Rental Pool and Annual Dues and
Special Assessments. . . . . . . . . . . . . . . . . . . . . . 33
Pro Forma Results With Various Occupancy Levels. . . . . . . . 37
Guaranteed Rental Arrangement. . . . . . . . . . . . . . . . . 40
License Payment Options. . . . . . . . . . . . . . . . . . . . 42
Determination of Offering Price. . . . . . . . . . . . . . . . 45
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . 45
License Plan of Distribution . . . . . . . . . . . . . . . . . 45
How to Subscribe . . . . . . . . . . . . . . . . . . . . . . . 46
Summary of Promotional and Sales Material. . . . . . . . . . . 46
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . 47
Management . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Decade Properties, Inc.. . . . . . . . . . . . . . . . . . . . 48
Conflicts of Interest of Management
and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . 49
Certain Federal Income Tax Considerations. . . . . . . . . . . 50
Certain Florida Tax Matters. . . . . . . . . . . . . . . . . . 63
Prior Performance of Jeffrey Keierleber and Affiliates . . . . 66
Liability and Indemnification of Officers and Directors. . . . 76
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . 76
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Financial Statements and Related Information . . . . . . . . .f-1
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . .f-2
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 $ 1,288
NASD Filing Fee 750
Florida Time Share Filing Fee 3,600
Printing and Engraving (estimate) 15,000
Legal Fees (estimate) 163,000
Accounting Fees (estimate) 29,000
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 were exempt from registration, pursuant to
Regulation D and Section 4(2) of the Securities Act of 1933,
as amended.
Item 33. Indemnification of Director and Officers
The Company's Officers and Director 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 and certain indemnification
agreements to be entered into with the Company, and the
Articles 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 the Company's officers and the director. The
indemnification agreements will require, among other things,
that Charthouse indemnify its Director and Officers to the
fullest extent permitted by law and advance to the director
and officers 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 the officers
and the director seeking to enforce their rights under the
indemnification agreement and cover the officers and the
director 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 director and officers that indemnification
will be available because, as a contract, it cannot be
modified unilaterally in the future by the director 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 License 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 July 31, 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 (not applicable)
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 License Plan (attached as an Annex)
4.3 Rules and Regulations for Chart House Suites Hotel
(attached as an Annex)
4.4 Time Share Public Offering Statement (attached as an
Annex)
5 Opinion re: Legality of Interests*
8 Form of Tax Opinion
10.1 Property Management Agreement
10.2 Non-Disturbance and Notice to Creditors
10.3 Guaranteed Rental Arrangement Agreement**
10.4 RCI Agreement
10.5 Schedule of Weeks (attached as an Annex)
10.6 Escrow Agreement between William Atkinson and Charthouse
Suites Vacation Ownership, Inc.
10.7 Non-Exclusive Easement**
10.8 Private Letter Ruling Request**
10.9 Revised IRS Private Letter Ruling, dated July 16, 1997
10.10 Real Estate and Sales Agreement
10.11 Personal Property Purchase and Subscription Agreement
10.12 Escrow Agreement
10.13 Quit Claim Deed
23.1 Consent of Ernst & Young
23.2 Consent of Quarles & Brady
23.3 Consent of Virchow, Krause & Company
*To be filed
**Previously filed
<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>
UNDERWRITING AGREEMENT
Decade Securities Corp.
250 Patrick Boulevard
Brookfield, WI 53045 ____________ , 1997
RE: Charthouse Suites Vacation Ownership, Inc. Offering of
Charthouse Suites Vacation Interests
Ladies and Gentlemen:
Charthouse Suites Vacation Ownership, Inc. (the "Company"),
hereby confirms prior negotiations with Decade Securities Corp.
regarding employment of the Company for the offering and sale to
selected persons acceptable to the Company, upon the terms and
subject to the conditions set forth herein and in the Prospectus,
of up to 150 Charthouse Suites Vacation Interests (the
"Interests").
Decade Securities Corp. will hereinafter be called
"Underwriter" (whether or not Decade Securities Corp. engages other
broker-dealer(s)).
As used in this Agreement, the following terms shall have the
following meanings:
1. Act -- The Securities Act of 1933, as amended.
2. Affiliate -- (a) Any person directly or indirectly
controlling, controlled by or under common control with another
person; (b) any person owning or controlling 10% or more of the
outstanding voting securities of such other person; (c) any
officer, director or partner of such person, and (d) if such other
person is an officer, director or partner, any enterprise for which
such person acts in any such capacity.
3. Affiliate Sale -- The sale of Interests to employees of
Decade Companies or an Affiliate, which will be made net of the up
to 7% sales commission.
4. Blue Sky Application -- Any application, document,
information or other paper, executed by the Company and filed in
any State in order to register the Interests under the state's
securities laws.
5. Commission -- The Securities and Exchange Commission.
6. Effective Date -- The date upon which the Registration
Statement is declared effective by the Commission.
7. Interest -- The Charthouse Suites Vacation Interest,
whether Class A, B, C, D, E or F, offered for sale by the Company.
8. Holders -- All persons who purchase an Interest and who
agree to be bound by the provisions of the Charthouse Suites
Vacation License Plan, and such other instruments as the Company
may require, as well as any assignee thereof.
9. NASD -- The National Association of Securities Dealers,
Inc. in Washington, D.C.
10. Company -- Charthouse Suites Vacation Ownership, Inc., a
Florida corporation.
11. Prospectus -- The prospectus included in the Registration
Statement filed with the Commission, pursuant to which the Company
will offer Interests to the public, as the same may be amended or
supplemented from time to time.
12. Registration Statement -- The registration statement filed
with the Commission on Form S-11, including a form of preliminary
Prospectus for registration of the Interests to be offered to the
public under the Act, and any and all amendments thereto,
including, without limitation, exhibits and financial statements
when the Registration Statement becomes effective and, in the event
of any amendments or supplements after the Effective Date, such
Prospectus as so amended or supplemented.
13. Sales Literature -- Any written, audio or audiovisual
material prepared by the Company, the Underwriter or any Soliciting
Dealer and approved by the NASD and the Florida Time Share Bureau
for use in conjunction with the offer or sale of the Interests.
14. Soliciting Dealers -- Broker/dealers that are members of
the NASD and that entered into a Soliciting Dealer Agreement with
Decade Securities Corp.
15. Underwriter -- Decade Securities Corp., a licensed
broker/dealer and member of the NASD, and the managing dealer in
the distribution of Interests.
I
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Underwriter that:
1. The Company is duly organized and validly existing as a
corporation under the laws of the State of Florida, and will have,
at the time of the Registration Statement referred to herein is
effective, the power and authority to conduct business as described
in the Prospectus under the laws of the State of Florida.
2. The Interests shall have the characteristics as set forth
in the Registration Statement.
3. There will be available for inspection by the
Underwriter, upon your request at any reasonable time, copies of
all material contracts to which the Company is a party.
4. The Company has prepared and filed with the Commission a
Registration Statement on Form S-11 (including a form of
preliminary Prospectus) for registration of the Interests to be
offered to the public under the Act, and it will so prepare and
file amendments thereto (including amended forms of preliminary
Prospectus). The Company will use its best efforts to cause the
Registration Statement to become effective as soon as possible. A
copy of such Registration Statement will be made available to the
Underwriter.
5. When the Registration Statement becomes effective, it and
the accompanying Prospectus will comply in all material respects
with the requirements of the Act and with the rules and regulations
of the Commission promulgated thereunder; provided, however, the
Company makes no representations or warranties as to information
contained or omitted from the Registration Statement or the
Prospectus, in reliance upon information furnished to the Company
by the Underwriter specifically for inclusion therein.
6. The Company's capitalization is as set forth in the
Registration Statement and Prospectus. The offer and sale of the
Interests has been duly and validly authorized by the Company, and
the Interests will conform to the description thereof contained in
the Prospectus.
7. Except as contemplated in the Registration Statement and
the Prospectus, since the respective dates as of which information
is therein given (a) the Company has not incurred any liability or
obligations, direct or contingent, and has not entered into any
material transactions, not in the ordinary course business, (b)
there has not been any material adverse change in its financial
position, (c) the business and operations of the Company have not
been materially interfered with by strike, fire, flood, accident or
other calamity (whether or not insured), and (d) no material legal
or governmental proceedings, domestic or foreign, affecting the
Company or the transactions contemplated by this Agreement have
been instituted or, to the knowledge of the Company, are
threatened.
8. The person or persons who have signed this Agreement on
behalf of the Company are duly authorized to so sign, and this
Agreement is a valid, legal and binding agreement of the Company
enforceable in accordance with their respective terms.
9. The financial statements set forth in the Registration
Statement and the Prospectus fairly represent the financial
position of the Company as of the date thereof, and since the dates
of such financial statements, there has been no material adverse
change in the financial position of the Company, except as
contemplated in the Prospectus.
10. The certified public accountants who certified the
financial statements filed with the Commission as part of the
Registration Statement and the financial statements incorporated in
the Prospectus, and who, as experts, may certify or review other
information of a financial or accounting nature contained in the
Registration Statement and the Prospectus, are independent as
required by the Act and the Rules and Regulations thereunder.
11. Except as set forth in this Agreement, the Company shall
not be required to pay any finder's or origination fees. The
Company will indemnify and hold the Underwriter harmless from and
against any and all other expenses, costs, losses, damages and
liabilities to which the Underwriter becomes subject by reason of
any claim for finder's, origination or other compensation for
service with respect to the bringing about of this Agreement.
12. There are no contracts or other documents required to be
filed by the Act or the Rules and Regulations of the Commission
thereunder as exhibits to the Registration Statement which have not
been so filed, or which will not be so filed prior to the Effective
Date.
13. All of the foregoing representations, agreements and
warranties shall survive delivery of the payment for all of the
Interests covered by this Agreement.
The Underwriter hereby represents and warrants to the Company
that:
1. No subscription agreement will be taken without the prior
delivery of a copy of the preliminary Prospectus, and no accepted
subscription agreement, as confirmation of sale, will be returned
to any person confirming his or her purchase unless a copy of the
Prospectus has been delivered to any person who is expected to
receive such accepted subscription agreement as confirmation of the
sale, at least 48 hours prior to mailing the accepted subscription
agreement.
2. It has delivered and will deliver a copy of the latest
preliminary Prospectus on file with the Commission to the address
given in the written request of any person for a preliminary
Prospectus between the filing date and a reasonable time prior to
the Effective Date of the Registration Statement to which such
Prospectus relates, except that the furnishing of Prospectuses in
any State where such furnishing would be unlawful under the laws of
such State shall not be required.
3. During the period between the Effective Date of the
Registration Statement and the later of either the termination of
the distribution of the securities or the expiration of the 90-day
period under Section 4(3) of the Act, the Underwriter shall mail a
copy of the Prospectus to the address given in the written request
of any person for a copy of the Prospectus relating to the
Interests, except that the furnishing of Prospectuses in any State
where such furnishing would be unlawful under the laws of such
State shall not be required.
4. It has made and will make available: (a) a copy of the
preliminary Prospectus relating to the Interests to each of its
associated persons who was expected, prior to the Effective Date,
to solicit customers' orders for such Interests before the making
of any such solicitation by such associated persons, and (b) a copy
of any amended preliminary Prospectus to each such associated
person promptly after the filing thereof.
5. It will make available a copy of the Prospectus relating
to the Interests to each of its associated persons who is expected,
after the Effective Date, to solicit customers' orders for such
securities prior to the making of any such solicitation by such
associated persons.
6. It will assure that all Soliciting Dealers are promptly
furnished with sufficient copies, as requested by them, of each
preliminary Prospectus, each amended preliminary Prospectus and the
Prospectus to enable them to comply with paragraphs (b), (c), (d)
and (e) of Rule 15c2-8 of the Securities Exchange Act of 1934.
7. It will assure that Soliciting Dealers are furnished
reasonable quantities of the Prospectus relating to the Interests,
as requested by such Soliciting Dealers, in order to enable such
Soliciting Dealers to comply with the Prospectus delivery
requirement of Section 5(b)(1) and (2) of the Securities Act of
1933.
8. It has reasonable grounds to believe, and does believe,
based upon the information made available to it by the Company
through the Registration Statement and other materials, that all
material facts are adequately and accurately disclosed and provide
a basis for evaluating the offering of Interests.
(a) The Underwriter represents that in determining the
adequacy of the disclosed facts, it has obtained information on
material facts relating, at a minimum, to the following:
(i) items of compensation to the Company and
Affiliates and to entities not affiliated with the Company;
(ii) the physical property of the Chart House Suites
hotel and the description thereof;
(iii) tax aspects of the offering;
(iv) the financial stability and experience of the
Company; and
(v) risk factors associated with the Interests,
including potential conflicts of interest.
9. The Underwriter represents and warrants that it shall not
be required to pay any finder's or origination fees. The
Underwriter will indemnify and hold the Company harmless from and
against any and all other expenses, costs, losses, damages and
liabilities to which the Company may become subject by reason of
any claim for finder's, origination or other compensation for
service with respect to the bringing about of this Agreement.
10. All of the foregoing representations, agreements and
warranties shall survive delivery of the payment for all of the
Interests covered by this Agreement.
II
EMPLOYMENT OF THE UNDERWRITER
Upon the foregoing representation, agreements and warranties
and subject to the terms and conditions of this Agreement:
1. (a) The Company hereby employs the Underwriter as its
agent to effect sales of up to 150 Interests as set forth in the
Prospectus. The Underwriter agrees to use its best efforts as
agent to sell all of the Interests subject to the terms, provisions
and conditions of the Agreement, during the period commencing with
the receipt of the written notice of the Effective Date of the
Registration Statement and ending: (i) on the second anniversary
of the Effective Date; (ii) upon sale of all of the Interests; or
(iii) at such earlier date as the Company shall designate by notice
to you in writing, unless the parties agree to extend such period
of time.
2. The Interests shall be offered to the public at the price
set forth in the Prospectus.
3. Each person desiring to purchase an Interest will be
required to complete and execute a subscription agreement and a
signature page, and to return them together with a check payable to
the order of "Charthouse Suites Vacation Ownership, Inc." or the
escrow agent, in the amount of the purchase price of such Interests
and any other documents that may be required or advisable under
state securities laws or by the Company. The Underwriter, or such
Soliciting Dealer, shall ascertain that each subscription agreement
and each signature page sent in by a prospective purchaser of
Interests have been completed and executed by such prospective
purchaser and that each check has been written as stated above and
shall then forward such subscription agreement, such signature page
and such check to the Company's escrow agent at the aforementioned
address. In the event a subscriber's check is made payable other
than as specified above, Underwriter shall immediately return the
same to the subscriber. The Underwriter shall make provisions for
its own receipt of any and all checks delivered to a Soliciting
Dealer by the end of the next business day following Soliciting
Dealer's receipt thereof.
Within 48 hours after receipt of the subscription documents by
the Company:
(a) the Company will either accept or reject the
proposed purchaser as a Holder, it being understood that the
Company reserves the right to reject the tender of any signature
page and to reject all tenders; and
(b) such investor's check will either be deposited by
the Company into the escrow account or returned to the Holder, in
the event of acceptance or rejection, respectively. Should the
Company determine to accept the tender of the signature page, the
Company will promptly advise the Underwriter of such action. If
the Company rejects the tender of the signature page, it will
promptly notify the Underwriter in writing of the determination.
Nothing contained in the foregoing paragraph shall be
construed to impose upon the Company the responsibility of assuring
that prospective Holder meets the suitability standards contained
in the Prospectus or to relieve you or any Soliciting Dealer of the
responsibility of complying with Conduct Rules of the NASD. In
recommending an investment in the Company, the Underwriter (or, if
applicable, Soliciting Dealer) shall:
(a) have reasonable grounds to believe, on the basis of
information obtained from the participant concerning his investment
objectives, other investments, financial situation and needs, and
any other information known by the Underwriter that:
(i) the participant is or will be in a financial
position appropriate to enable him to realize to a significant
extent the benefits described in the Prospectus, including use of
the Chart House Suites hotel;
(ii) the participant has a fair market net worth
sufficient to sustain the risks inherent in the program, including
loss of investment and lack of liquidity; and
(iii) the program is otherwise suitable for the
participant.
Prior to executing a purchase transaction in this Offering,
the Underwriter (or, if applicable, Soliciting Dealer) shall inform
the prospective purchaser of all pertinent facts relating to the
liquidity and marketability of the program during the term of the
Company. The Underwriter (or, if applicable, Soliciting Dealer)
shall further maintain in its files documents disclosing the basis
upon which the determination of suitability was reached as to each
participant.
Notwithstanding the foregoing provisions, Underwriter (or, if
applicable, Soliciting Dealer) shall not execute any transaction in
the Company in a discretionary account without prior written
approval of the transaction by the customer.
4. The total payments made to all dealers, including the
Underwriter and Soliciting Dealers in connection with the offering,
will not exceed 7% of the gross issue price of the offering, or up
to 10%, including other expense reimbursement in connection with
due diligence activities, plus any special sales incentives as may
be agreed upon by the parties in writing.
5. The Underwriter shall have the right to associate with
such other underwriters or broker-dealers as it may determine, who
shall be members of the NASD (the "Soliciting Dealers"). Such
Soliciting Dealers shall become parties hereto by executing a
Soliciting Dealer Agreement, in which event, the term "Underwriter"
shall be construed as Decade Securities Corp., and such Soliciting
Dealers, and in such event Decade Securities Corp. shall be the
Managing Dealer.
6. This Agreement and the Company's obligations hereunder
may be canceled upon 60 days' written notice, without liability on
the part of the Company. Notice of such cancellation shall be
given to the Underwriter at its principal place of business.
III
FURTHER AGREEMENTS OF THE COMPANY
The Company agrees, at its expense and without expense to the
Underwriter, as follows:
1. To make available, and to continue to make available, and
supply such financial statements and other information to and as
may be required by the Commission or the proper public bodies in
the states in which the Interests may be registered for sale.
