As filed with the Securities and Exchange Commission on March 19, 1998
Registration No. 333-13511
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-11
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
CHARTHOUSE SUITES VACATION OWNERSHIP, INC.
(Exact name of registrant as specified in governing instrument)
250 PATRICK BOULEVARD
BROOKFIELD, WISCONSIN 53045
(414) 792-9200
(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>
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
Title of Amount Proposed Proposed Amount of
Securities being maximum maximum registration fee
being registered registered offering aggregate
price per offering price
Interest
Vacation 150 $18,500 (A) $4,248,000 $1,288*
Interests Interests, - $60,000 (F)
Classes A-F, with
with Rental Pool Rental
Arrangement Pool
Arrangement
</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.
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 Management's Discussion
and Analysis of Financial and Analysis of Financial
Condition and Results of Condition and Results of
Operations Operations
11. General Information as to The Company
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 and Certain Federal Income Tax
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 Affiliates
Investments
25. Policies with Respect to Conflicts of Interest of
Certain Transactions Management and Affiliates
26. Limitations of Liability The Interests
27. Financial Statements and Financial Statements and
Information Related Information
28. Interest of Named Experts and Experts
Counsel
29. Disclosure of Commission Liability and Indemnification
Position on Indemnification of Officers and Directors
for Securities Act Liabilities
150 CHARTHOUSE SUITES VACATION INTERESTS,
WITH RENTAL POOL ARRANGEMENT
Holders of Charthouse Suites Vacation Interests, with Rental Pool
Arrangement (the "Interests") have the rights and responsibilities set
forth in the Charthouse Suites Vacation License Plan (the "License Plan"),
including the license 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." 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 during that period; otherwise, there are no arrangements
to place any proceeds in escrow, trust or a similar arrangement.
SEE "RISK FACTORS" AT PAGE 11 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS.
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 and the License Plan.
An Interest Holder's failure to make these payments will 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 by
majority vote will have the right to approve certain increases in annual
dues or special assessments. 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."
> The IRS has informally indicated that Interests will constitute a
"dwelling unit" within the meaning of Section 280A and the use of Interests
held by other Holders (perhaps, only other Holders of the same class of
Interest) would be aggregated with the use by a Holder, with the result
that even a Holder who never uses an Interest for personal purposes would,
nevertheless, have otherwise deductible expenses reduced by Section 280A
for tax purposes. See "Certain Federal Income Tax Considerations."
> 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,
whichever is later. See "License Payment Options."
> If fewer than 76 Interests are sold by October 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
Holders.
> 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." 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."
> Pursuant to Chapter 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.
> This Prospectus and the related Time Share Public Offering
Statement 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.
> Under the Internal Revenue Code of 1986, as amended, deductions for
expenses incurred in connection with the Rental Pool will depend upon the
particular factual circumstances of a Holder and may be limited. See
"Certain Federal Income Tax Considerations" and "Certain Florida Tax
Matters."
> 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."
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.
Per Interest Proceeds to
Price to the Sales the
Public Commissions(1) Company(2)
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
(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
$361,000.
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 October 17, 1997.
UNTIL JANUARY 17, 1998, 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.
TABLE OF CONTENTS
(THE ANNEXES AND GLOSSARY OF TERMS CONSTITUTE A PART OF THE PROSPECTUS)
Page
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
DESCRIPTION OF THE CHART HOUSE SUITES HOTEL. . . . . . . . . . . . . . . 18
THE INTERESTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
CHART HOUSE RESULTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS. . . . . . . . . . . . . . . . . . . . . . . . 25
CERTAIN RENTAL POOL FINANCIAL INFORMATION. . . . . . . . . . . . . . . . 30
CERTAIN OCCUPANCY INFORMATION. . . . . . . . . . . . . . . . . . . . . . 34
ANNUAL DUES AND SPECIAL ASSESSMENTS. . . . . . . . . . . . . . . . . . . 34
DIFFERENCES IN ALLOCATING RENTAL POOL AND ANNUAL DUES
AND SPECIAL ASSESSMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 36
PRO FORMA RESULTS WITH VARIOUS ASSUMED OCCUPANCY LEVELS. . . . . . . . . 38
GUARANTEED RENTAL ARRANGEMENT. . . . . . . . . . . . . . . . . . . . . . 42
LICENSE PAYMENT OPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . 44
SUMMARY OF INCOME AND COSTS TO HOLDERS . . . . . . . . . . . . . . . . . 44
DETERMINATION OF OFFERING PRICE. . . . . . . . . . . . . . . . . . . . . 46
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . 47
HOW TO SUBSCRIBE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SUMMARY OF PROMOTIONAL AND SALES MATERIAL. . . . . . . . . . . . . . . . 48
CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
DECADE PROPERTIES, INC.. . . . . . . . . . . . . . . . . . . . . . . . . 51
CONFLICTS OF INTEREST OF MANAGEMENT AND AFFILIATES . . . . . . . . . . . 51
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS. . . . . . . . . . . . . . . . 52
CERTAIN FLORIDA TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . 65
PRIOR PERFORMANCE OF JEFFREY KEIERLEBER AND AFFILIATES . . . . . . . . . 68
LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS. . . . . . . . . 77
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
FINANCIAL STATEMENTS AND RELATED INFORMATION . . . . . . . . . . . . . .F-1
GLOSSARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F-2
ANNEX A CHARTHOUSE SUITES VACATION LICENSE PLAN. . . . . . . . . .Annex A-1
ANNEX B RULES AND REGULATIONS FOR CHART HOUSE
SUITES HOTEL. . . . . . . . . . . . . . . . . . . . . . . . .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
ANNEX FANNUAL DUES BUDGET INFORMATION. . . . . . . . . . . . . . .Annex F-1
ANNEX G ARTISTIC RENDERINGS. . . . . . . . . . . . . . . . . . . .Annex G-1
SUMMARY
CHARTHOUSE SUITES VACATION INTERESTS
WITH RENTAL POOL ARRANGEMENT
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 "Chart House Results" and "Certain Rental
Pool Financial Information."