2. As soon as the Company is informed thereof, to orally
advise the Underwriter as follows:
(a) when the Registration Statement becomes effective;
(b) when any post-effective amendment to the
Registration Statement becomes effective;
(c) of any request of the Commission for amendments to
the Registration Statement or related Prospectus or for additional
information;
(d) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of
the initiation of any proceedings for that purpose; and
(e) of any material adverse change in its financial
position or operating condition and of any development materially
affecting the Company or rendering untrue or misleading any
material statement in the Registration Statement or Prospectus.
3. To make every reasonable effort to prevent the issuance
of any stop order suspending the effectiveness of the Registration
Statement, and, if such stop order is entered at any time, the
Company shall use its best efforts to obtain withdrawal of the same
at the earliest possible moment.
4. To make available to the Underwriter (a) prior to the
Effective Date, copies of such preliminary Prospectus filed with
the Commission bearing in red ink the statement required by the
rules of the commission, (b) on and from time to time after the
Effective Date, copies of the Prospectus and, if applicable, of any
amended or supplemented Prospectus; and (c) as soon as they are
available and from time to time thereafter, copies of each
Prospectus prepared for the purpose of permitting compliance with
Section 10 of the Act and, if applicable, of any amended or
supplemented Prospectus; and the number of copies to be delivered
in each such case will be such as the Underwriter may reasonably
request.
5. To make available for your inspection, one executed copy
of the Registration Statement, including all exhibits and
amendments thereto.
6. For the period after the Effective Date during which the
Prospectus is required by law to be used, if any change shall have
occurred as a result of which the Prospectus includes an untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, forthwith
to prepare and make available to the Underwriter supplements or an
amended Prospectus correcting the untrue statements or supplying
the omission.
7. In the event that revisions of the Prospectus, pursuant
to the provisions of Section 10 of the Act, shall become necessary
to the Prospectus, to file copies thereof with the Commission, and
to make available copies of the amended, supplemented or revised
Prospectus to the Underwriter.
8. To use its best efforts in causing the Interests covered
by this Agreement to be registered for sale on terms consistent
with those stated in the effective Registration Statement under the
so-called Blue Sky Laws in such states as may be agreed upon.
9. If applicable, to issue to its Holders financial
statements prepared by an independent certified public accountant
and to make the same available to the Underwriter at least
annually.
IV
INDEMNITY PROVISIONS
1. The Company agrees to indemnify, defend and hold each
Underwriter (including, specifically, such Underwriter added as
provided in Article II hereof), and each person, if any, who
controls any such Underwriter within the meaning of Section 15 of
the Act, free and harmless from and against any losses, claims,
damages, liabilities or expenses (including reasonable legal or
other expenses incurred by each such Underwriter and controlling
person in connection with defending any such claims or liabilities,
whether or not resulting in any liability to such Underwriter or to
any controlling person), to which such Underwriter or controlling
person may become subject under the Act or otherwise insofar as
such losses, claims, damages, liabilities, expenses or actions in
respect thereof arise out of or are based upon (a) any untrue
statement or alleged untrue statement of material fact contained in
(i) the Registration Statement or any post-effective amendment
thereof (or supplement to the Prospectus), (ii) any Sales
Literature, or (iii) any Blue Sky Application, or (b) the omission
or alleged omission to state in the Registration Statement or any
post-effective amendment thereof or in any Sales Literature or in
any Blue Sky Application, a material fact required to be stated
therein or necessary to make the statements therein not misleading,
or (c) any untrue statements or alleged untrue statements of a
material fact contained in any preliminary Prospectus, if used
prior to the Effective Date, or in the Prospectus (if applicable,
as amended or as supplemented if the Company shall have filed with
the Commission any amendment thereof or supplement thereto), or the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; and will reimburse each Underwriter
and Soliciting Dealer and each such controlling person for any
legal or other expenses reasonably incurred by such Underwriter,
Soliciting Dealer or such controlling person in connection with
investigating or defending any such loss, claim, damage, liability
or action, provided, however, that the Company will not be liable
in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with information furnished to the
Company by or on behalf of any Underwriter or any Soliciting Dealer
specifically for use with reference to such Underwriter or such
Soliciting Dealer in the preparation of the Registration Statement
or any such post-effective amendment thereof or any such Blue Sky
Application or any such preliminary Prospectus or the Prospectus or
any such amendment thereof or supplement thereto. The foregoing
indemnity agreement is subject to the condition that, insofar as it
relates to any untrue statement, alleged untrue statement, omission
or alleged omission made in any preliminary Prospectus (or the
Prospectus) but eliminated or remedied in the Prospectus (or in any
amendment thereof or supplement thereto), such indemnity agreement
shall not inure to the benefit of any Underwriter or any Soliciting
Dealer from whom the person asserting any loss, liability, claim or
damage purchased the Interest which is the subject thereof (or to
the benefit of any person who controls such Underwriter or such
Soliciting Dealer), if a copy of the Prospectus (or of the
Prospectus as so amended or supplemented) was not sent or given to
such person at or prior to the time the subscription of such person
was accepted by the Company. This indemnity agreement will be in
addition to any liability which the Company may otherwise have.
2. The foregoing indemnity of the Company in favor of the
Underwriter shall not be deemed to protect the Underwriter against
any liability to the Company or its Holders to which the
Underwriter would, otherwise, be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of
their duties, or by reason of their reckless disregard of their
obligations and duties under this Agreement.
3. The Underwriter agrees to give the Company an opportunity
to participate in the defense, or preparation of the defense, of
any action brought against any such Underwriter or controlling
person of such Underwriter to enforce any such claim or liability,
and the Company shall have the right so to participate. The
agreement is the Company, under the foregoing indemnity, is
expressly conditioned upon notice of any such action having been
sent by such Underwriter or controlling person, as the case may be,
to the Company, by letter (addressed to the principal place of
business of the Company), promptly after the commencement of such
action against such Underwriter or controlling person, such notice
either being accompanied by copies of papers served or filed in
connection with such action or by a statement of the nature of the
action to the extent known to such Underwriter. Failure to notify
the Company within a reasonable time of any such action shall
relieve the Company of its respective liabilities under the
foregoing indemnity, but failure to notify the Company as herein
provided shall not relieve it from any liability, which it may have
to any Underwriter or controlling person other than on account of
the indemnity agreement contained in this Section.
4. The Underwriter and, if applicable, Soliciting Dealer
jointly and severally likewise agree to indemnify and hold harmless
the Company against any losses, claims, damages or liabilities to
which the Company becomes subject under the Act, or otherwise,
insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon (a) any untrue
statement or alleged untrue statement of a material fact contained
in (i) the Registration Statement or any post-effective amendment
thereof, or (ii) any Blue Sky Application, or amendments thereto;
or (b) the omission or alleged omission to state in the
Registration Statement or any post-effective amendment thereof, a
material fact required to be stated therein or necessary to make
the statements therein not misleading resulting from the use of
information furnished to the Company by the Underwriter for use in
the preparation of the Registration Statement or in any amendment
or amendments to the Registration Statement or in any Blue Sky
Application; or (c) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary
Prospectus, if used prior to the Effective Date or in the
Prospectus (as amended, or as supplemented, if the Company shall
have filed any amendment thereof or supplement thereto) or the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon
and in conformity with written information furnished to the Company
by or on behalf of such Soliciting Dealer in the preparation of the
Registration Statement or any such post-effective amendment thereof
or any such Blue Sky Application or any such preliminary Prospectus
or the Prospectus or any such amendment thereof or supplement
thereto; and will reimburse any legal or other expense reasonably
incurred by the Company in connection with investigating or
defending any such loss, claim, damage, liability or action. This
indemnity agreement will be in addition to any liability which such
Underwriter or such Soliciting Dealer may otherwise have.
5. The Company agrees to give each Underwriter an
opportunity to participate in the defense or preparation of the
defense of any action brought against the Company or such persons
to enforce any such claim or liability, and such Underwriter shall
have the right so to participate. The agreement of such
Underwriter under the foregoing indemnity is expressly conditioned
upon notice of any such action having been sent by the Company to
such Underwriter (by letter or by telegram addressed as in this
Agreement hereinafter provided for), promptly after the
commencement of such action against the Company, such notice either
being accompanied by copies of papers served or filed in connection
with such action or by a statement of the nature of the action to
the extent known to the Company. Failure to notify such
Underwriter of any action shall relieve such Underwriter of its
liability under the foregoing indemnity, but failure to notify such
Underwriter as herein provided shall not relieve such Underwriter
from any liability, which such Underwriter may have to the Company
or the Holders otherwise than on account of the indemnity agreement
contained in this Article.
6. The provisions of this Article shall not, in any way,
prejudice any right or rights which any Underwriter may have
against the Company or the Company may have against any Underwriter
under any statute other than the Act, at common law or otherwise.
V
PAYMENT OF EXPENSES
The Company agrees, at its own expense and without expense to
the Underwriter, to pay all costs and expenses incident to this
Agreement, including, but without limitation, all expenses in
connection with the preparation, printing and filing of the
Registration Statement or any post-effective amendment thereof,
together with all exhibits; to pay all filing fees and costs,
charges or disbursements connected with the issue and delivery of
the Interests covered by this Agreement; and to pay all reasonable
expenses incurred in connection with the registration of the
Interests under the securities or Blue Sky Laws of the states
agreed upon.
VI
PUBLIC OFFERING
The Underwriter agrees to make a public offering of the
Interests covered by this Agreement as soon after the Effective
Date as is advisable in accordance with and as set forth in the
Registration Statement. If applicable, such public offering will
be made through Soliciting Dealers as described herein.
VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF THE UNDERWRITER
It is understood that the obligations of the Underwriter
hereunder shall be conditioned upon:
1. The approval of counsel for the Underwriter of: the form
and content of the Registration Statement; the organization and
present legal status of the Company; and the legality and validity
of the authorization and sale of Interests to be offered hereunder,
which approval shall not be unreasonably withheld.
2. The performance by the Company of all the obligations on
its part to be performed hereunder, and the truth, completeness and
accuracy of all statements and representations contained herein or
any financial statements furnished hereunder.
3. The fact that no substantial claims shall be made or
legal action for substantial amounts be instituted or reasonable
basis therefor be discovered against the Company.
4. The fact that the Registration Statement shall become
effective on such later date as may be agreed upon, and that no
amendment to the Registration Statement shall have been filed to
which the Underwriter shall have reasonably objected after having
received reasonable notice; and that no stop order suspending the
effectiveness of the Registration Statement shall have been issued
and no proceedings for that purpose shall have been threatened or
instituted.
VIII
MISCELLANEOUS
This Agreement shall inure to the benefit of, and be binding
upon, the Underwriter (including, specifically, such Underwriter as
may be added as provided in Article II hereof), the Company and its
successors, and the term "successors" as used in this Agreement
shall not include any purchaser, as such purchaser, of any of the
Interests. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person other than the
persons mentioned in the preceding sentence any legal or equitable
right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained this Agreement and all conditions
and provisions hereof being intended to be, and being, for the sole
exclusive benefit of such person and for the benefit of no other
persons, except that the warranties, indemnities and agreements of
the Company contained herein shall also be for the benefit of any
persons, if any, who control any Underwriter within the meaning of
Section 15 of the Act, and except that the indemnification by the
Underwriter shall be for the benefit of the Company and such
persons as shall have signed the Registration Statement.
IX
TERMINATION
Any termination of this Agreement, pursuant to this Article,
shall be without liability of the Company to Underwriter or the
Soliciting Dealers, except as otherwise provided herein, and
without liability on the Underwriter's part or the part of the
Soliciting Dealers to the Company.
Any notice referred to above may be given at the Company's
principal place of business in writing, orally or by telephone, and
if orally or by telephone, shall be immediately confirmed in
writing.
X
NOTICE
Any notice required or permitted to be given hereunder may be
given orally or in writing by depositing the same in the United
States Mail postage prepaid, addressed as follows:
To the Underwriter: Decade Securities Corp.
250 Patrick Boulevard
Brookfield, Wisconsin 53045
To the Company: Charthouse Suites Vacation
Ownership, Inc.
250 Patrick Boulevard
Brookfield, Wisconsin 53045
With a copy to: Conrad G. Goodkind, Esq.
Quarles & Brady
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202-4497
If the foregoing correctly sets forth our understanding,
please indicate your acceptance thereof in the space provided for
such purpose. This letter, upon its acceptance, will set forth the
entire agreement between us and no representations, warranties,
understandings or agreements not herein specifically set forth
shall be implied therefrom.
Very truly yours,
Charthouse Suites Vacation
Ownership, Inc.
By: _____________________________
Jeffrey Keierleber,
President
The foregoing agreement is hereby confirmed and accepted as of the
date first above written.
DECADE SECURITIES CORP.
By: _____________________________
President
150 Charthouse Suites Vacation Interests
CHARTHOUSE SUITES VACATION OWNERSHIP, INC.
SOLICITING DEALER AGREEMENT
Decade Securities Corp. (the "Dealer Manager"), as Dealer
Manager/Underwriter for Charthouse Suites Vacation Ownership,
Inc., a Wisconsin corporation ("Charthouse") invites you to
become a soliciting dealer ("Soliciting Dealer") in an offering
of up to 150 Charthouse Suites Vacation Interests (the
"Interests") pursuant to the terms and conditions set forth
in the Prospectus dated _______________, 1997 (the
"Prospectus") included herewith. The interests are more
particularly described in the Prospectus, additional copies of
which will be supplied in reasonable quantities upon request.
The terms and conditions of this invitation and Agreement are as
follows:
1. Offer and Sale of Interests. The Soliciting Dealer
represents that it only will offer and sell the Interests in
conformity with federal and state securities laws to persons who
are bona fide residents of those states in which the Interests
may legally be offered and sold and only at the price, in the
amounts and on the terms set forth in Charthouse's current
Prospectus.
2. Investor Suitability. The Soliciting Dealer represents
that in recommending the purchase of Interests to potential
purchasers: (1) it will have reasonable grounds to believe (on
the basis of information obtained from the potential purchaser
concerning his or her investment objectives, other investments,
financial situation and needs, and other information available to
it) that the potential purchaser is or will be in a financial
position appropriate to enable him or her to realize to a
significant extent the benefits described in the Prospectus, that
the potential purchaser has a fair market net worth sufficient to
sustain the risks inherent in an investment, and that the
Interests are otherwise suitable for the potential purchaser; (2)
it will maintain in its files documents disclosing the basis on
which the determination of suitability was reached as to each
purchaser; and (3) it or a person associated with it will, prior
to accepting subscriptions for the Interests, inform prospective
purchasers of all pertinent facts relating to the liquidity and
marketability of the Interests during the term of the investment.
The Soliciting Dealer further represents that it will not
purchase Interests on behalf of a discretionary account without
the prior written approval of the transaction by the purchaser.
3. Due Diligence Investigation. The Soliciting Dealer
has, or will have, prior to its participation in the offering,
reasonable grounds to believe that all material facts are
adequately and accurately disclosed in the Prospectus and provide
a basis for evaluating Charthouse, including information relating
to items of compensation, benefits to purchasers, tax aspects,
conflicts of interest, risk factors, and pertinent documents and
reports. The Soliciting Dealer further acknowledges that the
Dealer Manager is an affiliate of Charthouse, and therefore the
Soliciting Dealer cannot rely on the Dealer Manager's due
diligence investigation with respect to the offering.
4. Preliminary Prospectus. The Soliciting Dealer agrees
to use the "Preliminary Prospectus" supplied by the Dealer
Manager in conformity with the provisions of federal and state
securities laws. In particular (and without limiting the
generality of the foregoing), the Soliciting Dealer shall accept
no funds or executed subscriptions until the Interests may be
legally sold.
5. Selling Commissions. The Soliciting Dealer will be
allowed a commission of up to seven percent (7%), and other non-
cash compensation as specified on Exhibit A, with respect to all
Interests sold by the Soliciting Dealer. Such payments shall be
made to the Soliciting Dealer by the Dealer Manager promptly
after the Dealer Manager receives its commissions and dealer
manager fee from Charthouse. Such payments will not be made
until the earlier of (i) the sale of 76 Interests (which have not
been rescinded) or (ii) 180 days after the Effective Date of the
Registration Statement for the Interests. The Soliciting Dealer
agrees to comply with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and will not grant any
concessions, discounts or other reallowances which are not
permitted by under such provisions. The Dealer Manager will also
pay the incentive compensation set forth on Exhibit A.
6. Status of Soliciting Dealer. The Soliciting Dealer
agrees to purchase the Interests for its customers only through
the Dealer Manager, and all such purchasers shall only be made
upon orders already received by the Soliciting Dealer from its
customers. In all sales of Charthouse's Interests to the public,
the Soliciting Dealer shall confirm to such purchasers that it is
acting as agent for another.
7. Delivery of Funds. The Soliciting Dealer will promptly
(by noon of the next business day following receipt of the funds)
transmit to the Dealer Manager all funds received from
prospective purchasers of Interests and a completed Subscription
Agreement for each sale which will set forth the name, address,
and social security or federal tax identification number of each
purchaser,, the number of Interests subscribed for, and, if there
is to be more than one registered owner, whether the purchasers
are acting in joint tenancy or otherwise. The Soliciting Dealer
shall report, in writing, to the Dealer Manager upon request, the
number of Charthouse's Interests which have been sold and the
number of persons who have purchased such Interests from the
Soliciting Dealer. Each subscription may be rejected by
Charthouse or the Dealer Manager, and if rejected, all funds paid
will be returned to the purchaser within one business day after
rejection. In such event, the Soliciting Dealer will be notified
accordingly by the Dealer Manager.
8. Payment. Payment for Charthouse's Interests shall
accompany all confirmations and applications and shall be in
clearing house funds delivered to the Dealer Manager. All checks
and other orders for payment of money shall be made payable to
the Decade Charthouse Vacation Ownership, Inc.
9. Soliciting Dealer's Undertakings. No person is
authorized to make any representations concerning the Interests
except those contained in Charthouse's then current Prospectus.
The Soliciting Dealer will not sell any Interest pursuant to this
Agreement unless a copy of the Prospectus is furnished to each
purchaser prior to the acceptance of the purchaser's
subscription. The Soliciting Dealer agrees not to use any
supplemental sales literature of any kind without the prior
written approval of the Dealer Manager, unless the literature is
furnished by the Dealer Manager for such purpose. In offering
and selling the Interests, the Soliciting Dealer will rely solely
on the representations contained in Charthouse's Prospectus.
10. Failure of Order. If any order is rejected or if any
payment is received which proves insufficient or worthless, any
compensation paid to the Soliciting Dealer shall be returned
either by the Soliciting Dealer's remittance in cash or by a
charge against the account of the Soliciting Dealer, as the
Dealer Manager may elect.
11. Representations and Agreements of Soliciting Dealer.
By accepting this Agreement, the Soliciting Dealer represents
that it is registered as a broker-dealer under the Securities
Exchange Act of 1934, as amended, is a member in good of the
National Association of Securities Dealers, Inc., is licensed as
a broker-dealer in one or more states in which the Interests may
legally be sold and will maintain such registration, membership
and licenses throughout the term of this Agreement. The
Soliciting Dealer also represents that it will only offer and
sell Charthouse's Interests in compliance with all federal, state
and regulatory agency laws and regulations to bona fide residents
of those states in which the Interests may legally be sold and in
which the Soliciting Dealer, and its representatives making
offers and sales, are licensed. The Soliciting Dealer shall not
be entitled to any compensation during any period in which its
registration with the Securities and Exchange Commission, or its
or its representative's membership with the National Association
of Securities Dealers Inc. or license in a state where a sale
occurred has been suspended or terminated.
12. Indemnification:
(a) At the time of the offering, the Dealer
Manager shall have caused Charthouse to indemnify and
hold harmless each Soliciting Dealer (other than the
Dealer Manager), and each person, if any, who controls
(within the meaning of Securities Act of 1933, as
amended (the "Act") the Soliciting Dealer, against any
loss, claim, damage, liability or expense (including
attorneys' fees and litigation costs) to which the
Soliciting Dealer, or such controlling person, may be
subject under the Act or under any other statute or
common law or otherwise, insofar as such loss, claim,
damage, liability or expense (or any action in respect
thereof) arises out of or is based upon (1) any act or
omission by Charthouse in connection with the offer or
sale of Interests, which act or omission constitutes,
or is alleged to constitute a violation of the Act or
such statute, common law or otherwise, or (ii) any
untrue statement or alleged untrue statement of a
material fact contained in the Prospectus (including
any amendment or supplement thereto) relating to
Corporation or the omission or the alleged omission to
state therein a material fact necessary in order to
make the statements therein, in light of the
circumstances under which they were made, not
misleading; provided, however, that Charthouse shall be
liable in any such case to the extent that any such
loss, claim, damage, liability or expense arises out of
or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the
Prospectus, or such amendment or supplement thereto, in
reliance upon and in conformity with written
information furnished to the Dealer Manager or
Corporation by any Soliciting Dealer.
(b) The Dealer Manager agrees to indemnify and
hold harmless, the Soliciting Dealer, and such person,
if any, who controls (within the meaning of the Act)
the Soliciting Dealer, against any loss, claim, damage,
liability or expense (including attorneys' fees and
costs of litigation) to which the Soliciting Dealer, or
such controlling person, may become subject under the
Act or under any other statute or common law or
otherwise insofar as such loss, claim, damage,
liability or expense (or any action in respect thereof)
arises out of or is based upon (i) any act or omission
by the Dealer Manager in connection with the offer or
sale of Interests, which act or omission constitutes or
is alleged to constitute, a violation of the Act or
such statute, common law or otherwise; and (ii) any
untrue statement or alleged untrue statement of a
material fact contained in the Prospectus (including
any amendment or supplement thereto) or the omission or
alleged omission to state therein a material fact
necessary in order to make the statements therein, in
light of the circumstances under which they were made,
not misleading which is made or omitted in reliance
upon and in conformity with written information
furnished to Charthouse by the Dealer Manager.
(c) The Soliciting Dealer hereby agrees to
indemnify and hold harmless the Dealer Manager and
Charthouse and each person, if any, who controls any
of them (within the meaning of the Act) from and
against any and all loss, claims, damages or
liabilities to which the Dealer Manager or Corporation
may become subject under the Act, or otherwise, insofar
as such loss, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based
upon (i) information contained in the Prospectus to the
extent such information is supplied by the Soliciting
Dealer to the Dealer Manager or Corporation for
inclusion therein; (ii) any alleged misrepresentations
or omissions to state material facts in connection with
statements made by the Soliciting Dealer or the
Soliciting Dealer's salespersons orally or by other
means or (iii) any material breach or inaccuracy in any
representation or warranty made by the Soliciting
Dealer herein; and the Soliciting Dealer will reimburse
Charthouse and Dealer Manager for any legal or other
expenses reasonably incurred in connection with Dealer
Manager shall, after receiving notice of commencement
of any action upon it or Charthouse and any proceeding
in respect of which indemnity may be sought by
Charthouse or the Dealer Manager hereunder, notify the
Soliciting Dealer within 10 days in writing of the
commencement thereof. In case any such action be
brought against Charthouse or the Dealer Manger, the
Dealer Manger shall notify the Soliciting Dealer of the
commencement thereof and the Soliciting Dealer shall be
entitled to participate in (and, in the extent the
Soliciting Dealer shall wish, to direct) the defense
thereof at the Soliciting Dealer's own expense, but
such defense shall be conducted by counsel satisfactory
to Charthouse and the Dealer Manager. If the
Soliciting Dealer shall fail to provide such defense,
Charthouse or the Dealer Manager may defend such action
at the Soliciting Dealer's cost and expense. The
Soliciting Dealer's obligation under this
indemnification agreement shall remain operative and in
full force and effect, regardless of any termination or
cancellation of this Agreement, or any investigation by
any party.
(d) The indemnity agreement between the Dealer
Manager and each Soliciting Dealer shall remain
operative and in full force and effect, regardless of
any termination or cancellation of the Dealer Manager
Agreement or Soliciting Dealer's Agreement, or any
investigation by any party.
13. Reports and Notices. The Dealer Manager agrees that
for so long as any of the Interests are outstanding, it will
furnish or cause to be furnished to the Soliciting Dealer (i)
such documents, reports and information as are furnished by
Charthouse to its members (such documents, reports and
information to be so furnished at the same time that they are
furnished to the members).
14. Survival. All representations, warranties and
covenants herein shall survive the execution and delivery hereof
and should not be affected by any investigation made by any
party.
15. Notices Hereunder. Any notice under this Agreement
shall be given or confirmed in writing, delivered personally or
sent by certified mail, postage pre-paid, addressed as specified
in this Section:
Notices to Dealer Manager: Decade Securities
Corporation
250 Patrick Boulevard
Brookfield, WI 53045
Attn.: Michael G. Sweet
and copy to: Conrad G. Goodkind, Esq.
Quarles & Brady
411 E. Wisconsin Avenue
Milwaukee, WI 53202
Notices to Soliciting Dealer:
To the Address indicated under the Soliciting
Dealer's Signature appearing on the last page
of this Agreement.
16. Applicable Law. This Agreement shall be governed by
the internal laws of the State of Wisconsin.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the ____ day of ________________, 1997.
DECADE SECURITIES CORP.,
Dealer Manager
By: __________________________
Its: _________________________
______________________________
(name of Soliciting Dealer)
By: __________________________
Its: _________________________
______________________________
(Soliciting Dealer's Street
Address or Post Office Box)
______________________________
(Soliciting Dealer's City,
State and Zip Code)
______________________________
(Tax Identification No. of
Soliciting Dealer)
<PAGE>
<PAGE>
EXHIBIT A
As Incentive Compensation a representative of a Soliciting
Dealer may earn the following Incentive Compensation:
If a representative sells 5 Interests, such representative
will have the right to (a) use of a one unit week at Charthouse
Suites Hotel in Clearwater, Florida, (b) submit the one week
hotel suite in the RCI Travel Vacation Exchange Program and in
accordance with the terms and, upon payment of all RCI fees,
select a week at a participating resort, or (c) receive a cash
payment equal to the Guaranteed Rental Rate described in the
Charthouse Suites Vacation Ownership, Inc. prospectus for the
Interests. For purposes of this Incentive Compensation, the
Dealer Manager will select the category of Charthouse hotel
suite, in its discretion, but intends to consider the type of
class of Interests sold by the representative in selecting such
category.
If a representative sells 8 - 9 Interests, such
representative will have the right to (a) two unit weeks at
Charthouse Suites Hotel, (b) submit the two week hotel suite in
the RCI Travel Vacation Exchange Program and, in accordance with
the terms and upon payment of all RCI fees, select two weeks at a
participating resort, or (c) receive a cash payment equal to the
Guaranteed Rental Rate described in the Charthouse prospectus for
the Interests. For purposes of this Incentive Compensation, the
Dealer Manager will select the category of Charthouse hotel
suite, in its discretion, but intends to consider the type of
class of Interests sold by the representative in selecting such
category.
If a representative sells 10 or more Interests, such
representative will have the right to (a) three unit weeks at
Charthouse Suites Hotel, (b) submit the three week hotel suite in
the RCI Travel Vacation Exchange Program and, in accordance with
the terms and upon payment of all RCI fees, select three weeks at
a participating resort, or (c) receive a cash payment equal to
the Guaranteed Rental Rate described in the Charthouse prospectus
for the Interests. For purposes of this Incentive Compensation,
the Dealer Manager will select the category of Charthouse hotel
suite, in its discretion, but intends to consider the type of
class of Interests sold by the representative in selecting such
category.
_________ ___, 1997
Holders of Interests
From Charthouse Suites Vacation Ownership, Inc.
Re: Federal Income Tax Issues and Certain Florida Tax
Issues Concerning Purchase of Interests from Charthouse
Suites Vacation Ownership, Inc.
Ladies and Gentlemen:
You have requested our opinion with respect to certain
federal income tax issues and certain Florida tax issues in
connection with the purchase of Charthouse Suites Vacation
Interests ("Interests") in the Chart House Suites hotel from
Charthouse Suites Vacation Ownership, Inc. (the "Company"), a
Florida corporation. All capitalized terms used but not
otherwise defined in this letter will have the same meaning as in
the Prospectus dated ______________, 1997 (the "Prospectus"), the
Subscription and Purchase Agreement for Charthouse Vacation
Interests (the "Subscription and Purchase Agreement") and the
Charthouse Suites Vacation License Plan (the "License Plan").
I. BASES OF OPINIONS.
For purposes of rendering our opinions, we have examined and
relied upon (i) the Prospectus, (ii) the Subscription and
Purchase Agreement, (iii) the License Plan, (iv) the Internal
Revenue Code of 1986, as amended through the date hereof (the
"Code"), the Treasury Regulations issued thereunder, Revenue
Rulings and Revenue Procedures issued by the Internal Revenue
Service (the "Service") and applicable case law, (v) the Florida
Statutes of ____, as amended through the date hereof (the
"Statutes"), the Florida Administrative Code (the "Code") issued
thereunder, administrative authorities issued by the State of
Florida Department of Revenue (the "Department") and applicable
case law, and (vi) such other documents as we have considered
necessary in order for us to render the opinions contained
herein.
For purposes of this examination, we have assumed the
authenticity of original documents, the conformity to original
documents of all documents submitted to us as copies, the
genuineness of all signatures, and the capacity of each party
executing a document to so execute such document.
II. OPINIONS.
A. Federal Income Tax.
Based on our interpretation of the currently applicable
sections of the Code, the Treasury Regulations issued thereunder,
Revenue Rulings and Revenue Procedures issued by the Service and
applicable case law, and subject to the foregoing discussion and
to the qualifications and discussion in the "Certain Federal
Income Tax Considerations" section of the Prospectus, we give our
opinion with respect to the specific issues discussed below.
1. In our opinion, it is more likely than not that
the license a Holder will acquire from the License Plan creates a
separate contractual relationship between the Company and each
Holder, and that the sum of such separate relationships does not
create an entity for federal income tax purposes.
A separate entity exists for tax purposes under Section
301.7701(1)(a)(2) of the Treasury Regulations if the participants
in a joint venture or other contractual arrangement (1) carry on
a trade, business, financial operation, or venture, and (2)
divide the profits therefrom. Holders of an Interest 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. Alternatively, some
Holders may elect the Guaranteed Rental Arrangement. Annual dues
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. It is our opinion that the sum of the
separate relationships between the Company and each Purchaser do
not result in an entity engaged in business for joint profit and
therefore, such separate relationships do not create an entity
for federal income tax purposes.
2. In our opinion, it is more likely than not that
the Charthouse rental pool constitutes a joint venture or other
contractual arrangement engaged in a trade, business, financial
operation or venture for joint profit whose participants consist
of those Holders that utilize the rental pool and the Company if
it places unsold Unit Weeks that it owns in the rental pool.
Furthermore, it is our opinion that the resulting entity will be
classified as a partnership for federal income tax purposes.
Under Section 301.7701-1 of the Treasury Regulations, an
entity is created for federal income tax purposes and is treated
as separate from its owners if the participants carry on a trade,
business, financial operation or venture and divide the profits
therefrom. An entity is properly classified as a partnership
under Sections 301.7701-2 and 301.7701-3 of the Treasury
Regulations if (1) it has at least two members, and (2) it is not
classified as a corporation. Under Section 301.7701-2 of the
Treasury Regulations, an entity is classified as a corporation if
it is described as a corporation under federal or state law. In
addition, under Section 301.7701-3 of the Treasury Regulations,
an entity may elect to be taxed as an association taxable as a
corporation if the entity has at least two members. In our
opinion, the Charthouse rental pool is an entity separate from
its owners that is engaged in a trade, business, financial
operation or venture in which profits are divided therefrom.
Because the Company has advised us that it does not intend to
file an election to treat the relationships created by the
Charthouse rental pool as a corporation taxable as an
association, it is further our opinion that the resulting entity
will be properly classified as a partnership for federal income
tax purposes.
3. In our opinion, it is more likely than not that
any entity created by the Charthouse rental pool will not be
classified as a publicly traded partnership for federal income
tax purposes.
Section 7704(a) of the Code provides that a publicly traded
partnership shall be treated as a corporation for federal income
tax purposes. Section 7704(b) of the Code provides that, for
purposes of Section 7704(a), the term "publicly traded
partnership" means any partnership if (1) interests in such
partnership are traded on an established securities market, or
(2) interests in such partnership are readily tradeable on a
secondary market (or the substantial equivalent thereof). Based
on representations of the Company, Interests will not be traded
on an established securities market nor are they expected to be
readily tradeable on a secondary market (or the substantial
equivalent thereof), although no assurance can be given that such
a market may not develop after the date of this letter.
4. In our opinion, the statements made in the
Prospectus under "Certain Federal Income Tax Considerations" are
correct as to matters of law.
We incorporate by reference the "Certain Federal Income Tax
Considerations" section of the Prospectus, which cites authority
with respect to both the opinions expressed herein and general
tax considerations associated with a Holder's investment in an
Interest. We also incorporate by reference the discussions of
tax risks set forth in the "Tax Risks" section of the Prospectus.
The information in those sections, to the extent that it concerns
matters of law or legal conclusions, has been reviewed by us and
is correct as of the date of this letter.
B. Certain Florida Taxes.
Based on our interpretation of the currently applicable
sections of the Statutes, the Code issued thereunder,
administrative authorities issued by the Department and
applicable case law, and subject to the qualifications and
discussion in the "Certain Florida Tax Matters" section of the
Prospectus, in our opinion, the statements made in the Prospectus
under "Certain Florida Tax Matters" are correct as to matters of
law.
We incorporate by reference the "Certain Florida Tax
Matters" section of the Prospectus, which cites authority with
respect to certain general tax considerations associated with a
Holder's investment in an Interest. We also incorporate by
reference the discussions of tax risks set forth in the "Tax
Risks" section of the Prospectus. The information in those
sections, to the extent that it concerns matters of law or legal
conclusions, has been reviewed by us and is correct as of the
date of this letter.
No opinion, favorable or unfavorable, is expressed on the
availability of any other tax (federal or state) consequences or
treatment to Holders of Interests, although such consequences or
treatment may be significant to a Holder of an Interest.
Our opinions are based on our current understanding of the
applicable Federal and Florida law. There can, of course, be no
assurance that a court, the Service or the Department, when faced
with the same facts, will reach the same conclusions as we have
or that the law will not be changed after the date of this
letter. The information and opinions given in this letter are
effective as of the date of this letter.
This letter is delivered to you in connection with the
purchase of an Interest by a Holder. This opinion may be relied
upon only by the Company and the Holders of Interests.
This opinion is rendered as of the date hereof and we
disclaim any obligations to advise you of any events hereafter
arising which may adversely affect such opinion.
Except as specifically provided herein, we do not express
any opinion in this letter with respect to any issues pertaining
to state, local or foreign tax law that might affect the taxation
of the Company or the Holders of Interests.
Very truly yours,
QUARLES & BRADY
PROPERTY MANAGEMENT AGREEMENT
THIS AGREEMENT, dated _________________, 1997, is by and
between CHARTHOUSE SUITES VACATION OWNERSHIP, INC., a Florida
corporation ("Charthouse") and DECADE PROPERTIES, INC., a
Wisconsin corporation ("DPI").
WHEREAS, Charthouse owns a hotel comprised of 25 hotel rooms
located in Clearwater, Florida, known as Chart House Suites hotel
(the "Property"). In connection with the offering of Vacation
Interests in the Charthouse, Charthouse desires to retain DPI to
manage the Property on behalf of Charthouse and the holders of
Charthouse Vacation Interests ("Interests") on the terms and for
the compensation set forth below.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. Appointment and Acceptance. Charthouse hereby appoints
and retains DPI to perform the services set forth herein, and DPI
hereby accepts such appointment and employment, subject to the
conditions of this Agreement.
2. Efforts and Conflicts. DPI agrees to use commercially
reasonable and continual efforts to fulfill its obligations
hereunder. Charthouse acknowledges that DPI has been, is and
will be engaged to perform duties for other entities, including
affiliates of Charthouse and DPI that are similar to those duties
to be performed under this Agreement. Charthouse further
acknowledges that it has no exclusive right to DPI's services.