THE INTERESTS The 150 Interests are vacation licenses issued
pursuant to the Charthouse Suites Vacation License
Plan ("License Plan") 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 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 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 Pursuant to the License Plan, Holders 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 Unit Weeks
BY COMPANY 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 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 Holders may pay for the Interests either in cash upon
PURCHASE PRICE 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>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OFFERING 30% DOWN MAXIMUM MONTHLY TOTAL OF Total TOTAL TOTAL TOTAL PAYMENT
PRICE PAYMENT BALANCE PAYMENT ALL Interest PAYMENTS PAYMENTS PER RENTAL DAY
CLASS DUE DUE MONTHLY FOR INTEREST (IF INTEREST IS
PAYMENTS PER RENTAL PAID IN FULL
(OVER 360 DAY (43 AT TIME OF
MONTHS) YEARS)* SUBSCRIPTION)*
A $18,500 $5,550 $12,950 $104.20 $37,511.51 24,561.51 $43,061.51 $17.88 $7.68
B 21,500 6,450 15,050 121.10 43,594.45 28,544.45 50,044.45 20.78 8.93
C 25,500 7,650 17,850 143.63 51,705.05 35,855.05 59,355.05 24.65 10.59
D 36,500 10,950 25,550 205.50 74,009.19 48,459.19 84,959.19 35.28 15.16
E 39,500 11,850 27,650 222.48 80,092.14 52,442.14 91,942.14 38.18 16.40
F 60,000 18,000 42,000 337.94 121,658.94 79,658.94 139,658.94 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 will 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."
RENTAL POOL Each Unit Week will automatically be placed 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. A Unit Week left in the Rental Pool will not be
available for personal use, even if the Rental Pool
earns little or no proceeds.
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>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Number of Number Off Season Gross Total % Total % Total % Per Total % Per
Studios/ of Nightly Potential Per Class Per Unit Week Interest (8
Suites Interests Walk-in Daily Suite (52 Weeks) Unit Weeks)
Rate Revenue
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>
<S> <C> <C> <C> <C>
For the Nine Months For the Year Ended November 30, 1996 1995
Ended August 31, 1997 1994
(Average of 39 Unit Weeks (Average of 39
Among 52 Unit Weeks in a Unit Weeks
Year on a Per Interest Among 52 Unit
Basis)* (Eight (Eight Weeks in a
Unit Unit Year on a Per
Weeks) Weeks) Interest
Basis)*
Class A $1,692 $2,007 $1,466 $331
Class B $1,812 $2,151 $1,571 $354
Class C $2,054 $2,437 $1,781 $401
Class D $2,900 $3,441 $2,514 $567
Class E $3,142 $3,728 $2,723 $614
Class F $4,229 $5,018 $3,666 $826
</TABLE>
<PAGE>
* Depending upon the schedule, Holders would have between 4 and 6 Unit Weeks
during this period. This amount is the average of all Unit Weeks.
See "Certain Financial Rental Pool Information"
for more information as to the assumptions utilized in
the above calculations.
For managing the Rental Pool 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. If
all interests have been sold, the Company will
annually have 100 Unit Weeks in the Rental
Pool and, after consideration of the 5% fee, would
have earned approximately $28,818 for the nine months
ended August 31, 1997 (arising from 75 Unit Weeks), and
approximately $34,196, $24,982 and $5,631 for the
years ended November 30, 1996, 1995 and 1994,
respectively (with 100 Unit Weeks, annually except
for the year ended November 30, 1994 which included
62 Unit Weeks in the partial year). See "The
Interests."
THE COMPANY The Charthouse Suites Vacation Ownership, Inc.'s
offices are at 250 Patrick Blvd., Suite 140,
Brookfield, Wisconsin 53045-5864, 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 PROPERTIES, Decade Properties, Inc., an affiliate of the
INC. Company, provides property management and 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 (increasing annually by annual CPI
increases), plus all expenses payable from annual
dues. See "Decade Properties, Inc." 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 may
ARRANGEMENT OR CASH elect to receive guaranteed rental payments, at
DISCOUNT PROGRAM varying rates for each Class, for their Discount
Program Unit Weeks for a specified number of weeks.
Under this guaranteed rental arrangement, Holders who
purchase prior to April 17, 1998 may designate
six Unit Weeks and receive a guaranteed rental
rate. Holders purchasing between April 18, 1998
and July 17, 1998 may designate four Unit Weeks and
receive a guaranteed rental rate. Holders
purchasing between July 18, 1998 and October 17,
1998 may designate two Unit Weeks. Investors purchasing
after October 17, 1998 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 before
April 17, 1998 may elect to receive a 5%
discount from the purchase price of an
Interest. Holders purchasing between
April 17, 1998 and July 17, 1998 may
elect to receive a 3% cash discount from
the purchase price of an Interest.
Holders purchasing between July 18, 1998
and October 17, 1998 may elect to
receive a 1-1/2% discount from the
purchase price of an Interest.
Investors purchasing after October 18,
1998 may not participate in this cash
discount program. See "Guaranteed
Rental Arrangement."
Annual Dues and Holders will be responsible for a
Special Assessments proportionate share of the annual
maintenance and other related costs,
expenses and reserves of the Chart House
Suites hotel. For the year ended
December 31, 1997 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, which would be assessed
in order to fund any capital deficits.
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
Annual Dues and must pay his or her pro rata annual dues
Special Assessments (and, if applicable, special
assessments) prior to 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 and As of the date of this Prospectus,
Exchange Program Holders may enroll in the RCI Exchange
Program, upon 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 "Chart House 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., purchase price 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
Interest of 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 the Company, and Decade
Properties, Inc. and the sole
shareholder, sole director and
Vice-President and Secretary of Decade
Securities Corp. 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
Cancellation Rights Statutes, a Holder may cancel a
purchase, without penalty 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." There is no limitation on
the use by the Company.
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 October 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. The 76 Interest
minimum was arbitrarily selected by the
Company. If the Interests are canceled,
a written notice on or before November
30, 1998, will be sent to all Holders.
With that notice, Holders will receive
the net amount of any refund and an
accounting of that calculation as to
benefits. The sole shareholder of the
Company has agreed to invest additional
funds in the Company if it is necessary
in order to repay any such amounts.
Affiliates of the Company may purchase
Interests without limitation as to
amount. See "Plan of Distribution."
Use of Proceeds The net proceeds of this Offering will
be used to pay offering costs, the costs
of the guaranteed rental arrangement,
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 of Offering As of the date of the Prospectus, the
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
arrangement) must be executed. All
subscriptions are subject to acceptance
by the Company. See "How to Subscribe."
<PAGE>
<TABLE>
<CAPTION>
CHARTHOUSE SUITES
Organizational Structure
<S> <C> <C>
Management
Jeffrey Keierleber, Director
____________________ Jeffrey Keierleber, President ________________________
| | Michael Sweet, Secretary | |
| Charthouse Suites | Ownership | Decade Properties |
| Vacation | Jeffrey Keierleber 100% | Inc. |
|____________________ | |________________________|
| |
| ___________________________________________|
| | Property Management Agreement |
| | |
|_________________________ | |
| | | |
____________________ _____________________ ________________________
| Chart House Marina | | Chart House Hotel | | Hotel Manager and |
| | | | | Employees |
|____________________| |_____________________| |________________________|
|
|
_____________________
| Charthouse Suites |
| Vacation Interests |
|_____________________|
</TABLE>
<PAGE>
* Jeffrey Keierleber owns all outstanding shares of Decade
Properties, Inc., Charthouse Suites Vacation Ownership, Inc.
And Decade Securities Corp.
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." 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, the inherent
uncertainty of estimates and assumptions utilized in preparing forward
looking information, and other matters set forth in the Prospectus generally.
Except as required by the securities laws, 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
are not deductible.
UNCERTAINTY CONCERNING ENTITY STATUS OF RENTAL POOL. In the opinion of
Quarles & Brady, 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."
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. Except as noted with respect to
characterization of an Interest as a dwelling unit under Code Section 280A as
discussed in "Certain Federal Income Tax Considerations", no rulings have
been or will be sought from the IRS with respect to the transactions
described herein. The ruling request that was submitted was withdrawn after
the IRS informally indicated it would issue a ruling that the rights afforded
a Holder under a License constitute a "dwelling unit" within the meaning of
Section 280A. Furthermore, there can be no assurances that the IRS will not
challenge the opinions expressed herein and thus, the tax treatment of a
Holder could be materially different If an Interest is "dwelling unit,"
Interests held by other Holders (perhaps, only other Holders of the same
class of Interest) 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, possibly causing such Holder to be
unable to offset fully rental income by allocable expenses. 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."
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."
RIGHT TO CANCEL UPON INCOMPLETE OFFERING. If fewer than 76 Interests
are sold by October 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. This right to cancel shall lapse on October 31, 1998 or
earlier if 76 Interests are sold. The sole shareholder, Jeffrey Keierleber,
has agreed to invest additional funds for the Company as required to fund any
such repurchase. If Mr. Keierleber does not invest sufficient funds, and the
Company does not have sufficient funds, to repay amounts due upon
cancellation, Holders may not receive a return of their invested funds. 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 partial 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 generally 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 (an average 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 without limitation, provided, however, that such vote
would not change the guaranteed level of annual dues for the period through
December 31, 1998, and provided that the Company would have to bear its
proportionate share of any such increase. 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. Until a majority of Interests are held by Holders, the Company
may increase annual dues or special assessments under the License Plan
without limitation, provided that expense attributable to unsold Interests
will be born by the Company.. See "The Company." For further information
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, Decade Securities
Corp., 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, subject to increases based upon CPI and
a 5% Rental Pool fee plus reimbursement of all expenses. It is impossible to
estimate how much Decade Properties, Inc. would earn because it cannot
estimate the 5% rental pool fee. However, the $2,500 monthly fee would total
$1,290,000 (exclusive of CPI increases) over the 43 year term. If the Rental
Pool generated $500,000 a year, Decade Properties, Inc. would earn $25,000 a
year or $1,075,000 over the 43 year term. 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. The Company has contractual
duties under the License Plan and will act as a fiduciary for the Holders in
managing the License Plan and safeguarding the annual dues assessments. See
"Use of Proceeds." Affiliates of the Company may also benefit from the
property management agreements, Rental Pool fees and other fees. There are
no established conflict resolution procedures. See "Conflicts of Interest of
Management and Affiliates."
COMPANY CONTROL. The Company will control the operations of the Chart
House Suites hotel and the 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. As discussed earlier, the Company
cannot estimate what fee would be owed. However, 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. The Company does not intend to withhold consent if a potential
purchaser agrees to follow the License Plan and the rules and regulations.
In addition, a seller of a partial Interest (i.e., a Unit Week) will have to
pay the cost of License Payments for the Unit Week before being able to sell
or transfer the partial Interest. 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
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 will have a
fiduciary duty to manage the time share program and safeguard the annual dues
funds. In carrying out the duty, the Company intends to maintain annual dues
in a separate account for the benefit of Holders.
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. During
the pendency of the Offering, the Company will file a Form 10-K which will
contain audited financial statements.
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
October 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 June 30, 1997, the Company orally entered into an agreement with
Decade Properties, Inc. to acquire the Chart House Suites hotel, which was
confirmed in writing on September 29, 1997. Under the irrevocable terms of
the written 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 October 31, 1998, it reserves the right
to cancel the Interests and return the paid-in amount (less amounts for
certain benefits received or used). The Company and Decade Properties, Inc.
have agreed to escrow the title until the sale of 76 Interests or October 31,
1998 unless the Offering is canceled. 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 or until this requirement
has been waived. If the Agreement is breached, the Florida Time Share Bureau
will have the power to enforce the terms of the Agreement.
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.
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 in the U.S. 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 Rental Pool. See "Chart House Results" and "Certain Rental
Pool Financial 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
(i.e., the purchase price) 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:
<TABLE>
<CAPTION>
Total for One
Assumed Benefit Unit Week
____________________
<S> <C> <C>
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
</TABLE>
Therefore, once Holders have held the Interests after a certain period
of time, the cancellation right under the License Plan will result in a
return of no proceeds. Under the License Plan, Holders' cancellation
rights will expire as follows:
<TABLE>
<S> <C>
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.