3. Term of Agreement. This Agreement shall remain in full
force and effect until December 31, 2040. The parties agree that
DPI would not have sold the Property to Charthouse or created the
Charthouse Suites Vacation License Plan unless this Agreement was
entered into for the entire term and, moreover, DPI would not
enter into this Agreement for a lesser term.
4. Compensation. For services rendered hereunder,
Charthouse shall pay to DPI an amount equal to $2,500 a month
plus full reimbursement of all of its costs. The monthly
management fee amount will be increased on the first day of each
year (beginning January 1, 1998) by the annual increase in the
Consumer Price Index ("CPI") over the previous year, as reported
by the Department of Labor. The parties agree to select another
comparable index, if the Department of Labor ceases to publish
the CPI index.
5. DPI's Authority, Duties and Obligations. During the
term of this Agreement, DPI shall provide the following services,
and, in the performance of such services, shall have the
authority indicated to act as agent on behalf of Charthouse:
(a) To manage the Property, including the provision of
services necessary for the maintenance and operation of the
Property customarily performed by managing agents of similar
properties;
(b) To keep the Property in good condition and repair,
including, without limitation, interior and exterior
decorating, painting, plumbing, heating, and ventilating
systems and carpeting; to make, or cause to be made, and to
supervise repairs and alterations on Charthouse's behalf
required by normal wear and tear; to purchase supplies,
equipment and services and pay all related bills. DPI
agrees to secure the prior approval of Charthouse on all
expenditures in excess of $1,000 for any one item, except
monthly or recurring operating charges and/or emergency
repairs in excess of such maximum, if, in the opinion of
DPI, such repairs are necessary to protect the Property from
damage, or to maintain services to the holders of Interests
or their hotel guests.
(c) To hire, discharge and supervise all employees and
independent contractors.
(d) To borrow money in the name of Charthouse, provided
such funds are used exclusively for payment of expenses
related to the Property.
(e) To make contracts for electricity, gas, fuel, water,
telephone, vermin extermination, window cleaning, sweeping,
cleaning, ash or rubbish hauling and other services or such
of them as DPI shall deem advisable in its reasonable
opinion.
(f) To carry, at Charthouse's expense, necessary public
liability insurance with a minimum limit of $1,000,000 in
coverage and worker's compensation insurance adequate to
protect the interests of the parties hereto; which policies
shall, if possible, be so written as to protect DPI in the
same manner and to the same extent they protect Charthouse
and will name DPI as an additional insured under the policy;
and acquire fire, liability, burglary and theft, steam
boiler, pressure or any other appropriate insurance.
(g) To pay, on behalf of and at the direction of
Charthouse, indebtedness relating to DPI and operating
expenses.
(h) To follow the directions of any consultants retained by
Charthouse for the establishment of DPI's procedures and
controls.
(i) To bond by a fidelity bond all of DPI's employees who
are responsible for the handling of money for Charthouse.
(j) To pay all taxes and special assessments for public
improvements, now or hereafter assessed or levied against
and on the Property as they become due. Payments may be
made in installments, as permitted by the municipality.
(k) To pay all costs of data processing and/or computer
processing charges in connection with the accounting and
controls established by Charthouse or the holders of
Interests.
(l) To maintain and operate the Property, including,
without limitation, repairmen, gardeners, janitors, security
personnel, electricians and carpenters, provided that DPI
shall not be responsible for the actions and omissions of
such personnel and contractors.
(m) To perform such other services as may be reasonably
directed by Charthouse in the diligent management of the
Property.
(n) DPI shall comply with all laws, rules and regulations
applicable to the performance of its obligations under this
Agreement. DPI shall take such action as shall be necessary
to comply promptly with all orders and requirements
affecting the Property or the performance of its obligations
and activities under this Agreement from any governmental
entity having jurisdiction over the Property or DPI's
activities with respect to the Property. Notwithstanding
the foregoing to the contrary, DPI shall not take compliance
action under this subparagraph if Charthouse requests DPI in
writing to contest any such order or requirement and agrees
to reimburse DPI for all fees and expenses incurred by DPI
in connection with such contest. Upon such request and
agreement, DPI shall use its best efforts to contest such
order or requirement. DPI shall obtain reimbursement for
all fees and costs incurred in connection with such contest
from Charthouse.
6. Records and Reports. DPI will furnish such information
(including occupancy reports) as may be requested by Charthouse
from time to time with respect to the financial, physical or
operational condition of the Property.
7. Reimbursement of Expenses. In addition to the
compensation payable under Paragraph 4, Charthouse shall
reimburse DPI for the costs including all goods, materials and
services used for or by Charthouse, and for all expenses of DPI
on behalf of Charthouse and directly relating to the prudent
operation of the Property and all services provided to residents
or licensees of the Property, including site bookkeeping services
and operating the Charthouse rental pool. In the case of
services performed by employees of DPI, the reimbursable costs
shall be based upon consideration of the time actually spent by
such employees in performing such services, as supported by time
records multiplied by a rate established by DPI to cover the
costs related to the employment of such persons; however, such
amounts charged to Charthouse will not exceed those which
Charthouse generally would be required to pay to independent
parties for comparable services in the area in which the Property
is located. The amount of reimbursable expenses shall not
include amounts for time spent by the President of DPI.
8. Termination. The parties hereby agree that an integral
component of the Charthouse Suites Vacation License Plan and this
Agreement is the right of DPI to manage the Property pursuant to
this Agreement. As a result, the parties agree that DPI can only
be terminated for cause and then upon the entire payment in cash
to DPI by the successor, the third party or Charthouse of the
present value amount of the future compensation to be paid to the
Charthouse under this Agreement. For purposes of calculating the
present value amount, the parties agree to use a 8% discount rate
over the remaining term of this Agreement.
9. Entire Agreement, Amendments. This Agreement
constitutes the entire understanding between the parties hereto
with respect to the subject matter hereof. The rights and
obligations specified herein are intended to be construed as
separate and independent from any other prior, contemporaneous or
subsequent agreements among the parties hereto. No amendment or
modification of this Agreement will be valid, unless made by
supplemental agreement in writing.
10. Assignability. The rights under this Agreement may be
assigned and the duties hereunder may be delegated by DPI without
the consent of Charthouse, provided that such delegation shall
not relieve DPI of its obligations to Charthouse hereunder.
11. Severability. If any provision of this Agreement shall
be held to be invalid, unenforceable or illegal in any
jurisdiction under any circumstances for any reason, (i) such
provision shall be reformed to the minimum extent necessary to
cause such provision to be valid, enforceable and legal and
preserve the original intent of the parties, or (ii) if such
provision cannot be so reformed, such provision shall be severed
from this Agreement. Such holding shall not affect or impair the
validity, enforceability or legality of such provision in any
other jurisdiction or under any other circumstances. Neither
such holding nor such reformation or severance shall affect or
impair the legality, validity or enforceability of any other
provisions of this Agreement to the extent that such other
provision is not itself actually in conflict with any applicable
law.
12. Choice of Law. This Agreement shall, in all respects,
be governed by, and construed in accordance with, the internal
laws of the State of Florida.
13. Titles and Headings. All titles and headings have been
inserted solely for the convenience of the parties and are not
intended to be a part of this Agreement or to affect its meaning
or interpretation.
DECADE PROPERTIES, INC. CHARTHOUSE SUITES VACATION
OWNERSHIP, INC.
By: By:
Jeffrey Keierleber, Jeffrey Keierleber,
President President
THIS INSTRUMENT PREPARED BY AND AFTER
RECORDING SHOULD BE RETURNED TO:
Mary Neese Fertl, Esq.
Quarles & Brady
411 East Wisconsin Avenue
Suite 2900
Milwaukee, Wisconsin 53202-4497
NON-DISTURBANCE AND NOTICE TO CREDITORS
THIS NON-DISTURBANCE AND NOTICE shall be effective as to all
persons, firms or entities acquiring rights or claims against the
following described property, subsequent to the date hereof:
(SEE EXHIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF)
1. YOU ARE HEREBY NOTIFIED that the aforementioned
property has been submitted to a certain Vacation License Plan
for Charthouse Suites, a copy of which is available from
Charthouse Suites Vacation Ownership, Inc. (the "Plan"). All
persons, firms or entities acquiring rights in the subject
property referenced herein, subsequent to the date hereof, shall
be specifically subject to all terms, conditions and provisions
of such Plan, and hereby subordinate all such right, title and
interest to the terms thereof. This Notice to Creditors shall be
binding upon all persons, firms and entities, and their
successors and assigns, acquiring rights in the subject property,
subsequent to the date hereof, and shall be for the benefit of
all Licensees of any Licenses, their successors and assigns, and
the Developer as defined in the Plan.
2. If the party seeking enforcement is not in default of
its obligations, this instrument may be enforced by both the
Seller/Developer and any Licensee of the Plan.
3. This instrument shall be effective as between the
Licensee and any of the undersigned, despite any rejection or
cancellation of the License Agreement between the Licensee and
Developer during bankruptcy proceedings of the Developer.
4. So long as any of the undersigned has any interest in
the accommodations, facilities or Plan, each of the undersigned
will fully honor all the rights of the Licensees in and to the
Plan, will honor the Licensees' right to cancel their License
Agreements and receive appropriate refunds, and will comply with
all other applicable requirements of Chapter 721, Florida
Statutes, and rules promulgated thereunder.
DATED: _______________________, 1997.
CHARTHOUSE SUITES VACATION DECADE PROPERTIES, INC.,
OWNERSHIP, INC., a Wisconsin Corporation
a Florida Corporation 250 Patrick Boulevard
250 Patrick Boulevard Suite 140
Suite 140 Brookfield, WI 53045
Brookfield, WI 53045
BY:___________________________ BY:___________________________
Its:__________________________ Its:__________________________
Print Name:___________________ Print Name:___________________
STATE OF ________________________ )
) SS.
COUNTY OF _______________________ )
The foregoing instrument was acknowledged before me this
__________ day of __________________________, 1997, by
__________________________, as ________________________, of
Decade Properties, Inc., on behalf of the corporation. He/She is
personally known to me 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:
_____________________________
GUARANTEED RENTAL ARRANGEMENT
This Agreement is made this _____ day of __________, 1997 by
Charthouse Suites Vacation Ownership, Inc. ("Charthouse").
RECITALS
WHEREAS, as an incentive, Charthouse, in order to induce
persons to purchase Charthouse Suites Vacation Interests
("Interests"), is willing to allow Holders, who purchase within a
certain period of time, the right to put a certain number of
weeks of a Holder's right to use the Chart House Suites hotel,
located in Clearwater Beach, Florida, to Charthouse, in return
for receiving certain guaranteed rates, on the terms and
conditions herein.
NOW, THEREFORE, Charthouse agrees as follows:
1. Definitions:
Effective Date Effective Date shall mean the date the
Securities and Exchange Commission
declares the Charthouse Registration
Statement for the Interests effective.
Guaranteed Rental Rate Guaranteed Rental Rate shall mean:
Class A Interest-Standard Studio $ 70.00
Class B Interest-King Bed Studio $ 75.00
Class C Interest-Large Studio $ 85.00
Class D Interest-1 Bedroom $120.00
Class E Interest-1 Bedroom Suite (with lanai) $130.00
Class F Interest-Penthouse $175.00
2. Guaranteed Put Weeks. Charthouse agrees that:
(a) Holders who purchase Interests within six months of the
Effective Date (and do not cancel their subscription)
will receive the right to put six (6) weeks to
Charthouse, on the terms and conditions herein, ("Put")
and receive the Guaranteed Rental Rate, or in the
alternative, may elect to receive the Cash Discount
Amount set forth in Section 5(a) of this Agreement.
(b) Holders who purchase Interests between six months and
one day and nine months of the Effective Date (and do
not cancel their subscription) will receive the right
to put four (4) weeks to Charthouse, on the terms and
conditions herein ("Put"), and receive the Guaranteed
Rental Rate, or in the alternative, may elect to
receive the Cash Discount set forth in Section 5(b) of
this Agreement.
(c) Holders who purchase Interests between nine months and
one day and one year of the Effective Date (and do not
cancel their subscription) will receive the right to
put two (2) weeks to Charthouse, on the terms and
conditions herein ("Put"), and receive the Guaranteed
Rental Rate, or receive the Cash Discount set forth in
Section 5(c) of this Agreement.
3. Put Procedures. In order to exercise the Put (described in
Section 2), a Holder must:
(a) give Charthouse written notice of their intent to
exercise the Put at least 30 days prior to the
beginning of the Unit Week desired to be Put;
(b) Put the entire Unit Week to Charthouse;
(c) exercise the Put within 5 years after the Effective
Date;
(d) be current with all license payments (if paying by
installment), annual dues and special assessment, if
any, for the Interest, and such amount is to be
consideration of the Charthouse rental pool fee of 5%.
Provided that, notwithstanding the foregoing,
Charthouse may reject the Put if it has received 5
requests for the requested Unit Week (Charthouse will
accept requests in the order of receipt). Furthermore,
this guarantee is conditioned upon there being no
action threatened, pending or taken, which makes the
Charthouse rental pool or the Guaranteed Rental
Arrangement illegal, or otherwise restricts or
prohibits the ability of Charthouse to use the Unit
Week.
4. Consequence of Exercise. Charthouse agrees to forward the
funds from the Guaranteed Rental Arrangement within 90 days
of its acceptance of the Put. Upon the acceptance of the
Put, Charthouse will have the exclusive right to use,
exchange or rent the suite and may collect and retain all
revenue arising from its use or rent of the suite. A Holder
may not withdraw a Put request without Charthouse's consent.
5. Cash Discount. In place of the Guaranteed Rental
Arrangement, a Holder may elect to receive the following
Cash Discount Amount on the subscription price.
(a) Holders who purchase Interests within six months of the
Effective Date (and do not cancel their subscription)
may elect to receive a Cash Discount of 5% from the
price of the Interest.
(b) Holders who purchase Interests between six months and
one day and nine months of the Effective Date (and do
not cancel their subscription) may elect to receive a
Cash Discount of 3% from the price of the Interest.
(c) Holders who purchase Interests between nine months and
one day and one year of the Effective Date (and do not
cancel their subscription) may elect to receive a Cash
Discount of 1-1/2% from the price of the Interest.
6. Annual Dues and Licensing Payments. Nothing in this
Agreement shall change a Holder's responsibilities to pay
license payments, annual dues, special assessments or the
Charthouse rental pool fee. Charthouse may elect to retain
the proceeds from the Guaranteed Rental Arrangement and
apply the funds against past due license or annual dues.
7. Amendment. Charthouse may amend this Agreement, provided
that any amend-ment does not reduce the cash benefit to be
received by a Holder.
Agreed to as of the date set
forth above.
________________________________
Charthouse Suites Vacation
Ownership, Inc.
Its: President
RESORT AFFILIATION AGREEMENT
This RESORT AFFILIATION AGREEMENT ("Agreement") is made and
entered into at Indianapolis, Indiana, by and between RESORT
CONDOMINIUMS INTERNATIONAL, INC., an Indiana corporation having
offices and its principal place of business at One RCI Plaza, 3502
Woodview Trace, Indianapolis, Indiana, U.S.A. ("RCI"), and
CHARTHOUSE SUITES VACATION OWNERSHIP, INC., having its principal
place of business at 850 Bayway Boulevard, Clearwater Beach,
Florida 34630 ("Affiliate").
RECITALS
A. RCI makes available the RCI Exchange Program to
individuals who purchase or acquire Timeshare Interests in RCI
Affiliated Resorts.
B. Affiliate has developed Timeshare Interests at the resort
project(s) described as follows: Name, location and street address
of each Resort project affiliated hereby:
(use additional sheets if necessary)
C. Affiliate has submitted to RCI an Application for
Affiliation, a copy of which is incorporated by reference herein in
its entirety, and desires the Resort to become an RCI Affiliated
Resort, and for Affiliate to offer to Purchasers the opportunity to
become RCI Members and to be eligible to participate in the RCI
Exchange Program.
D. RCI desires the Resort to become an RCI Affiliated Resort
and for Affiliate to perform services and duties associated with
the RCI Exchange Program in accordance with the provisions of this
Agreement.
NOW THEREFORE, in consideration of the mutual covenants and
obligations contained in this Agreement, the parties hereby agree
as follows:
ARTICLE 1 - DEFINITIONS
For the purposes of this Agreement, the terms listed below
shall, unless the context otherwise requires, bear the following
meanings:
1.1 Application for Affiliation: The Affiliate's Application
for Resort Affiliation, including any attachments thereto, which is
required to be submitted by Affiliate to RCI in connection with
this Agreement.
1.2 Confirmed Exchange: RCI's written notification to the
Resort and RCI Member or Exchange Guest that accommodations at the
Resort or another resort have been reserved for use by the RCI
Member or Exchange Guest.
1.3 Enrollment Application: The form of application from
time to time prescribed by RCI for the enrollment of Purchasers in
the RCI Exchange Program.
1.4 Exchange Guest(s): Person(s) who have received a
Confirmed Exchange to the Resort from RCI.
1.5 Marks: Those trademarks set forth below, or other
trademarks as may be included and licensed by RCI to Affiliate from
time to time:
RCI
RESORT CONDOMINIUMS INTERNATIONAL
1.6 Presale: That status where the Resort or a Unit at the
Resort is under construction, renovation or refurbishment and is
considered by RCI to be not ready for occupancy by an Exchange
Guest(s).
1.7 Prospective Purchaser: Prospective purchasers of a
Timeshare Interest or other Interest at the Resort or any other RCI
Affiliated Resort.
1.8 Purchasers: Persons who purchase Timeshare Interests in
the Resort, including persons who are already RCI Members at time
of purchase.
1.9 RCI Affiliated Resorts: Resorts subject to resort
affiliation agreements with RCI, including those resorts described
in Recital B.
1.10 RCI Exchange Program: RCI's program of facilitating the
exchange of Timeshare Interests.
1.11 RCI Procedures Manual: Any manual(s) of policies and/or
procedures for affiliates and associations as published and amended
by RCI from time to time.
1.12 RCI Subscribing Members or RCI Members: Purchasers whose
Enrollment Applications are accepted by RCI and who comply with the
Terms and Conditions of RCI Membership.
1.13 RCI Subscription Fee: The annual fee from time to time
payable by RCI Members in respect of RCI's directory, magazine(s)
or other publications and such other benefits incident to the
subscription.
1.14 RCI Terms and Conditions: Those terms and conditions of
RCI membership contained in RCI's "Endless Vacation Special Resort
Edition" magazine as amended from time to time by RCI in its
discretion.
1.15 Intentionally omitted.
1.16 Resort: The resort project(s) or other lodging or
vacation accommodation(s): (1) described in Recital B, and (2) all
subsequent buildings or phases of the resort project(s) or other
lodging or vacation accommodation(s) which meet RCI standards.
1.17 Timeshare Interests: Possessory, occupancy or usage
rights in timeshare resorts or other lodging or vacation
accommodation(s), whole-owner condominiums or similar vacation
ownership plans.
1.18 Unit: A unit of accommodation of moveable or immovable
property designed for separate occupancy in connection with the use
of a Timeshare Interest.
ARTICLE 2 - RCI'S DUTIES AND OBLIGATIONS
2.1 Provide Exchange Program. RCI shall make the RCI
Exchange Program available to RCI Subscribing Members and perform
its functions with respect to the RCI Exchange Program in
accordance with it obligations under this Agreement, the RCI Terms
and Conditions of Membership and the RCI Procedures Manual.
2.2 Process Enrollment Applications. RCI shall process,
promptly and fairly, Enrollment Applications and will notify
Affiliate if RCI rejects an Enrollment Application.
2.3 Fees. If an Enrollment Application is rejected by RCI or
is canceled by the Purchaser as a result of the Purchaser's
cancellation or recision of a contract to purchase a Timeshare
Interest, RCI will refund fees previously remitted to RCI which
correspond to such rejected or canceled Enrollment Application in
accordance with the procedures set forth in the RCI Procedures
Manual.
2.4 Materials. RCI, in order to assist Affiliate in offering
the RCI Exchange Program to Prospective Purchasers, shall provide
to Affiliate, upon acceptance of this Agreement by RCI, those
promotional materials as more fully set forth in Exhibit A attached
hereto. Thereafter, additional materials will be available to
Affiliate at RCI's published rates.
ARTICLE 3 - AFFILIATE'S OBLIGATIONS
3.1 Enrollment Application and Fees. During the term of this
Agreement and any renewal terms, Affiliate shall on a weekly basis
and no later than thirty (30) days after a Purchaser's date of
purchase:
3.1.1 submit to RCI a fully completed Enrollment
Application for each Purchaser;
3.1.2 pay to RCI in a form acceptable to RCI and
without setoff or deduction, a sum equal to the
number of Purchasers since the last payment was
made multiplied by the applicable fee(s)
required for each Purchaser; and
3.1.3 submit a sales report in a form prescribed by
RCI.
It is understood that the foregoing relates only to the
initial Purchaser from the Affiliate and only for the first year
for that Purchaser.
3.2 Promotion of Exchange Program. Affiliate shall in a
manner that complies with the terms of this Agreement and the RCI
Procedures Manual, promote RCI and the RCI Exchange Program to
Purchasers and Prospective Purchasers. Such efforts shall include
but not be limited to:
3.2.1 distributing or arranging for the distribution
of the "Endless Vacation Special Resort
Edition" magazine to all Purchasers at the
Resort;
3.2.2 making the "Endless Vacation Special Resort
Edition" magazine available to all Prospective
Purchasers in the Resort; and
3.2.3 encouraging continued membership in the RCI
Exchange Program.
3.3 Minimum Performance Requirement. Affiliate acknowledges
that if Affiliate's annual RCI Member Enrollment Applications do
not exceed fifty (50), it is not economically viable for RCI to
maintain the Affiliation, and this Agreement is likewise terminable
at the sole option and discretion of RCI upon sixty (60) days
notice to Affiliate.
3.4 Photographs, Names and Logos. Affiliate agrees to
provide to RCI at least two (2) photographs or representative
images of the Resort. Affiliate agrees that these images, along
with the names(s) and logo(s) of the Resort, are for non-exclusive
use by RCI or its licensees, at RCI's sole discretion, for the
promotion of the RCI Exchange Program. Affiliate represents and
warrants to RCI that: (a) Affiliate owns, has acquired or licensed
the trademark and copyright rights in and to such images, names and
logos, and (b) Affiliate has obtained, and has on file at its
office, releases or consents from or for every person, entity or
thing as may be required by law or otherwise for the reproduction
of each such photograph or image as contemplated herein. Further,
Affiliate hereby releases, discharges and agrees to indemnify and
hold RCI harmless from and against any and all liability, demand,
claim, cost, expense, loss or damage (including attorneys' fees)
caused by or arising from the reproduction and distribution of such
images or use of such images, names or logos. This indemnification
and hold harmless provision shall survive the termination of this
Agreement for all applicable statutes of limitation.
3.5 Reserve Units. Affiliate agrees to make available to the
RCI Exchange Program N/A reserve unit(s) at the Resort each week of
the year until Affiliate ceases sales of the Timeshare Interests to
be sold at the Resort. Each such reserve unit shall be a unit
configuration acceptable to RCI. In the event that RCI sends to
the Resort written notice that it does not intend to use a reserve
unit, Affiliate may use that reserve unit as it sees fit. In the
event that RCI sends to the Resort written notice that it does
intend to use the reserve unit, or RCI sends no notice to the
Resort, RCI may use that reserve unit as it sees fit.
3.6 Management Duties. Affiliate agrees to perform the
following management responsibilities:
3.6.1 on RCI's request, to promote new services and
benefits provided by RCI to RCI Members;
3.6.2 to perform services and other duties associated
with the operation of the RCI Exchange Program
in accordance with the RCI Procedures Manual
and other materials furnished to it by RCI from
time to time;
3.6.3 to maintain high qualitative and managerial
standards throughout the Resort (including
maintenance of an efficient and effective
reservations system) and in particular to
maintain high standards of hospitality,
service, cleanliness, maintenance and
appearance and a comprehensive maintenance
program;
3.6.4 to operate its business in a commercially
reasonable fashion that will enable it to meet
its obligations;
3.6.5 to honor all Confirmed Exchanges at the Resort;
3.6.6 to provide all RCI Members and Exchange Guests
with the services and facilities referred to in
the Application for Affiliation and this
Agreement;
3.6.7 to provide all RCI Members and Exchange Guests
with the same rights and privileges at the same
rates afforded generally to Purchasers at the
Resort;
3.6.8 to act in a reasonable and cooperative manner
to satisfy any complaints;
3.6.9 to the extent permissible by law, to submit to
RCI upon RCI's requests, not to exceed once
annually a report containing the name, current
billing address and current ownership
information for each Purchaser at the Resort.
This report shall be current as of one month
prior to the date such report is submitted to
RCI;
3.6.10 not to require Exchange Guests staying at the
Resort to attend a sales presentation;
3.6.11 to collect any bed tax, transient occupancy tax
or other local rate tax or charge on use or
occupancy of the Resort's accommodations from
owners of the Timeshare Interests at the
Resort, unless the imposition of such tax is
precluded by law, in which case to collect the
applicable taxes from Exchange Guests;
3.6.12 to provide RCI with Certificates of Insurance
reflecting: (1) those property and casualty
coverages in effect as described in Section
5.3.3, and (2) naming RCI as an additional
insured under such general liability policy as
required by Section 5.3.3; and
3.6.13 to inform RCI before the appointment or
replacement of any management and/or
maintenance company relating to the Resort.
3.7 Change in Information. Affiliate agrees to immediately
notify RCI of any change in any information set forth in the
Application for Affiliation or of any other fact or circumstances
affecting the operation of the RCI Exchange Program with respect to
the Resort.
3.8 Non-Interference. During the term of this Agreement and
following its termination, Affiliate shall not:
3.8.1 encourage any Purchaser or any other timeshare
owner or RCI Member, to modify, amend, rescind,
contravene or cancel his/her RCI membership;
3.8.2 encourage any owners' association, club,
developer or RCI Affiliated Resort to modify,
amend, rescind, contravene or cancel its
affiliation agreement with RCI; or
3.8.3 interfere or facilitate interference in any
respect with the contractual relationship
between RCI (including any RCI subsidiary,
parent, associated or affiliated company or
other entity in which RCI or its principal
holds a controlling ownership interest) and any
party contracting with RCI.
3.9 Non-Disclosure. During the term of this Agreement and
after its termination, Affiliate agrees that it shall not use for
its own benefit (other than as permitted under this Agreement) or
disclose to any third party, directly or indirectly, any
information with respect to: (a) the terms of this Agreement or
this Agreement's prior drafts or documents used in this Agreement's
negotiations, (b) any proposals produced by RCI and distributed to
Affiliate, (c) any RCI proprietary information (including but not
limited to any trade secrets, any confidential business information
not readily available to the general public, or any confidential
information regarding the operation of the RCI Exchange Program) to
which it may be privy, (d) RCI membership numbers or exchange
activity of any RCI Member or Exchange Guest, or (e) the names,
addresses or telephone numbers of RCI Members. However, disclosure
of the terms of this Agreement may be permitted in the following
limited circumstances: (i) where such disclosure is required by
law, provided that Affiliate gives RCI at least twenty (20) days
written notice prior to such disclosure, and (ii) where requested
by Affiliate's fiduciaries or proposed lenders, only if: (1)
Affiliate secures, on behalf of RCI, the agreement in writing of
the receiving party not to further disclose the confidential
information, and (2) RCI gives written approval of such disclosure.
Notwithstanding the above, Affiliate agrees that direct or indirect
disclosure of any of the above information to any other exchange
company, timeshare or vacation ownership developer or timeshare
owners association is expressly prohibited by this section under
any circumstances.
3.10 Denial of Access.
3.10.1 If Affiliate fails to honor a Confirmed
Exchange into the Resort or if an Exchange
Guest is otherwise denied access to a unit at
the Resort for which that Exchange Guest has a
Confirmed Exchange, then Affiliate shall
immediately and at its own expense secure
alternative accommodations of similar size and
quality for the days the Affiliate is unable to
accommodate the Exchange Guest.
3.10.2 Neither Affiliate nor RCI shall have any
obligation to secure alternate accommodations
for an Exchange Guest arriving at the Resort
during an interval other than that for which
the Exchange Guest hs been confirmed by RCI.
3.11 Protection of RCI's Interests. Affiliate agrees that
during the term of this Agreement and for a period of one (1) year
after this Agreement is terminated for any reason, it will not,
without RCI's prior written consent, hire, employ, engage or pay
for services any person who was employed by RCI during the term of
this Agreement; or directly or indirectly induce any such person to
terminate or alter his/her relationship with RCI.
ARTICLE 4 - RELATIONSHIP OF THE PARTIES
4.1 Representation of Relationship. Affiliate shall fully
and accurately describe the RCI Exchange Program and Affiliate's
relationship with RCI to Prospective Purchasers and Purchasers. To
this end, Affiliate:
4.1.1 shall not misrepresent in any way the RCI
Exchange Program to Purchasers or Prospective
Purchasers nor make any representation which
could lead to any confusion on the part of any
Purchaser or Prospective Purchaser as to the
RCI Exchange Program or the services and
benefits offered in connection therewith;
4.1.2 shall deliver, in writing and in easily
readable print, and prior to the execution of
any contract for purchase, the following or
substantially similar language to Prospective
Purchasers or Purchasers:
RCI conducts an exchange program made available
to purchasers at this resort. No joint
venture, partnership or contract of agency
exists between RCI and the owner of this
resort; however, the owner of this resort is a
party to an agreement with RCI through which
the owner submits applications on behalf of
purchasers to become members of RCI's Exchange
Program. RCI's responsibility for
representations concerning the RCI Exchange
Program is limited to those representation made
in materials supplied by RCI. While it is
anticipated that the owner of this resort and
RCI will maintain an ongoing relationship,
there is no assurance that the agreement
between the owner of this resort and RCI will
continue. Similarly, RCI makes no
representations as to the continued viability
of this resort. Your decision to purchase
should be based primarily upon the benefits to
be gained from ownership and use of your
timeshare interests in the resort and not upon
the RCI Exchange Program.
4.1.3 shall not amend, summarize, change or modify
any material supplied by RCI without RCI's
prior written consent, or delete, alter or
obscure any proprietary notice or legend
contained thereon.
4.1.4 shall not use the name, photograph(s) or
image(s) of any other RCI Affiliated Resort or
any other resort or hotel in any material to be
used in a sales presentation. Further, those
name(s), photograph(s) and image(s) may not be
used in any other manner without obtaining the
prior written consent of: (a) RCI, (b) the
owner of such other RCI Affiliated Resort or
other resort, hotel, or other lodging or
vacation accommodation, (c) the owner of the
copyright in the photograph(s) or image(s), and
(d) any other person whose permission is
legally required to use such name(s),
photograph(s) or image(s).
4.1.5 intentionally omitted.
4.1.6 shall not promote the RCI Exchange Program or
other services available from RCI as the main
or principal reason for purchase of any
Timeshare Interest nor represent Affiliate's
affiliation to the RCI Exchange Program as a
warranty or indication of the Affiliate's, or
Resort's status or condition.
4.2 Intentionally omitted.
4.3 Intentionally omitted.
4.4 Responsibilities of Affiliate. Affiliate acknowledges
and agrees that it is and remains at all times directly and
primarily responsible for (a) the submission to RCI of RCI
Enrollment Applications and fees with respect to the initial
Purchaser from Affiliate; and (b) the content and correctness of
RCI Enrollment Applications it submits.
ARTICLE 5 - ACKNOWLEDGMENTS, REPRESENTATIONS
AND WARRANTIES
5.1 Acknowledgments. Affiliate acknowledges and agrees that:
5.1.1 RCI has the right to accept or reject any
Enrollment Application submitted to it;
5.1.2 it will offer the RCI Exchange Program only to
Purchasers purchasing Timeshare Interests in
the Resort(s) identified in Recital B;
5.1.3 it will not offer the RCI Exchange Program to
Purchasers of Timeshare Interests at any other
resort without entering into a separate Resort
Affiliation Agreement for such resort or adding
such resort to this Agreement by Addendum;
5.1.4 RCI memberships are available to natural
persons, and if a Timeshare Interest is
purchased by a corporation, partnership, or
other business entity, RCI membership must be
in the name of the natural person authorized by
such entity to utilize the purchased Timeshare
Interest;
5.1.5 through the RCI Exchange Program, RCI has the
right to confirm any individuals into Units at
the Resort which have been deposited with RCI
provided, however, such Exchange Guests comply
with the rules and regulations of the Resort;
5.1.6 the RCI Terms and Conditions, including but not
limited to the services and benefits provided
by RCI to RCI Members, exchange privileges, the
practices, procedures and priorities for
effecting exchanges and the fees payable by RCI
Members, govern the relationship between RCI
and RCI Members, and may be changed by RCI from
time to time in its discretion;
5.1.7 the use of RCI Guest Certificate is personal to
RCI Members and no commercial use of RCI Guest
Certificates may be made by Purchasers, or
Affiliate, or any of its officers, directors,
employees, sales representatives, brokers or
agents;
5.1.8 RCI has the right to inspect the Resort and the
sales records of Affiliate with respect to the
Resort upon reasonable notice and during
regular business hours;
5.1.9 it may not assign or sublicense any or all of
it rights under this Agreement to any person
without RCI's prior written approval and any
such attempted assignment or sublicense shall
be null and void;
5.1.10 RCI may assign its rights and duties under this
Agreement or any Enrollment Application or
agreement with an RCI Member in which case this
Agreement shall remain in full force and
effect; and
5.1.11 except for sales in the ordinary course of
business to Purchasers for use other than a
commercial use, it will not transfer during the
initial five (5) year term of this Agreement
any interest in the Resort unless the
transferee agrees to be bound by the terms and
conditions of this Agreement in the same manner
as the Affiliate hereunder.
5.2 Acknowledgment of Relationship. Affiliate hereby
acknowledges that:
5.2.1 it has no power to bind RCI in any manner;
5.2.2 Affiliate and Resort are independent and
outside the control of RCI and that nothing in
this Agreement creates a relationship of
agency, employment, partnership or joint
venture between RCI and the Affiliate;
5.2.3 the product(s) of Affiliate (including but not
limited to Timeshare Interests) are separate
and distinct from the services offered through
the RCI Exchange Program; and
5.2.4 it is not relying on RCI or the RCI Exchange
Program for the sale of its product(s).
5.3 Representations and Warranties. Affiliate represents and
warrants to RCI that:
5.3.1 the statements made by it in the Application
for Affiliation are not misleading and are true
and correct in all material respects and that
all the facilities referred to in the
Application for Affiliation will be available
to Exchange Guests in the manner described in
the Application for Affiliation;
5.3.2 it owns or has the legal right to convey
Timeshare Interests to Purchasers;
5.3.3 it maintains with a reputable insurer property
and casualty insurance to cover loss or damage
to the Resort, as well as general liability
insurance naming RCI as an additional insured
in an amount sufficient to cover its risk;
5.3.4 it has thoroughly examined the RCI Exchange
Program as set forth in the RCI Procedures
Manual and other materials furnished to it by
RCI and that it is familiar with the operation
of the RCI Exchange Program;
5.3.5 except as previously disclosed in writing to
RCI, there is no litigation, proceeding, claim,
complaint, investigation or similar action
pending or threatened against it which would
materially and adversely affect the performance
of its obligations or the continued operation
of the Resort;
5.3.6 by entering into this Agreement, it will not be
in breach of the provisions of any other
agreement, lease, charter, by-law or any other
instrument or obligation;
5.3.7 it is in compliance with all applicable laws,
rules and regulations; and
5.3.8 the execution of this Agreement has been duly
authorized by all necessary actions, the
persons executing this Agreement are authorized
to do so and this Agreement constitutes its
legal and binding obligation.
The representations and warranties contained herein are of a
continuing nature, and unless otherwise disclosed to RCI in
writing, shall be considered reaffirmed by Affiliate with each
submission of Enrollment Application.