</TABLE>
Holders should not assume that the 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 October 31, 1998.
See "Plan of Distribution."
CHART HOUSE RESULTS
The following is a summary of the results of the Chart House Suites
hotel.
<TABLE>
<S> <C> <C> <C> <C>
For the Nine For the Years Ended November 30
Months Ended
August 31,
1997 1996 1995 1994
(unaudited) (audited) (audited) (audited)
Rental Income $379,931 $452,981 $327,031 $ 72,687
Other Income 13,698 14,220 14,090 4,154
Total Operating $393,629 $467,201 $341,121 $ 76,841
Revenues
Total Salaries 101,480 127,377 93,648 38,243
Total Direct 117,619 150,287 141,411 111,056
Expenses
Total 11,607 25,114 37,570
Maintenance and 30,917
Repair Expenses
Total Expenses $230,706 $302,778 $272,629 $180,216
Excess
(Deficiency) of
Operating $162,923 $164,423 $ 68,492 $(103,375
Revenues Over )
Certain
Expenses
Derived Average Unit Week Rental Revenue
For the Nine For the Years Ended November 30
Months Ended
August 31,
1997 1996 1995 1994
Rental Income $379,931 $452,981 $327,031 $72,687
(Actual)
Pro Forma (18,997) (22,649) (16,3352) (3,634)
Rental Pool Fee
(5%)
Pro Forma Net $360,934 $430,332 $310,679 $69,053
Rental Revenue
(95%)
Number of Unit 39 52 52 32
Weeks
Number of Hotel 25 25 25 25
Suites
Pro Forma $ 370 $ 331 $ 239 $ 86
Average Unit
Week Rental
Revenue
</TABLE>
The above summary for operating revenues and certain expenses reflect
income and expenses that are directly attributable to the operations of the
Chart House Suites hotel since it opened in 1994, 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 nine months ended
August 31, 1997, the break-even rate for the Company is $33.68 per suite per
day (on average). Because rates vary, a break-even rate in occupancy
percentage 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 40 months, from its
opening on April 21, 1994, through August 1997. The comparative presentation
of operations reflects the operation of 25 Studios/Suites during each period
presented.
Operating revenues for the initial 7.3 months (32 weeks) ended November
30, 1994, averaged $96 per Suite 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 $404 during the nine months
(39 weeks) ended August 31, 1997. The 1997 increase, however, was achieved
primarily 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 rental units and
increased occupancy. The average daily rental unit revenue for occupied
Studios/Suites increased from $52 in 1994 to $66 in 1995, to $77 in 1996, to
$86 in 1997. The average occupancy during these periods increased from 39%
in 1994, to 52% in 1995, to 65% in 1996 and to 65% in 1997.
Expenses for the initial 7.3 months in 1994 averaged $225 per Unit Week.
The average Unit Week expenses decreased to $210 in 1995, and then increased
to $233 in 1996 and $237 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 $104 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 $121 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 $12 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 $167
in 1997.
The daily revenue for hotel studios and suites by class for the
comparative periods was:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TYPE OF 1997 1996 1995
UNIT LOW AVERAGE HIGH LOW AVERAGE HIGH LOW AVERAGE HIGH
Class A $45 $69 $119 $44 $63 $100 $38 $57 $98
Class B $45 $71 $119 $45 $63 $100 $40 $61 $104
Class C $50 $73 $119 $45 $67 $115 $43 $56 $110
Class D $70 $107 $165 $50 $96 $155 $50 $80 $150
Class E $75 $117 $165 $55 $118 $155 $50 $101 $155
Class F* $73 $110 $250 $68 $87 $200 $65 $82 $194
All $85 $77 $66
Classes
(Average)
</TABLE>
*Primarily rented on a monthly basis.
The average daily occupancy for hotel studios and suites by class for
the comparative periods was:
<TABLE>
<S> <C> <C> <C>
Type of Unit 1997 1996 1995
Class A 75% 77% 63%
Class B 70% 69% 58%
Class C 69% 69% 51%
Class D 45% 45% 38%
Class E 57% 61% 59%
Class F 86% 91% 97%
All Classes 65% 65% 54%
(Average)
</TABLE>
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:
<TABLE>
<S> <C> <C> <C>
TYPE OF UNIT 1997 1996 1995
Class A $56-92 $49-79 $49-75
Class B $61-89 $55-96 $53-81
Class C $63-89 $51-75 $31-78
Class D $95-126 $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 $56-90
(Average)
</TABLE>
The average monthly occupancy range for each class of hotel rental unit
was:
<TABLE>
<S> <C> <C> <C>
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 28-75% 14-91% 19-73%
Class E 33-84% 30-95% 34-93%
Class F 63-100% 58-100% 84-100%
All Classes 52-87% 42-90% 31-81%
(Average)
</TABLE>
Occupancy data for 1994 by type of rental unit is not available. The
difference in occupancy levels is primarily related to seasonal fluctuations.
Historical average occupancy levels at the Chart House Suites hotel were
as follows:
<TABLE>
<S> <C> <C> <C> <C>
MONTH 1997 1996 1995 1994
January 62% 53% 51%
February 87% 90% 81%
March 85% 90% 80%
April 63% 74% 58%
May 57% 66% 51%
June 53% 72% 44% 13%
July 66% 66% 58% 41%
August 55% 61% 42% 26%
September 63% 39% 36%
October 54% 51% 42%
November 54% 43% 75%
December 52% 42% 31%
</TABLE>
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 $1.8 million, which will be covered by payments for
the Interests. 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 September 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 Suites 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 removed from the Rental Pool and 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 removed their Unit
Weeks from 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 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.