ARTICLE 6 - TRADEMARKS
6.1 License. Upon the terms and conditions of this
Agreement, and the policies and procedures established by RCI from
time to time governing the use of the Marks, RCI grants to
Affiliate, individually, a non-exclusive license to use the Marks
only on and in connection with its services in promoting the RCI
Exchange Program, submitting Enrollment Applications of Purchasers
at the Resort to RCI, and coordinating activities and performing
services associated with the operation of the RCI Exchange Program
at the Resort. Affiliate shall not use or permit use of the Marks,
in whole or in part, on or in connection with any other business,
including but not limited to travel related services, financing
services, reservation services, resort management services or
resort rental enterprises. Except as expressly provided herein at
Section 4.3, Affiliate shall not permit or authorize any other
person or entity of any kind to use the Marks in any manner.
6.2 Acknowledgment. Affiliate acknowledges that: (a) RCI is
the owner in the United States and various other countries of the
Marks, and (b) RCI has the right to exclude others from using the
Marks or any variant or combination of the Marks determined to be
confusingly similar to the Marks. Affiliate shall not register or
attempt to register the Marks or any other trademark or tradename
confusingly similar to one or more of the Marks in its own name or
that of any person or entity. Further, Affiliate shall not contest
to the validity of the Marks or any registration of the Marks by
RCI.
6.3 Quality and Control. RCI has the right to control all
uses of the Marks. Affiliate agrees to maintain such quality
standards for its services, in connection with which the Marks are
used, equal to the quality of services of RCI. Affiliate may use
the Marks on its promotional materials, advertising and owner
communications only as prescribed by RCI policies and procedures in
the RCI Procedures Manual and other materials furnished to
Affiliate from time to time. Affiliate agrees to comply with all
requests of RCI with respect to the appearance and use of the
Marks, including any requests to change the form or style of the
Marks. Affiliate shall at all times consistently use the Marks so
as to ensure that RCI's rights are adequately preserved. Affiliate
agrees to promptly submit to RCI one copy of all printed or visual
material bearing one or more of the Marks for prior written
approval. RCI reserves the right to withdraw approval should it be
determined, in RCI's sole discretion, that such materials
misrepresent or do not accurately reflect RCI or the RCI Exchange
Program. Affiliate shall not do anything itself, or aid or assist
any other party to do anything which would infringe, violate,
damage, dilute, harm or contest the rights of RCI in and to the
Marks. In addition, Affiliate confirms that all use of the Marks
by it or any of its approved sublicensees shall inure to RCI's
benefit. Affiliate shall at any time execute any documents
reasonably required by RCI to confirm RCI's ownership of all such
rights in and to the Marks.
ARTICLE 7 - TERMINATION AND REMEDIES
7.1 General Right of Termination. Either party may terminate
participation in this Agreement:
7.1.1 in the event of a breach of any of the terms,
conditions, covenants, representations or
warranties contained in this Agreement,
following written notice to the other party
stating the grounds for such termination,
unless the breaching party cures the asserted
breach to the reasonable satisfaction of the
party giving such notice within thirty (30)
days of the date of notice;
7.1.2 immediately by giving the other party written
notice if the other party commits a breach of
any of the provisions of this Agreement which
breach is incapable of cure; or
7.1.3 by giving the other party hereto at least 180
days written notice prior to the expiration of
the initial term or any renewal term of its
intent to terminate this Agreement at the end
of such term.
7.2 RCI's Right of Termination. Without prejudice to any
other rights of termination RCI may have under this Agreement, RCI
may terminate its participation in this Agreement with respect to
any or all of the Resorts listed in Recital B:
7.2.1 immediately upon written notice to the
Affiliate in the event the Affiliate: (a)
becomes insolvent as defined in the Uniform
Commercial Code or makes an assignment for the
benefit of its creditors; (b) initiates a
proceeding, whether voluntarily or
involuntarily, under any chapter or part of the
Federal Bankruptcy Code; (c) is a party to a
proceeding for the reorganization or for the
adjustment of any of its debts under any act or
law, for the relief of debtors now or hereafter
existing; (d) has a receiver or trustee
appointed for it or for a substantial part of
any of its assets; or (e) is a party to any
proceeding seeking its dissolution or its full
or partial liquidation;
7.2.2 Intentionally omitted.
7.2.3 immediately upon written notice to Affiliate if
Affiliate transfers a controlling interest in
the Resort without RCI's prior written consent;
7.2.4 immediately upon written notice to Affiliate if
Affiliate attempts to assign or sublicense all
or any portion of its rights and duties under
this Agreement without RCI's prior written
approval except for the sale of security
interests contemplated by the offering filed
with the Securities and Exchange Commission;
7.2.5 immediately upon written notice to Affiliate if
Affiliate is in fundamental or material breach
of a term of this Agreement or engages in
fraudulent, deceptive or dishonest conduct in
connection with this Agreement (whether or not
capable of remedy);
7.2.6 upon written notice to Affiliate of not less
than six (6) months in the event Affiliate
enters into any agreement or arrangement other
than with RCI that provides for internal or
external exchange services to Purchasers. In
any event, Affiliate agrees to provide RCI with
ninety (90) days written notice prior to
entering into such agreement or arrangement;
7.2.7 immediately upon written notice to Affiliate if
any representation or warranty contained herein
is not true at the time it is made or
considered reaffirmed;
7.2.8 immediately upon written notice to Affiliate if
any representation or warranty contained herein
ceases to be true during the term of this
Agreement and any renewals thereto; and
7.2.9 as provided for elsewhere in this Agreement.
7.3 Affiliate's Acknowledgments.
7.3.1 Termination of this Agreement for whatever
reason shall not in any way affect the right of
RCI to receive fees that have accrued and
remain unpaid.
7.4 Obligations Upon Termination. Upon termination of this
Agreement:
7.4.1 RCI and Affiliate shall honor all Confirmed
Exchanges and exchange privileges of Exchange
Guests that are confirmed or accrued prior to
termination;
7.4.2 RCI and Affiliate shall honor all Confirmed
Exchanges and exchange privileges of RCI
Members who are Purchasers at the Resort that
are confirmed or accrued prior to termination
of this Agreement;
7.4.3 RCI at its sole discretion, may allow RCI
Members who are Purchasers at the Resort to
participate in the RCI Exchange Program
following termination of this Agreement
provided that the Resort maintains high
qualitative and managerial standards.
Affiliate agrees to honor all present and
future Confirmed Exchanges or exchange
privileges of Purchasers and Exchange Guests;
7.4.4 Affiliate shall immediately discontinue
promoting, selling, marketing or offering the
RCI Exchange Program in any form to Purchasers
or Prospective Purchasers;
7.4.5 Affiliate shall immediately cease using and
thereafter abstain from using all RCI videos
and other materials bearing any of the RCI
Marks, and return the same to RCI within
fifteen (15) days after termination of this
Agreement;
7.4.6 Affiliate shall immediately cease using and
thereafter abstain from using the Marks and any
name or mark similar thereto; and
7.4.7 Affiliate shall immediately ensure that the
agreement with any RCI approved Reseller is
correspondingly immediately terminated with
respect to any activities related to RCI and/or
use of the Marks, as detailed in Article 4
herein.
7.5 Suspension. Upon breach by Affiliate, RCI may, without
prejudice to its right to terminate this Agreement, suspend
operation of the RCI Exchange Program at the Resort or impose such
conditions or limitations thereon as RCI deems necessary or
appropriate from time to time.
7.6 Equitable Relief. Affiliate acknowledges and agrees that
RCI shall be entitled to a remedy of specific performance or
injunctive relief, as appropriate, in the event of a breach or
threatened breach of any such provisions by Affiliate.
7.7 Waiver. Upon the termination of this Agreement as a
result of uncured default, Affiliate hereby expressly waives any
claim for a refund of any applicable fees remitted during the term
of this Agreement.
7.8 Limitations. Failure to cease using any one or more of
the Marks by Affiliate or its Resellers following termination of
this Agreement shall entitle RCI to liquidated damages from
Affiliate in the amount of One Thousand Dollars (US $1,000) per
day, which Affiliate agrees is reasonable. This liquidated damages
remedy shall be in addition to any other remedies, legal or
equitable, available to RCI with respect to failure to cease using
the Mark.
ARTICLE 8 - GENERAL
8.1 Term. This Agreement shall become effective on the date
it is executed by RCI in Indianapolis, Indiana, U.S.A. and shall be
for an initial term of five (5) years from the effective date of
Affiliate _____________ offering, but not later than August 31,
1997. Thereafter, this Agreement will automatically renew for
additional five (5) year terms, until such time as notice of intent
to terminate is given by any party hereto pursuant to Section 7.1;
provided, however, that Affiliate is in compliance with this
Agreement at the expiration of the initial term and subsequent
renewal terms.
8.2 Notices: All notices and other communications made
pursuant to this Agreement shall be in writing and shall be deemed
to have been given if mailed by registered or certified mail,
return receipt requested, or transmitted by facsimile with printed
confirmation of receipt together with mailing of an original, to
the appropriate party(ies) at the following address (or such other
address as shall be specified by notice given pursuant to this
Section 8.2):
(a) if to Affiliate:
CHARTHOUSE SUITES VACATION OWNERSHIP, INC.
850 Bayway Boulevard
Clearwater Beach, Florida 34630
(b) if to RCI:
RESORT CONDOMINIUMS INTERNATIONAL, INC.
One RCI Plaza
3502 Woodview Trace
P.O. Box 80229
Indianapolis, Indiana 46280-0229, U.S.A.
Attention: Legal Services
Notwithstanding the above, RCI may send the notices referred
to in Section 3.5 to the Resort at the address set forth in Recital
B (or such other address as shall be specified by notice given
pursuant to this Section 8.2) by regular United States mail.
8.3 Legal and Binding Obligation. Affiliate and the
individuals executing this Agreement on behalf of Affiliate,
respectively, represent and warrant to RCI that this Agreement has
been duly and validly executed and delivered by Affiliate, and
constitutes a legal, valid, binding and enforceable agreement of
Affiliate.
8.4 Intentionally omitted.
8.5 Indemnification. Affiliate agrees to indemnify and hold
RCI harmless from and against any and all claims, demands,
obligations, deficiencies, judgments, damages, suits, losses,
penalties, expenses, costs (including reasonable attorneys' fees)
and liabilities of any kind, type or nature whatsoever but only
with respect to claims made by third parties directly against RCI
resulting from, arising out of or in connection with:
8.5.1 any inaccuracy in a representation or warranty
made by Affiliate or any breach of any of its
obligations in this Agreement;
8.5.2 a failure of Affiliate to observe policies and
procedures established by RCI;
8.5.3 the wrongful denial of access to a Unit to any
Exchange Guest;
8.5.4 any death or personal injury or damage to or
loss of property sustained by Exchange Guests
while at the Resort;
8.5.5 any acts or omissions by any of its directors,
officers, partners, employees, representatives,
agents, brokers, salesmen, independent
contractors, or associates which would
constitute a breach of this Agreement if
committed by Affiliate;
8.5.6 Intentionally omitted.
8.5.7 alleged or actual infringement of any
trademark, copyright, trade secret, patent,
publicity rights, privacy rights, moral rights
or false advertising or unfair competition (but
excluding any such action on RCI Marks).
This indemnification and hold harmless provision shall survive
the termination of this Agreement for all applicable statutes of
limitation. RCI shall promptly provide to Affiliate written notice
of any such claim upon obtaining notice thereof and shall cooperate
with Affiliate in connection therewith.
8.6 Severability. If any provision of this Agreement is
declared by any judicial or other competent authority to be void,
voidable, illegal or otherwise unenforceable or indications of the
same are received by either of the parties from any relevant
competent authority, the parties shall amend that provision in such
reasonable manner as achieves the intention of the parties without
illegality or, at the discretion of RCI, such provision may be
severed from this Agreement and the remaining provisions of this
Agreement shall remain in full force and effect; provided, however,
that if, in RCI's judgment, the effect of such declaration is to
defeat the original intention of the parties,
RCI shall be entitled to terminate this Agreement by 30 days'
notice to the Affiliate.
8.7 General. The headings in this Agreement are intended
solely for convenience of reference and shall be given no effect in
the construction or interpretation of this Agreement. The Recitals
are hereby incorporated in this Agreement. All references in this
Agreement to particular Recitals and Sections are references to
Recitals and Sections of this Agreement. If there is any
difference or conflict between the English text of this Agreement
and any translation, the English text shall prevail. Failure of
either party to insist on strict compliance with the provisions of
this Agreement shall not constitute waiver of that party's right to
demand later compliance with the same or other provisions of this
Agreement. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement. This
Agreement and Affiliate's Application for Affiliation and all
attachments thereto constitute the entire understanding and
agreement between the parties concerning the subject matter of this
Agreement. This Agreement may be modified only by a writing
executed by the parties with the same formality with which this
Agreement has been executed. All understandings between the
parties are merged into this Agreement, and there are no
representations, warranties, covenants, obligations, understandings
or agreements, oral or otherwise, in relation thereto between the
parties other than those incorporated herein. This Agreement is
for the exclusive benefit of Affiliate and RCI; nothing herein
shall be construed to create a third-party beneficiary of any
Purchaser, RCI Member or other individual or entity. Affiliate
acknowledges that this Agreement has been executed, made and
entered into in Indianapolis, Indiana, U.S.A., and consents to the
personal jurisdiction of the courts of the State of Indiana. This
Agreement shall in all respects be interpreted and construed in
accordance with and governed by the laws of the State of Indiana,
U.S.A., and any action at law or in equity under this Agreement
shall be submitted exclusively to the jurisdiction of the courts of
Marion County, Indiana, U.S.A., unless RCI determines in its sole
discretion that, because of the injunctive or other equitable
relief sought by it, the action should be brought in a jurisdiction
in which the Affiliate or the Resort are located. This Agreement
and all of its provisions shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns.
CHARTHOUSE SUITES VACATION OWNERSHIP, INC.
("Affiliate")
By: /s/ Jeffrey Keierleber
Jeffrey Keierleber, President
AGREED TO AND ACCEPTED THIS 12th DAY OF APRIL, 1997.
RESORT CONDOMINIUMS INTERNATIONAL, INC.
By: /s/ John B. Reinhardt
John B. Reinhardt, Senior Vice President
<PAGE>
EXHIBIT A
MATERIALS
RCI will provide the following materials to Affiliate:
(a) one (1) copy of the current RCI film, at a charge not to
exceed RCI's cost, and the right to use such RCI film in
accordance with the terms of RCI's agreement, if any, with
persons appearing in such films;
(b) three hundred (300) RCI promotional brochures at no charge;
(c) three hundred (300) copies of selected issues of "Endless
Vacation" magazine at no charge;
(d) one hundred fifty (150) copies of the current "Endless
Vacation Special Resort Edition" publication at no charge;
(e) one hundred seventy-five (175) RCI Membership forms;
(f) five (5) RCI Procedures Manuals;
(g) one (1) set of RCI posters;
(h) one (1) affiliation plaque;
(i) ten (10) orange member envelopes;
(j) twenty-five (25) weekly enrollment application report forms;
and
(k) one (1) RCI logo stat sheet.
<PAGE>
ADDENDUM TO RCI RESORT AFFILIATION AGREEMENT
This Addendum to the RCI Resort Affiliation Agreement
("Addendum") is made and entered into on the ______ of
____________, 1997, by and between CHARTHOUSE SUITES VACATION
OWNERSHIP, INC. ("Affiliate") and RESORT CONDOMINIUMS
INTERNATIONAL, INC. ("RCI").
WHEREAS, RCI and Affiliate desire to amend certain provisions
contained in the RCI Resort Affiliation Agreement ("Agreement")
executed contemporaneously herewith.
NOW THEREFORE, in consideration of the mutual covenants and
conditions contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. The Agreement is hereby specifically incorporated as part
hereof. In all respects other than as specifically herein
modified, the terms and condition of the Agreement shall continue
in full force and effect.
2. To the extent any conflict of terms and conditions exist
between this Addendum and the Agreement then the terms and
conditions of this Addendum shall supersede and control.
3. Capitalized terms as used herein, unless otherwise
defined, have the same definition as used in the Agreement.
4. The first sentence in Section 3.5 Reserve Units is hereby
deleted in its entirety and replaced with the following:
Affiliate agrees to make available to the RCI Exchange
Program a total of six (6) weeks (five weeks in a studio
unit and one week in a one bedroom) at the Resort during
the period February 7, 1997, through December 31, 1997,
as designated in written notice to RCI at least fourteen
(14) days prior to when the weeks in such units are
available.
IN WITNESS WHEREOF, the parties have executed this Addendum to
RCI Resort Affiliation Agreement as of the day and year first above
written.
CHARTHOUSE SUITES VACATION OWNERSHIP, INC. ("Affiliate")
By: /s/ Jeffrey Keierleber
Jeffrey Keierleber, President
RESORT CONDOMINIUMS INTERNATIONAL, INC. ("RCI")
By: /s/ John B. Reinhardt
John B. Reinhardt, Senior Vice President
ESCROW AGREEMENT
THIS ESCROW AGREEMENT made and entered into this ____ day of
June, 1997, by and between Charthouse Suites Vacation Ownership,
Inc., a Florida corporation with offices at 250 N. Patrick Blvd.,
Brookfield, WI 53045 (hereinafter referred to as "Charthouse"),
and William Atkinson, Broker, a Florida Real Estate Broker
(hereinafter referred to as "Escrow Agent").
WHEREAS, Charthouse has rights to a certain property known
as Charthouse Suites Hotel, more particularly described on
Exhibit A attached hereto and made a part hereof (hereinafter
referred to as the "Project"); and
WHEREAS, Escrow Agent is authorized to act as an escrow
agent for timeshare plans established in accordance with the
Florida Statutes Chapter 721; and
WHEREAS, Charthouse desires that Escrow Agent act as escrow
agent for the Project pursuant to the terms of this Agreement and
in accordance with the laws and provisions of the Florida
Statutes Chapter 721. The terms used in this Agreement shall be
deemed to have the meanings set forth in the Florida Statutes,
Chapter 721.05, as amended.
NOW, THEREFORE, in consideration of the mutual promises and
other good and valuable consideration, the sufficiency and
validity hereby acknowledged, the parties agree as follows:
1. Representations. The representations set forth above are
true and correct.
2. Escrow Account. Charthouse does hereby establish an escrow
account with Escrow Agent for the purpose of protecting deposits
made by purchasers of the Charthouse Vacation Interests (herein
defined as persons contracting with the Charthouse for the
purposes of acquiring Charthouse Vacation Interests in the
Project).
3. Receipt and Disbursement of Escrowed Funds.
A. One hundred percent (100%) of all funds or other
property which is received from or on behalf of purchasers shall
be deposited with the Escrow Agent. Funds appropriate may be
released from escrow only as follows:
1. Cancellation. (a) In the event a purchaser gives a
notice of cancellation pursuant to Florida Statutes
Chapter 721.10 in the appropriate time period
allowed under Chapter 721 or as otherwise entitled
to cancel the sale of the Interest. The funds or
property received from or on behalf of the purchaser
or the proceeds thereof shall be returned to the
purchaser. Such refund shall be made within 20 days
of the demand of the purchaser or within five
(5) days after receipt of funds from the purchaser's
cleared check, whichever is later. The Charthouse
shall notify Escrow Agent immediately of receipt of
a notice of cancellation.
(b) If the purchaser has received benefits under the
contract prior to the effective date of the
cancellation the funds or property to be returned to
the purchaser may be reduced by the proportion of
the contract benefits actually received as set forth
in the Charthouse Suites Vacation License Plan,
attached hereto.
2. Purchaser's Default. Following expiration of the 10
day cancellation period if the purchaser defaults in
the performance of his obligations under the terms
of the contract or such other agreement by which the
seller sells the Charthouse Vacation Interests
Charthouse shall provide an affidavit to Escrow
Agent requesting release of the escrowed funds for
the property and shall provide a copy of such
affidavit to the purchaser which has defaulted. The
Charthouse's affidavit as required herein shall
include: (a) Charthouse's statement that the
purchaser has defaulted and the Charthouse has not;
(b) a brief explanation of the nature of the default
and the date of its occurrences; (c) a statement
that pursuant to the terms of the contract the
Charthouse is entitled to the funds held by the
escrow; and (d) a statement that Charthouse has not
received from the purchaser any written notice of
dispute between the purchaser and Charthouse or
claimed by the purchaser to the escrow.
3. Compliance with Conditions. (a) If no cancellation
or default has occurred, Escrow Agent may release
the escrowed funds or property upon presentation of:
(1) an affidavit by the Charthouse that it has met
all of the following conditions:
(a) expiration of the cancellation;
(b) completion of construction (which Charthouse
represents has already occurred); and
(c) closing.
(b) Evidence that the timeshare estate is free and
clear of all the claims of any interest holders
other than the claims of interest holders that
through recorded instruments are irrevocably
made subject to the Charthouse Suites License
Plan and the use rights of the purchasers made
available through the Charthouse Suites Vacation
License Plan or that are subject of a recorded
nondisturbance notice to creditors instrument
that complies with Chapter 721.08(3) F.S.
4. Investment of Escrowed Funds. Escrow Agent may invest any
escrowed funds in securities of the United States Government, or
any agency thereof, or in savings or time deposits and
institutions insured by an agency of the United States
Government. The right to receive the interest generated by any
such investment shall be paid to the party to whom the escrowed
funds or properties are paid unless otherwise specified by
contract.
5. Separate Books and Records. Escrow Agent shall maintain
separate books and records for the Project and shall maintain
such books and records in accordance with good accounting
practices.
6. General Obligations and Duties of the Escrow Agent. Escrow
Agent shall maintain the accounts called for in the agreement
only in such a manner as to be under the direct supervision and
control of the Escrow Agent. A fiduciary relationship shall exist
between the Escrow Agent and the purchasers. Escrow Agent shall
retain all affidavits received pursuant to this Agreement and as
provided in Florida Statutes 721.08 for a period of five (5)
years. Escrow Agent shall deliver monthly statements to the
Charthouse which statements will indicate the:
A. The escrowed funds received for the Project and the
purchasers who made payments of the funds so deposited;
B. The funds disbursed for the Project and to whom the
funds were disbursed; and
C. The remaining balance of the funds held in escrow for
the Project.
7. Responsibilities of Charthouse. Charthouse agrees that it
shall at all times, file all required documents with the Division
of Florida Land Sales and Condominiums or any successor thereof
(the "Division") and at all times comply with other terms and
provisions of the Florida Statutes, Chapter 721 and all other
federal, state and local regulations affecting the Project.
Charthouse does hereby agree to indemnify and to hold Escrow
Agent harmless for any liability of the Escrow Agent which shall
occur as a result of a breach or violation of Charthouse or of
any term or condition of the Florida Statutes, Chapter 721 or any
other rule, regulation or law affecting the Project. Escrow Agent
agrees that Division shall have the right, upon reasonable
notice, to inspect the books and records of the Escrow Agent
regarding monies deposited and disbursed referencing the Project.
8. Other Assurances. Notwithstanding anything contained in
this Agreement to the contrary, funds may be released from the
escrow following the acceptance and approval by the Director of
the Division of other assurances as described in Florida Statutes
Chapter 721.08(2).
9. Disputes. In the event that Escrow Agent shall receive
conflicting demands for the escrowed funds or property, the
Escrow Agent shall promptly notify the Division of the dispute
and either, with the consent of all parties, submit the matter to
arbitration or, by interpleader, or otherwise seek an
adjudication of the matter by court. In the event of any such
dispute or in the event of any litigation arising out of any of
the terms of this provision of this Agreement, Escrow Agent shall
be entitled to recover its reasonable attorney's fees and court
costs at trial and appellate levels.
10. Terms and Agreements.
A. The agreement shall remain in effect unless and until it
is canceled (1) upon written notice given by the Charthouse to
the Escrow Agent of cancellation of designation of the Escrow
Agent to act and serve in such capacity, in which such event, the
cancellation shall take effect not later than 30 days after
notice to Escrow Agent of said cancellation; or (2) Escrow Agent
may resign as Escrow Agent at any time upon giving notice to
Charthouse of its desire to do so provided, however, that
resignation by the Escrow Agent shall take effect not sooner than
30 days after the giving of notice of resignation.
B. Upon termination of the duties of the Escrow Agent in
either manner described above, Charthouse shall immediately
designate a new Escrow Agent and the Escrow Agent shall deliver
any and all funds held by it in escrow and any and all contracts
or documents and copies, if not the originals, maintained by
Escrow Agent to the new Escrow Agent.
C. Any compensation the Charthouse agrees to pay Escrow
Agent for the performance of services provided herein shall not
be paid from the principal escrowed or from any interest accruing
thereto. Neither shall compensation be automatically deducted
from escrowed funds by any financial institution, including the
financial institution acting as Escrow Agent.
11. Nonexclusive Agreement. The parties here agree that nothing
herein shall prohibit Escrow Agent from serving in a similar
capacity on behalf of other developers or persons, provided,
however, that any other escrowed funds maintained by the Escrow
Agent shall be maintained separately, pursuant to separate books
and records for each timeshare plan.
12. Notices. All notices, certificates, requests, demands,
materials and other communications hereunder shall be in writing
and shall be deemed to have been duly given upon notice thereof
by hand to the appropriate addresses set forth below as evidenced
by a signed receipt, on the first business day after mailing, by
the U.S. registered or certified mail, return receipt requested,
postage prepaid addressed as follows:
If to the Charthouse: Charthouse Suites Vacation
Ownership, Inc.
250 Patrick Boulevard
Brookfield, WI 53045
Attention: Mr. Michael Sweet
If to Escrow Agent: Mr. William Atkinson
348 Bahia Vista Drive
Indian Rocks Beach, FL
33785
13. Binding Agreement. The agreement shall be binding upon
Charthouse and Escrow Agent and their successors and assignees.
14. Fees and Expenses of the Escrow Agent. The Escrow Agent
acknowledges that upon the execution and delivery of this
Agreement the full amount of all of the fees and expenses which
are or will become due to it for the performance of its
obligations throughout the term of this Agreement have been paid
to it or that arrangements satisfactory to it for the payment of
those amounts have been made. Upon the end of each calendar
quarter, the Escrow Agent as a fee for sevices rendered under
this Agreement shall be paid $10 by Charthouse for each purchaser
who deposits funds in the escrow account, plus all ordinary and
reasonable out of pockets expenses and disbursements. The Escrow
Agent has no lien upon funds held pursuant to this Agreement or
for payment of its fees or services under this Agreement or for
payment of any other amounts due it for whatever reason. Without
limiting the foregoing, the Escrow Agent expressly waives any
right of setoff or counterclaim against the escrow funds.
Notwithstanding any of the foregoing, monies in the escrow funds
may be used to pay fees incurred in the ordinary course with
disbursements of the escrow funds, including, but not limited to,
wire transfer fees.
The Escrow Agent shall not be liable to Charthouse, except for
its own gross negligence or willful misconduct. The Charthouse
shall indemnify and hold the Escrow Agent harmless from and
against any and all losses, liabilities, claims, actions, damages
and expenses, including reasonable attorneys fees and
disbursements arising out of and in connection with the Agreement
("Indemnifiable Expenses"), except to the extent that such
Indemnifiable Expenses are based upon gross negligence or willful
misconduct claims against the Escrow Agent that are successfully
asserted.
The Escrow Agent may rely on any notice, instrument or other
written communication delivered to it in accordance with this
Agreement. The Escrow Agent shall have no duty to determine the
authenticity or correctness of the notice or facts stated
therein. The Escrow Agent may assume that any person purporting
to give the notice or accept and acknowledge receipt of the
notice or to make any statement or execute any document in
connection with the provisions of this Agreement has been duly
authorized to do so.
15. Counterparts; Headings. This Agreement may be executed in
several counterparts, each of which shall be deemed an original,
but such counterparts shall together constitute but one and the
same agreement. The Section headings in this Escrow Agreement are
inserted for convenience of reference only and shall not
constitute a part hereof.
16. Interpretation. Unless the context requires otherwise, all
words used in this Escrow Agreement in the singular number shall
extend to and include the plural, all words in the plural number
shall extend to and include the singular, and all words in any
gender shall extend to and include all genders.
17. Severability. If any provision, clause or part of this
Agreement, or the application thereof under certain
circumstances, is held invalid, the remainder of this Agreement,
and the application of such provision, clause or part under other
circumstances, shall not be affected thereby.
18. Governing Law. This Agreement shall be construed and
interpreted according to the internal laws of the State of
Florida.
19. Amendment. No amendment of this Agreement shall be effective
unless in writing and signed by all of the parties hereto.
20. Entire Agreement. This Agreement and the other documents
referred to herein or therein constitutes the entire
understanding of the parties with respect to the subject matter
hereof. There are no restrictions, promises, warranties,
covenants or undertakings other than those expressly set forth
herein and therein. This Agreement supersedes all prior
negotiations, agreements and undertakings between the parties
with respect to such subject matter.
21. No Reliance. No third party is entitled to rely on any of
the representations, warranties and agreements of the parties
contained in this Agreement. The parties assume no liability to
any third party because of any reliance on the representation,
warranties and agreements of the parties contained in this
Agreement.
IN WITNESS WHEREOF, Charthouse and Escrow Agent have caused
this Escrow Agreement to be executed in their respective
corporate names by the undersigned authorized officers this ___
day of June, 1997.
Charthouse ESCROW AGENT: William Atkinson
CHARTHOUSE SUITES VACATION
OWNERSHIP, INC.
By: __________________________ By: ___________________________
Its:__________________________
July 16, 1997
VIA FACSIMILE(202-622-6316) (Branch 2)
and
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
Associate Chief Counsel (Domestic)
Internal Revenue Service
Attn: CC:DOM:IT&A:2
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044
Re: Request for Private Letter Ruling by
Charthouse Suites Vacation Ownership, Inc.
and Michael G. Sweet -- Supplemental Letter
Dear Sir or Madam:
On May 8, 1997, a request for ruling was submitted by
Charthouse Suites Vacation Ownership, Inc. and Michael G. Sweet.
On June 26, 1997 a conference was held concerning that request at
the office of the Internal Revenue Service in Washington DC.
That conference was attended by Robert Berkovsky, Edwin Cleverdon
and Marilyn Brookens (all of the Internal Revenue Service, IT&A
Branch 2) and Michael J. Conlan (the taxpayers' representative).
Pursuant to that conference, this letter is submitted to
supplement the May 8, 1997 letter.
The issue is whether a Holder of an Interest under the
Subscription and Purchase Agreement and the License Plan,
previously submitted to the IRS, will be subject to the
limitations of Section 280A of the Code. In order for a Holder
to be subject to Section 280A, the Holder must first have an
interest in a dwelling unit. The Holder of an Interest possesses
only an intangible right -- the right to obtain hotel-like
services. The Holder does not have any interest in a dwelling
unit.
As mentioned during the June 26, 1997 conference, in another
context the Service has previously considered the nature of a
vacation license such as the license considered here. In PLR
8252005 (a copy of which is attached as Exhibit A) the Service
determined that the rights under such a plan did not constitute a
conveyance of real property or a lease. The IRS stated:
"The vacation license is not a conveyance of
real property, partly because of its lack of
defined premises, but chiefly because it is a
contract . . . to provide future hotel-like
services."
The IRS also stated:
"A vacation license, for Federal income tax
purposes, is a contract to provide future
services much like those of a hotel
reservation, but for a much longer period and
with other important differences."
A portion of PLR 8252005 was superseded by PLR 8639006 (a
copy of which is attached as Exhibit B). PLR 8639006 addressed
the timing of income recognition by the seller of the vacation
license, an issue not under consideration here. Nevertheless,
PLR 8639006 reinforced the holding that a vacation license is a
sale of services and provided:
"As stated in issue one of LTR 8252005 [the
issue concerning the characterization of a
vacation license], the 'Vacation Licenses',
for federal tax purposes, are contracts to
provide future services, and not sales of
real property."
Like the vacation license considered in PLR 8252005 and PLR
8639006, the rights obtained by a Holder of an Interest are a
collection of intangible rights -- the rights to obtain hotel-like
services. Those services do not give the Holder an Interest in a
dwelling unit.
Section 280A limits deductions with respect to the use of a
dwelling unit that is used by the taxpayer as a residence.
Section 280A(a). A taxpayer uses a dwelling unit as a residence
if he uses the unit for personal purposes for a number of days
exceeding the greater of (i) 14 days or (ii) 10% of the days the
unit is rented at a fair value. Section 280A(d)(1). Thus,
Section 280A applies only if the taxpayer uses a dwelling unit
for personal purposes. A taxpayer cannot use the dwelling unit
for personal purposes if he does not have an interest in the
unit. Section 280A(d)(2)(A) provides that a taxpayer uses a
dwelling unit for personal purposes if the unit is used --
"for personal purposes by the taxpayer or any
other person who has an interest in such
unit . . ."
Thus, inherent in the application of Section 280A is the concept
that the taxpayer or the other person must have an interest in
the unit. A contract to obtain hotel-like services does not give
one an interest in a unit. Therefore, Section 280A does not
apply to the Holder of an Interest.
If you desire any additional information, please contact
Michael J. Conlan (or Walter J. Skipper or Patricia A. Hintz),
Quarles & Brady, 411 East Wisconsin Avenue, Milwaukee, Wisconsin
53202-4497. Our telephone number is 414-277-5000.
A Section 6110(c) deletion statement accompanies this
letter.
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.
and Michael G. Sweet
MJC:jmh
cc: Mr. Robert Berkovsky
Mr. Edwin Cleverdon
Ms. Marilyn Brookens
Office of Assistant Chief Counsel
Income Tax and Accounting
Branch 2
Benjamin Franklin Station
P.O. Box 7616
Washington, D.C. 20044
<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 __, 1997 _____________________________________
Michael G. Sweet, Secretary,
Charthouse Suites Vacation
Ownership, Inc.
<PAGE>
SECTION 6110(c) DELETIONS STATEMENT
We request that all names, addresses, and identifying details
of Decade Properties, Inc., Charthouse Suites Vacation Ownership,
Inc., their shareholders, the Charthouse Hotel and Michael G. Sweet
be deleted from this request and from the ruling letter. No other
information need be deleted.
July __, 1997
______________________________
Michael J. Conlan,
Under Power of Attorney from
Charthouse Suites Vacation
Ownership, Inc. and Michael
G. Sweet
<PAGE>
DECLARATION
The undersigned 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.
July __, 1997 _____________________________________
Michael G. Sweet
REAL ESTATE PURCHASE AND SALE AGREEMENT
THIS AGREEMENT is made as of the 30th day of June, 1997 by
and between DECADE PROPERTIES, INC. (hereinafter the "Seller")
and CHARTHOUSE SUITES VACATION OWNERSHIP, INC. (hereinafter the
"Buyer").
1. Property. The Seller agrees to sell to the Buyer, and
the Buyer agrees to purchase from the Seller, the Seller's
interest in the real estate known as 850 Bayway Boulevard,
Clearwater Beach, Florida legally described on attached Exhibit
A, together with all rights and appurtenances pertaining to such
real property including any and all right, title and interest of
the Seller in and to adjacent roads, alleys, easements, streets
and ways; riparian rights; all improvements, structures and
fixtures placed, constructed or installed including the boat
slips and improvements; and all mechanical systems and related
equipment attached to the improvements including electrical,
plumbing, heating, air conditioning and ventilation systems
(hereinafter the "Property").
2. Purchase Price. The Purchase Price for the Property
shall be One Million Seven Hundred Fifteen Thousand Five Hundred
and No/100 Dollars ($1,715,500.00) payable at closing by
execution of a Note in the form attached on Exhibit C secured by
a Mortgage on the Property in the form of attached Exhibit D.
3. Marina. It is understood and agreed that the Property
to be conveyed by the Seller to the Buyer hereunder includes all
of the Seller's interest in and to the marina being operated by
the Seller at the Property including all of the boat slips and
improvements constructed thereon and the boat slip leases. The
Seller shall assign to the Buyer the Seller's interest in any
Submerged Land Lease relating to same and any Boat Slip Leases
and the Buyer shall assume the obligations of the Seller
thereunder and indemnify and hold harmless the Seller from any
and all liability thereunder arising from and after the closing.