RENTAL POOL
PRO FORMA STATEMENT OF RENTAL POOL REVENUES
(UNAUDITED)
<TABLE>
<S> <C> <C> <C> <C>
For the For the Years Ended
November 30,
1996 1995 For the
Nine Seven
Months Months
Ended Ended
August 31, November
1997 30,
1994
Rental Income $379,931 $452,981 $327,031 $72,687
Less Property (18,997) (22,649) (16,352) (3,634)
Management Fee (5.0%)
360,934 430,332 310,679 69,053
Other Income* 3,698 14,220 14,090 4,154
Total Revenues $374,632 $444,552 $324,769 $73,207
*Other income (i.e. interest income, vending income and telephoneincome) is
included in the pro forma computation of rental
poolrevenues because the above example assumes that 100% of the UnitWeeks are
placed into the rental pool at all times and suchincome will be
distributed to Rental Pool participants underthat assumption.
</TABLE>
ALLOCATION OF RENTAL POOL REVENUES ON AVERAGE AMONG
CLASSES OF INTERESTS
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Allocated Income (Using Off-Season Rates and Gross
Potential Income) (Unaudited)
For the Seven
For the Nine For the Years Ended Months Ended
TOTAL OFF SEASON DAILY GROSS Months Ended November 30, November 30,
NUMBER OF ANNUAL NIGHTLY POTENTIAL August 31, 1996 1995 1994
ROOMS/ RENTAL DAYS WALK-IN RENTAL 1997 (52 Unit (52 Unit (32 Unit
SUITES PER CLASS RATE INCOME (39 Unit Weeks) Weeks) Weeks) Weeks)
Class A 6 2,190 $70 $420 $65,973 $78,286 $57,192 $12,892
Class B 4 1,460 $75 $300 $47,124 $55,918 $40,852 $ 9,208
Class C 6 2,190 $85 $510 $80,110 $95,061 $69,448 $15,654
Class D 6 2,190 $120 $720 $113,097 $134,204 $98,044 $22,100
Class E 2 730 $130 $260 $40,840 $48,463 $35,404 $ 7,981
Class F 1 365 $175 $175 $27,489 $32,620 $23,829 $ 5,372
25 9,125 $2,385 $374,632 $444,552 $324,769 $73,207
</TABLE>
<PAGE>
The table below sets forth the pro forma average cash distribution per
Interest for each class of Interest from the Rental Pool using historic
results. The computations are based upon the preceding table which allocates
the pro forma rental pool revenues among the six classes of Interests. The
following table then the pro forma rental pool revenue allocated to the six
classes of Interests after eliminating the pro forma revenue allocated to the
Company for its retained Unit Weeks included in the rental pool. For the
years ended November 31, 1996 and 1995 the Company has 4 Unit Weeks for each
Suite. For the partials year ending November 30, 1994, and for the Nine
Months Ended August 31, 1997, the amounts are averaged so as to exclude an
average amount for Unit Weeks retained by the Company.
DISTRIBUTION PER INTEREST FOR EACH CLASS OF INTERESTS (AVERAGE)
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class Total (Unaudited) Per Interest
For the Nine For the Years Ended For the Seven For the For the Seven
Months Ended November 30, Months Ended Nine Months Months Ended
August 31, November 30, Ended November 30,
August 31,
Number of 1997 1996 1995 1994 1997 1996 1995 1994
Interests (Average of 39 (48 Unit (48 Unit (Average of 32
Unit Weeks) Weeks) Weeks) Unit Weeks)
Class A 36 $60,898 $72,264 $52,793 $11,900 $1,692 $2,007 $1,466 $331
Class B 24 $43,499 $51,617 $37,709 $8,500 $1,812 $2,151 $1,571 $354
Class C 36 $73,948 $87,749 $64,105 $14,450 $2,054 $2,437 $1,781 $401
Class D 36 $104,397 $123,881 $90,502 $20,400 $2,900 $3,441 $2,514 $567
Class E 12 $37,699 $44,735 $32,681 $7,367 $3,142 $3,728 $2,723 $614
Class F 6 $25,374 $30,110 $21,997 $4,958 $4,221 $5,018 $3,666 $826
150 $345,815 $410,356 $299,787 $67,575
</TABLE>
CONDENSED STATEMENTS OF OPERATING REVENUES AND CERTAIN EXPENSES
(UNAUDITED)
<TABLE>
<S> <C> <C> <C> <C>
For the
Seven
Months
For the Nine For the Years Ended Ended
Months Ended November 30, November 30,
August 31, 1997 1996 1995 1994
(Unaudited) (Audited) (Audited) (Audited)
Rental Income $379,931 $452,981 $327,031 $ 72,687
Other Income 13,698 14,220 14,090 4,154
Total Revenues 393,629 467,201 341,121 76,841
Total Salaries 101,480 127,377 93,648 38,243
Total Direct Expenses 117,619 150,287 141,411 111,056
Total Maintenance and 11,607 25,114 37,570 30,917
Repair Expenses
230,706 302,778 272,629 180,216
Excess (Deficiency)
of Operating Revenues $162,923 $164,423 $ 68,492 ($103,375)
Over Certain Expenses
</TABLE>
<PAGE>
The preceding condensed 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.
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 nine months ended August 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
<TABLE>
<S> <C> <C> <C>
For the Nine
Months Ended For the Years Ended
August 31, November 30,
1997 1996 1995
Average Occupancy
Class A 75% 76% 63%
Class B 70% 69% 58%
Class C 69% 69% 51%
Class D 45% 45% 38%
Class E 57% 61% 59%
Class F* 86% 91% 97%
Average Unit Week Rental
Amount (Collected)
Class A $482 $438 $397
Class B $497 $470 $426
Class C $513 $440 $390
Class D $748 $670 $563
Class E $821 $823 $709
Class F* $771 $608 $574
</TABLE>
*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.
The amounts paid for each expense in the last three years is set forth in
the following table:
<PAGE>
<TABLE>
<CAPTION>
CHART HOUSE SUITES
CERTAIN EXPENSES RELATED TO THE OPERATION OF THE HOTEL
For the Year Ended November 30,
1996 1995 1994
<S> <C> <C> <C>
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
Electricity 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 Expenses: 21,739 24,436 17,450
_________ ________ ________
Total Direct Expenses $150,287 $141,411 $111,056
_________ ________ ________
Repairs and Maintenance Expenses $25,114 $37,570 $30,917
_________ ________ ________
Total Expenses $302,778 $272,629 $180,216
</TABLE>
<PAGE>
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:
<TABLE>
<CAPTION>
Total Per Interest
(Eight Unit Weeks)* Total
<S> <C> <C>
Class A Interest (all Unit Weeks) .5027% 19.6045%
Class B Interest (all Unit Weeks) .5027% 13.0696%
Class C Interest (all Unit Weeks) .5424% 21.1522%
Class D Interest (all Unit Weeks) .7540% 29.4067%
Class E Interest (all Unit Weeks) .8069% 10.4901%
Class F Interest (all Unit Weeks) .9657% 6.2769%
TOTAL 4.0744% 100.0000%
</TABLE>
* 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). See Annex G for information on the
annual dues budget. 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.
As discussed above, any capital deficits will be met by special
assessments. A Holder will not be allowed to use or receive rental income
from the 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>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Off
Number Season Gross Total % Total % Per
of Number Nightly Potential Total % Per Unit Interest
Studios/ of Walk-in Daily Total % Per Week (52 (Eight Unit
Suites Interests Rate Revenue Per Class Room Weeks) Weeks)
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 Studios have generated greater per night rental income.
Accordingly, the annual dues and special assessments, if any, will be
allocated as follows:
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total %
Total Per
Number Annual Total % Total % Total % Interest
of Number Annual Dues Per Class Per Room Per Week (Eight
Studios/ of Dues Per (52 Unit (52 Unit (52 Unit (52 Unit Unit
Suites Interests Week Weeks) Weeks) Weeks) Weeks) Weeks)
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>
<S> <C> <C> <C> <C>
Rental Pool Participation ANNUAL DUES ALLOCATIONS
(all Eight Unit Weeks) (ALL EIGHT UNIT WEEKS)
TOTAL %
PER INTEREST TOTAL %
TOTAL % EIGHT UNIT TOTAL % PER INTEREST
INTEREST PER CLASS WEEKS PER CLASS EIGHT UNIT WEEKS
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%
100.0000% 4.225% 100.000% 4.074%
</TABLE>
PRO FORMA RESULTS WITH VARIOUS ASSUMED 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 BECAUSE OF SEASONALITY, DISCOUNTS AND CORPORATE RATES. THE
FOLLOWING TABLES DO NOT REPRESENT A PREDICTION OF ACTUAL RESULTS AND MAY NOT
BE RELIED ON FOR THAT PURPOSE.
CHARTHOUSE SUITES VACATION OWNERSHIP, INC.
PRO FORMA REVENUE FROM RENTAL POOL
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
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
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>
CHARTHOUSE SUITES VACATION OWNERSHIP, INC.
PRO FORMA REVENUE FROM RENTAL POOL
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
ASSUMED 90% OCCUPANCY PER WEEK
OFF ALLOCATED ALLOCATED
NUMBER RENTAL SEASON GROSS RENTAL RENTAL
OF TOTAL POOL NIGHTLY REVENUE IN INCOME BY INCOME
STUDIOS/ RENTAL OCCUPANCY WALK-IN RENTAL UNIT BY EIGHT UNIT
SUITES DAYS 90.00% RATE POOL CLASS WEEKS
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>
CHARTHOUSE SUITES VACATION OWNERSHIP, INC.
PRO FORMA REVENUE FROM RENTAL POOL
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
ASSUMED 80% OCCUPANCY PER WEEK
OFF ALLOCATED ALLOCATED
NUMBER RENTAL SEASON GROSS RENTAL RENTAL
OF TOTAL POOL NIGHTLY REVENUE IN INCOME INCOME
STUDIOS/ RENTAL OCCUPANCY WALK-IN RENTAL BY UNIT EIGHT UNIT
SUITES DAYS 80.00% RATE POOL BY CLASS WEEKS
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>
CHARTHOUSE SUITES VACATION OWNERSHIP, INC.
PRO FORMA REVENUE FROM RENTAL POOL
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
ASSUMED 70% OCCUPANCY PER WEEK
OFF ALLOCATED ALLOCATED
NUMBER RENTAL SEASON GROSS RENTAL RENTAL
OF TOTAL POOL NIGHTLY REVENUE IN INCOME INCOME
STUDIOS/ RENTAL OCCUPANCY WALK-IN RENTAL BY UNIT EIGHT UNIT
SUITES DAYS 70.00% RATE POOL BY CLASS WEEKS
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>
CHARTHOUSE SUITES VACATION OWNERSHIP, INC.
PRO FORMA REVENUE FROM RENTAL POOL
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
ASSUMED 50% OCCUPANCY PER WEEK
OFF ALLOCATED ALLOCATED
NUMBER RENTAL SEASON GROSS RENTAL RENTAL
OF TOTAL POOL NIGHTLY REVENUE IN INCOME INCOME
STUDIOS/ RENTAL OCCUPANCY WALK-IN RENTAL BY UNIT EIGHT UNIT
SUITES DAYS 50.00% RATE POOL BY CLASS WEEKS
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>
CHARTHOUSE SUITES VACATION OWNERSHIP, INC.
PRO FORMA REVENUE FROM RENTAL POOL
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
ASSUMED 25% OCCUPANCY PER WEEK
OFF ALLOCATED ALLOCATED
NUMBER RENTAL SEASON GROSS RENTAL RENTAL
OF TOTAL POOL NIGHTLY REVENUE IN INCOME INCOME
STUDIOS/ RENTAL OCCUPANCY WALK-IN RENTAL BY UNIT EIGHT UNIT
SUITES DAYS 25.00% RATE POOL BY CLASS WEEKS
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.
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
prior to April 17, 1998 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 April 18, 1998 and July 17,1998 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 July 18, 1998 and October
17, 1998 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
October 7, 2002 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
October 17, 1998 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>
Total
Total (Assuming (Assuming Four Total (Assuming
Guaranteed Rate Six Weeks) 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 ACCOUNT.
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 October 17, 2002.
(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 prior to April 17, 1998 may elect to receive a 5% discount on
the subscription amount in lieu of the Guaranteed Rental Arrangement.