4. "AS IS". It is understood and agreed that the Seller
is not making any and has not at any time made any warranties or
representations of any kind or character, expressed or implied,
with respect to the Property, including but not limited to, any
warranties or representations as to habitability,
merchantability, fitness for a particular purpose, title, zoning,
tax consequences, latent or patent physical or environmental
conditions, utilities, operating history, valuations,
governmental approvals or the compliance of the Property with
governmental laws. The Buyer acknowledges and agrees that upon
closing the Seller shall sell and convey to the Buyer and the
Buyer shall accept the Property "AS IS, WHERE IS, WITH ALL
FAULTS." Upon closing, the Buyer shall assume the risk that
adverse matters, including but not limited to, construction
defects and adverse physical and environmental conditions, may
have not been revealed by the Buyer's investigations and the
Buyer, upon closing, shall be deemed to have waived, relinquished
and released the Seller from and against any and all claims,
demands, causes of action (including causes of action in tort),
losses, damages, liabilities, costs and expenses (including
attorneys' fees and court costs) of any and every kind or
character, known or unknown, which the Buyer might have asserted
or alleged against the Seller at any time by reason of or arising
out of any latent or patent construction defects or physical
conditions, violations of any applicable laws (including, without
limitation, any environmental laws) and any and all other acts,
omissions, events, circumstances or matters regarding the
Property. The Buyer agrees that should any cleanup, remediation
or removal of hazardous substances or other environmental
conditions on the Property be required after the date of closing,
the Buyer shall make no claim or demand against the Seller to
provide or pay for all or any part of such cleanup, removal, or
remediation.
5. Title Insurance. If the Buyer desires a Title
Insurance Policy to insure the interest in the Property to be
acquired by the Buyer hereunder, then the Buyer shall obtain such
title insurance at the Buyer's sole expense.
6. Closing. This transaction is to be closed as of June
30, 1997. On the date of closing, the Seller shall deposit with
the Escrow Agent a properly executed, witnessed and acknowledged
Quit-Claim Deed for the Property and a signed DR-219 Form to be
held by Quarles & Brady as the Escrow Agent pursuant to an Escrow
Agreement, the form of which is attached hereto as Exhibit B.
The Buyer deposit with Quarles & Brady as Escrow Agent the
properly executed, witnessed and acknowledged (where required)
Note and Mortgage in the form of attached Exhibits C and B.
Notwithstanding that the closing shall occur as of June 30, 1997,
in the event that at least 76 Charthouse Suites Interests as more
particularly described in that certain Prospectus dated
________________ are not sold on or before June 29, 1998, said
sale shall be rescinded and both parties shall be put in the same
position they would have been if the sale had not occurred. The
Buyer shall pay any costs necessary in order to accomplish said
recision.
7. Closing Costs. The Buyer shall pay for the cost of
documentary stamp taxes due on the Quit-Claim Deed, any premium
for Title Insurance which may be obtained by the Buyer and any
Survey which may be obtained by the Buyer.
8. Closing Prorations. All rents, water and sewer use
charges, real estate taxes and service contract charges shall be
prorated between the parties as of the date of closing. Accrued
income and expense, including taxes, for the day of closing shall
accrue to the Seller. Real estate taxes shall be prorated based
on the net general real estate taxes for the current year with
the greatest discount, if known, otherwise on the net general
real estate taxes for the preceding year with the greatest
discount. The Seller shall pay any installments of special
assessments which may be due with respect to the Property prior
to closing, and the Buyer shall be responsible for all other
special assessments.
9. Conveyance. The Property shall be conveyed by the
Seller to the Buyer by Quit-Claim Deed.
10. No Assignment. The Buyer shall not be permitted to
assign its rights in this Agreement without the prior written
consent of the Seller.
11. FIRPTA Compliance. At closing, the Seller shall
provide the Buyer with a "nonforeign certificate" stating that
the Seller is not a foreign person and setting forth the Seller's
taxpayer identification number in order to comply with IRC
Section 1445.
12. Further Actions. The parties hereto agree to do,
execute, acknowledge, and deliver and cause to be done, executed
and delivered all such further acts, assignments and transfers as
shall be reasonably required of them to carry out this Agreement
and give effect to its provisions.
13. Radon Gas. Radon is a naturally occurring radioactive
gas that when it has accumulated in a building in sufficient
quantity, 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.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be duly executed as of the date first above
written.
SELLER:
DECADE PROPERTIES, INC.
By:________________________________
BUYER:
CHARTHOUSE SUITES VACATION OWNERSHIP, INC.
By:________________________________
PERSONAL PROPERTY PURCHASE AND SALE AGREEMENT
THIS AGREEMENT is made as of the 30th day of June, 1997, by
and between DECADE PROPERTIES, INC. (hereinafter the "Seller")
and CHARTHOUSE SUITES VACATION OWNERSHIP, INC. (hereinafter the
"Buyer").
1. Personal Property. The Seller agrees to sell to the
Buyer, and the Buyer agrees to purchase from the Seller, the
Seller's interest in the personal property to the extent owned by
the Seller which is located at and used in connection with the
real estate known as 850 Bayway Boulevard, Clearwater Beach,
Florida (hereinafter the "Personal Property").
2. Purchase Price. The Purchase Price for the Personal
Property shall be Eighty-one Thousand Four Hundred and No/100
Dollars ($81,400.00) payable at closing by execution of a Note in
the form of attached Exhibit A secured by a Security Agreement in
the form of attached Exhibit B and appropriate UCC Financing
Statements for said Personal Property.
3. "AS IS". It is understood and agreed that the Seller
is not making any and has not at any time made any warranties or
representations of any kind or character, expressed or implied,
with respect to the Personal Property, including, but not limited
to any warranties or representations as to merchantability,
fitness for a particular purpose, title, latent or patent
defects, valuations, or compliance of the Personal Property with
governmental laws. The Buyer acknowledges and agrees that upon
closing the Seller shall sell and convey to the Buyer and the
Buyer shall accept the Personal Property "AS IS, WHERE IS, WITH
ALL FAULTS."
4. Closing. The transaction is to be closed as of
June 30, 1997. The closing shall occur simultaneously with the
closing of the real estate pursuant to that certain Real Estate
Purchase and Sale Agreement executed on even date herewith. The
Seller shall deposit with Quarles & Brady as Escrow Agent the
properly executed Note, Security Agent and Financing Statements
described in Paragraph 2 above. Notwithstanding that the Closing
shall occur as of June 30, 1997, in the event that at least 76
Charthouse Suites Interests as more particularly described in
that certain Prospectus dated ____________________ are not sold
on or before June 29, 1998, said sale shall be rescinded and both
parties shall put in the same position they would have been if
the sale had not occurred. The Buyer shall pay any costs
necessary in order to accomplish said recision.
5. Closing Costs. The Buyer shall pay any taxes due in
connection with the transfer of the Personal Property to the
Buyer.
6. Closing Prorations. Personal property taxes shall be
prorated between the parties as of the date of closing, the date
of closing shall accrue to the Seller. Personal property taxes
shall be prorated based on the net general personal property
taxes for the current year with the greatest discount, if known,
otherwise on the net general personal property taxes for the
preceding year with the greatest discount.
7. No Assignment. The Buyer shall not be permitted to
assign its rights in this Agreement without the prior written
consent of the Seller.
8. Conveyance. The Seller shall deliver at closing a Quit
Claim Bill of Sale for the Personal Property.
IN WITNESS WHEREOF the parties hereto have caused this
instrument to be duly executed as of the date first above
written.
SELLER:
DECADE PROPERTIES, INC.
By:________________________________
BUYER:
CHARTHOUSE SUITES VACATION
OWNERSHIP, INC.
By:________________________________
ESCROW AGREEMENT
ESCROW AGREEMENT made and entered into as of the ____ day of
__________, 1997 by and between DECADE PROPERTIES, INC.
(hereinafter the "Seller"), CHARTHOUSE SUITES VACATION OWNERSHIP,
INC. (hereinafter the "Buyer") and QUARLES & BRADY (hereinafter
the "Escrow Agent").
WHEREAS, the Buyer and Seller have entered into a certain
Real Estate Purchase and Sale Agreement (hereinafter the "Real
Estate Agreement") for the real estate (hereinafter the "Real
Property") as described in the Real Estate Agreement and a
certain Personal Property Purchase and Sale Agreement
(hereinafter the "Personal Property Agreement") for the personal
property (the "Personal Property") as described therein dated on
even date herewith (collectively the "Agreements"); and
WHEREAS, the parties desire to enter into this Escrow
Agreement with the Escrow Agent with respect to the holding of
the Quit-Claim Deed and DR-219 pursuant to the Real Estate
Agreement in connection with the closing of the sale of the Real
Property and the Personal Property to the Buyer.
NOW, THEREFORE, in consideration of the mutual covenants
contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, it is agreed as follows:
1. Deposit. The Seller has deposited with the Escrow
Agent an executed, witnessed and acknowledged Quit-Claim Deed for
the Real Property together with an executed DR-219 Form, which
documents shall be held by the Escrow Agent in accordance with
the terms and provisions of this Agreement. Said Quit-Claim Deed
and DR-219 Form shall be hereinafter referred to as the
"Deposit."
2. Conditions. The Deposit shall be held by the Escrow
Agent until all of the following conditions have been satisfied:
A. At least 76 Charthouse Suites as more particularly
described in that certain Prospectus dated ____________________
have been sold;
B. The Buyer has paid to the Seller or deposited with
the Escrow Agent the respective Purchase Prices for the Real
Property and the Personal Property subject to closing prorations
and adjustments pursuant to separate Closing Statements for the
Real Property and the Personal Property, which Closing Statements
each have been signed by both the Buyer and the Seller;
C. The Buyer has provided funds to cover the
applicable recording fee and documentary stamp taxes with respect
to the conveyance of the Real Property; and
D. The Seller and Buyer have delivered such other
instruments and documents as may be necessary to effect the
transfers contemplated under the Real Estate Agreement and the
Personal Property Agreement.
The conditions in Subparagraphs B and C above shall be deemed
satisfied by the Escrow Agent's receipt of good and sufficient
funds in the amounts set forth on the required Closing Statements
which have been signed by both the Buyer and the Seller. If the
amounts required under the condition in subparagraph B above have
been paid to the Seller, then the condition shall be deemed
satisfied by written notice to the Escrow Agent signed by the
Seller acknowledging receipt of said funds. The conditions in
Subparagraphs A and D shall only be deemed satisfied by written
notice to the Escrow Agent signed by the Seller and the Buyer
acknowledging satisfaction of such conditions. Notwithstanding
any provision to the contrary the Escrow Agent shall not release
the Deposit without a written direction signed by both the Buyer
and the Seller authorizing the release of the Deposit. Upon
satisfaction of the conditions as provided herein and upon
receipt of said written direction signed by both the Buyer and
the Seller authorizing said release, the Escrow Agent shall
deliver to the Buyer the Deposit. If after the Deposit may be
released as provided above and if so directed by the Buyer,
provided that the Escrow Agent receives sufficient funds to pay
the applicable recording fee and documentary stamp taxes, then
the Escrow Agent shall cause the Quit-Claim Deed to be recorded
and the DR-219 Form to be filed in the Office of Clerk of Courts
for Pinellas County.
Notwithstanding any provision to the contrary, in the event
that all of the conditions stated above are not satisfied and the
written direction signed by both parties authorizing the release,
is not received by the Escrow Agent on or before __________, or
such earlier date set forth in written notice signed by the
Seller and the Buyer, then the Escrow Agent shall return the
Deposit to the Seller.
3. Default. Notice of any default, dispute or
disagreement among the parties as to this Escrow Agreement shall
be given to the Escrow Agent as soon as same arises. Subsequent
to giving notice of any default, dispute or disagreement among
the parties to this Escrow Agreement, the Escrow Agent shall not
disburse funds or deliver any documents from escrow, or perform
any other act required by this Escrow Agreement, except upon
specific and mutual agreement in writing signed by all parties to
this Escrow Agreement, or upon order of a court of competent
jurisdiction.
In the event of any default, dispute or disagreement between
the parties or otherwise in connection with this Escrow
Agreement, the Escrow Agent may, in its sole discretion, file an
action for interpleader or pursue other appropriate legal
proceedings to resolve the disagreement and, whether suit is
filed or not, may retain legal counsel for advice or
representation.
4. Escrow Agent Provisions. The Escrow Agent shall not be
liable for any mistakes of facts or errors in judgment, or any
acts or omissions of any kind unless caused by its willful
misconduct or gross negligence. The Escrow Agent shall be
permitted to rely on written notice, directions and other
documents received by the Escrow Agent purporting to be signed by
the Buyer and/or the Seller hereunder. The parties hereto agree
to reimburse the Escrow Agent for all costs, fees and expenses
incurred in connection with this Escrow Agreement and shall
indemnify and hold the Escrow Agent harmless from any claims,
demands, causes of action, liability damages and judgments,
including the costs of defending any action against it, together
with any reasonable attorneys' fees, costs, and legal expenses
incurred, all in connection with the Escrow Agent's undertaking
pursuant to the terms and conditions of this Escrow Agreement.
The Escrow Agent may at any time resign upon advance written
notice of such intention. The Escrow Agent shall deliver the
Deposit to successor Escrow Agent pursuant to written direction
signed by both the Buyer and the Seller. If such written
direction signed by both the Buyer and the Seller as to a
successor Escrow Agent is not received by the Escrow Agent within
five (5) days after the Escrow Agent's resignation, the Escrow
Agent may interplead the Deposit in the Circuit Court in and for
Pinellas County, Florida and shall have no further obligation in
connection with this Escrow Agreement.
5. Notices. Any notices or other communications or
deliveries which may be required or desired to be given under the
terms of this Agreement shall be in writing and shall be deemed
to have been duly given if personally delivered, if delivered via
facsimile to the respective party at the facsimile number set
forth below, if sent by overnight courier (e.g., Federal
Express), or if mailed U.S. certified mail, return receipt
requested, postage prepaid, addressed to the respective party at
the addresses set forth below:
If to Seller: Decade Properties, Inc.
250 Patrick Boulevard
Suite 140
Brookfield, WI 53045
Attn: Mr. Jeffrey Keierleber
Fax: (414) 792-0808
If to Buyer: Charthouse Suites Vacation
Ownership, Inc.
250 Patrick Boulevard
Suite 140
Brookfield, WI 53045
Attn: Mr. Michael Sweet
Fax: (414) 792-0808
If to Escrow Agent: Quarles & Brady
411 East Wisconsin Avenue
Milwaukee, WI 53202
Attn: Walter J. Skipper, Esq.
Fax: (414) 271-3552
Any notice so given by mail shall be deemed to have been duly
delivered two (2) days after the same is deposited in the U.S.
mail in the manner specified above. Any notice so given by
overnight courier shall be deemed to have been duly delivered on
the first day following the date the same is delivered to the
overnight courier. Any notice so given by any manner other than
by certified mail or by overnight courier shall be deemed to have
been duly delivered upon actual receipt of the same by the party
to whom the same is to be delivered. Any party may change the
address to which notices are to be sent to such party by written
notice to the parties specifying such change of address.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of this date first above written.
SELLER:
DECADE PROPERTIES, INC.
By:________________________________
BUYER:
CHARTHOUSE SUITES VACATION
OWNERSHIP, INC.
By:________________________________
ESCROW AGENT:
QUARLES & BRADY
By:________________________________
This instrument was prepared by and
after recording shall be returned to
Mary Neese Fertl, Esq.
411 E. Wisconsin Avenue, Suite 2900
Milwaukee, WI 53202
QUIT CLAIM DEED
THIS DEED, is made as of the ____ day of __________________,
1997, between DECADE PROPERTIES, INC., a Wisconsin corporation
("Grantor") and CHARTHOUSE SUITES VACATION OWNERSHIP, INC.
("Grantee"), whose post office address is 250 Patrick Boulevard,
Suite 140, Brookfield, WI 53045.
The grantor, in consideration of the sum of Ten Dollars
($10.00), and other good and valuable consideration paid by the
Grantee to the Grantor, the receipt of which is hereby
acknowledged, hereby conveys to Grantee, the following described
real property in Pinellas County, Florida:
Lot 12, Block "D", of BAYSIDE SUBDIVISION NO. 6,
UNIT "A", according to the map or plat thereof as
recorded in Plat Book 51, pages 48 and 49, Public
Records of Pinellas County, Florida.
Lots 13, 14, and 15, Block "D", of BAYSIDE SUBDIVISION
NO. 6, UNIT "C", according to the map or plat thereof
as recorded in Plat Book 55, pages 19 and 20, Public
Records of Pinellas County, Florida.
To have and to hold the same, together with all the
hereditaments and appurtenances thereunto belonging or in anywise
appertaining, to the Grantee, and Grantee's heirs, successors and
assigns.
Property I.D. Number: 17/29/15/05058/004/0130
Witnesses:
DECADE PROPERTIES, INC.
By:___________________________
Print Name__________________ Jeffrey Keierleber, President
____________________________ ADDRESS:
Print Name__________________ 250 Patrick Boulevard
Suite 140
Brookfield, WI 53045
STATE OF _____________
COUNTY OF ____________
The foregoing instrument was acknowledged before me this
______ day of ___________________, 1997 by Jeffrey Keierleber who
is personally known to me or (____) has produced
_____________________ as identification and who did not take an
oath.
_________________________________
Notary Public
(SEAL) Print Notary Name________________
My Commission Expires:___________
Consent of Independent Auditors
We consent to the reference to our firm under the caption
"Experts" and to the use of our report dated July 25, 1997, in
Pre-Effective Amendment No. 2 to the Registration Statement (Form
S-11 No. 333-13511) and related prospectus of Charthouse Suite
Vacation Ownership, Inc. for the Registration of 150 ownership
interests.
/s/ Ernst & Young LLP
Milwaukee, Wisconsin
July 31, 1997
[VIRCHOW, KRAUSE & COMPANY, LLP LETTERHEAD]
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 Charthouse Suites Vacation Ownership Inc. for the
registration of 150 of its Charthouse Suites Vacation 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.
VIRCHOW, KRAUSE & COMPANY, LLP
/s/ Virchow, Krause & Company, LLP
Waukesha, Wisconsin
July 29, 1997