Investors who purchase between April 18, 1998 and July 17, 1998 may elect to
receive a 3% discount on the subscription amount in lieu of the Guaranteed
Rental Arrangement. Holders who purchase between July 18, 1998 and October
17, 1998 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
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 minimum 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.
EXAMPLE OF AMOUNTS OF INSTALLMENT PAYMENTS
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TOTAL
PAY- CASH
TOTAL MENTS PRICE
30.00% MAXIMUM OF ALL PER PER
CASH DOWN BALANCE MONTHLY MONTHLY TOTAL TOTAL RENTAL RENTAL
CLASS PRICE PAYMENT DUE PAYMENT PAYMENTS INTEREST PAYMENTS DAY 43 DAY 43
YEARS YEARS
A $18,500 $5,550 $12,950 $104.20 $37,511.51 $24,561.51 $43,061.51 $17.88 $7.68
B 21,500 6,450 15,050 121.10 43,594.45 28,544.45 50,044.45 20.78 8.93
C 25,500 7,650 17,850 143.63 51,705.05 35,855.05 59,355.05 24.65 10.59
D 36,500 10,950 25,550 205.58 74,009.19 48,459.19 84,959.19 35.20 15.16
E 39,500 11,850 27,650 222.48 80,092.14 52,442.14 91,942.14 38.18 16.40
F 60,000 18,000 42,000 337.94 121,658.94 79,658.94 139,658.94 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 and that if the installment method is used, the
Subscription Agreement is not executed in Florida, the following will be due
upon subscription:
<TABLE>
<S> <C> <C> <C>
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
</TABLE>
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:
<TABLE>
<S> <C> <C> <C>
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
</TABLE>
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:
<TABLE>
<S> <C> <C> <C> <C> <C>
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
</TABLE>
* 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>
<S> <C> <C> <C> <C> <C>
PRO FORMA AVERAGE OF DISTRIBUTIONS PER INTEREST
FOR THE YEARS ENDED NOVEMBER 30,
FOR THE NINE
GUARANTEED MONTHS ENDED 1994
RENTAL AUGUST 31, 1997 1996 (EIGHT (AVERAGE OF
ARRANGEMENT (AVERAGE UNIT WEEKS) 1995 (EIGHT 32 UNIT
CLASS (PER UNIT OF 39 UNIT UNIT WEEKS) WEEKS)*
WEEK) WEEKS)*
A $ 490 $1,692 $2,007 $1,466 $331
B $ 520 $1,812 $2,151 $1,571 $354
C $ 595 $2,054 $2,437 $1,781 $401
D $ 840 $2,900 $3,441 $2,514 $567
E $ 910 $3,142 $3,728 $2,723 $614
F $1,225 $4,421 $5,018 $3,666 $826
</TABLE>
<PAGE>
*Depending upon the schedule, Holders would have between four and six Unit
Weeks during this eight month period. This amount is
the average of all Unit Weeks.
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.
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 $361,000 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 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 or
the amounts due upon cancellation of the Interests, 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 $650,000), (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 of Interests. 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
Section 721 F.S. cancellation period ends. During this 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 Underwriting Agreement and Soliciting
Dealer Agreement, the Company is offering sales representatives bonus Unit
Weeks for the sale of three Interests or more which will be deemed part of
the commission and further provided that the 7% commission plus the
incentives will not exceed 10% of the sales price.
The Company has reserved the right to cancel all Interests if fewer than
76 Interests are sold by October 31, 1998. The Company is not obligated to
exercise this right, and the number 76 is an arbitrary number 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
Unit Week or using the Unit Week. Holders will also be refunded any
prepayments for annual dues for periods after October 31, 1998. If the
Company exercises the right, it will send written notice to the Holders by
November 30, 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 Corporation 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 Corporation, 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.
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 1
Paid In Capital 99,999
Less: Stock Subscription Receivable (90,000)
Retained Earnings ---
$10,000
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
(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 (estimated at not more than
10% of their time), 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 Hotel and Suites Harbourside (formerly known as Hamlin's Landing),
located in Indian Rocks Beach, Florida. For financial information on Chart
House Suites hotel see the financial statements herein. Holiday Inn Hotel
and Suites Harborside has 164 rental units, two restaurants, and a 46 boat
slip marina. The property was purchased in December 1993, with 84 rental
units which were remodeled during 1994 and 1995. Another 80 rental units
were constructed during 1996-1997. Operating rental revenue from the hotel
and restaurant was approximately $867,000 in 1994, $1,019,000 in 1995, and
$1,367,000 in 1996. Net losses, after depreciation and debt service, of the
entire hotel/marina operation were approximately $845,000 in 1994, $642,000
in 1995, and $785,000 in 1996. The loss incurred in 1996 includes a one-time
demolition expense of approximately $408,000.
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.
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 & ENGINEERING CORP.
DPI Construction & Engineering Corp. ("DPIC&E"), an affiliate of the
Company, is engaged in the general contracting business. The Company may
enter into Agreements with DPIC&E whereby DPIC&E 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 Rental Pool for its Unit Weeks or
the sale of its Unit Weeks. The Company will have a fiduciary duty to manage
the time share plan and safeguard the annual dues.
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 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 an association
taxable as a corporation. 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. However, tax counsel believes it is unlikely that the IRS would
characterize an Interest as 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 such 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).
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. Generally, home equity indebtedness is all debt (other than
debt incurred to acquire a qualified residence) that is secured by a
qualified residence to the extent the amount of such debt does not exceed the
fair market value of the qualified residence. For purposes of determining
the fair market value of the residence, any debt incurred to acquire such
residence reduces such fair market value. Interest on home equity
indebtedness is deductible even if the debt proceeds are used for personal
expenditures. Tax counsel is unable to express an opinion as to whether any
debt obtained by a Holder to finance the acquisition of in Interest will be
qualified "home equity indebtedness." The determination of whether debt is
qualified "home equity indebtedness" depends on the specific factual
circumstances of a particular Holder, including the nature of a Holder's
residence. 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.
If an Interest is held for investment purposes by a Holder, interest
expense associated with debt used to finance the acquisition of such Interest
may be deductible as investment interest expense under Code Section 163(d).
The deduction, however, is limited to a taxpayer's net investment income for
the year. Tax counsel is unable to express an opinion as to whether any debt
obtained by a Holder to finance the acquisition of in Interest will be
deductible as investment interest expense. This determination depends on the
specific factual circumstances of a particular Holder. Holders should
consult with and must depend upon their own tax advisors in determining
whether an Interest is held as an investment and whether any debt used to
acquire such Interest is deductible as investment interest expense under Code
Section 163(d).
A Holder may elect to pay for his or her Interest in installments up to
360 months. Under the terms of the License, a Holder choosing 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 to make monthly
installment license payments. A Holder that elects to pay for his or her
Interest in installments will pay an increased license payment of up to 9
percent per year on the unpaid balance owing for the Interest. Because the
increased license payment could be deemed the economic equivalent of the
payment of interest, it is possible that the IRS would impute interest in
connection with the installment payment of license payments and characterize
the increased portion of such payments as interest expense. If characterized
as interest expense, such amounts would not be deductible by a Holder as
"qualified residence interest" or as "home equity indebtedness." Such
amounts may be deductible as investment interest pursuant to the rules
discussed in the immediately preceding paragraph. Holders should consult
with and must depend upon their own tax advisors in determining whether
increased license payments would be characterized as interest expense and, if
characterized as interest expense, whether such amounts are deductible.
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 an Interest is an entertainment facility (Code Section 274); (5)
whether the rental activity is a "passive activity" (Code Section 469); and
(6) 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 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). The numerator of the fraction is the days the
property is actually used for business, and the denominator 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," Interests held by other Holders (perhaps,
only other Holders of the same class of Unit Week) 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 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. Prior to issuing
a ruling, the IRS informally advised the Company that it would rule that the
rights afforded a Holder under a License constitute a "dwelling unit" within
the meaning of Code Section 280A. The Company subsequently withdrew its
ruling request. Holders must consult with and must depend upon their own tax
advisors in determining whether an Interest constitutes a "dwelling unit"
under Code Section 280A.
However, 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, if an Interest constitutes a "dwelling
unit," subject to the limitations imposed by Code Section 280A, 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 the expenses incurred in
connection with acquiring, holding and renting an Interest, subject to the
Code Section 280A disallowance rules if an Interest constitutes a "dwelling
unit" and subject to the limitations discussed below. 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), ordinary and necessary 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 line 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.
ENTERTAINMENT FACILITIES
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 it is likely that if an Interest is used
for entertainment, the 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.
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.
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.
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.
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. Provided the Interest is a capital asset or a Section 1231 asset
in the hands of the Holder, any resulting gain will be taxed at a maximum
individual capital gain rate of 28 percent if the Interest is disposed of
after a one-year holding period or 20 percent if it is disposed of after an
eighteen month holding period. 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 other than an S
corporation. Code Section 183 does not apply to corporate Holders. The
"ordinary and necessary expenses" requirement of Code Section 162(a) and the
entertainment facility limitations of Code Section 274(a)(1) apply to all
taxpayers, including corporate Holders. Code Section 469 applies only to
certain closely held C corporations and personal service corporations.
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
expected that an investment in an Interest will constitute a "tax shelter"
for purposes of the registration requirements and therefore, the Company will
register with the IRS.
Upon registration of a tax shelter, the IRS assigns the shelter a tax
shelter registration number. The Company will be required to register with
the IRS no later than the day on which the first Interest is offered for
sale. The Company will furnish the assigned registration number to a Holder
at the time of purchase or, if later, within 20 days after the Company
receives the number. The number will be furnished in a written statement
which identifies the tax shelter's name and taxpayer identification number
and will also include a prominent legend in bold and conspicuous type which
states that the registration number must be included on any return on which
a Holder claims any tax benefit from the shelter. This written statement
will also be furnished to a Holder at the time of purchase even if the tax
shelter registration number has not yet been received.
A Holder that claims a deduction, loss, credit, or other tax benefit in
connection with his or her Interest must report the tax shelter registration
number on Form 8271 (Investor Reporting of Tax Shelter Registration Number)
and attach the form to his or her income tax return. If a Holder fails to
include the tax shelter registration number on his or her return and claims
a tax benefit from the shelter, the Holder is subject to a $250 penalty.
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:
SUBSCRIPTION TAX PAYABLE (EXCLUSIVE
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 tax
is imposed on securities issued in the state of Florida. The Company has
advised tax counsel that it intends to accept and issue 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 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. Provided that the written promise
to pay is neither made, executed nor delivered in Florida, the sale of an
Interest will not be subject to excise tax unless the Interest is recorded in
Florida. The Company has advised that it will not record the Interests 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. The Department advised the Company in a ruling that the sale of an
Interest which is not recorded in Florida is not subject to this excise tax
if the written promise to pay is not fixed and absolute at the time of
execution. However, certain facts concerning the offering of Interests have
changed since the ruling was issued by the Department. Furthermore, the
Department issued the ruling to the Company. Consequently, the ruling is
limited in application to the Company and Holders may not rely on the ruling.
The Company will resubmit the ruling request to confirm that the terms of the
License Plan and the Company's stated position that it will cancel the
Interest upon a default render the financing not fixed and absolute for
Florida excise tax purposes and will request that the Department reissue the
ruling to both the Company and, if acceptable, Holders of Interests.
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. In providing its ruling, the Department relied on facts concerning the
offering of Interests as disclosed by the Company in its ruling request.
Since issuance of the ruling by the Department, certain facts concerning the
offering of Interests have changed. Furthermore, the Department issued the
ruling to the Company. Consequently, the ruling is limited in application to
the Company and Holders may not rely on the ruling. The Company will
resubmit the ruling request to reflect the change in facts and will request
that the Department confirm its ruling (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 and will request that the Department reissue the ruling to both the
Company and, if acceptable, Holders of Interests. In the opinion of tax
counsel the change in facts is not material and therefore, tax counsel
believes that the Department will affirm the conclusions contained in its
original ruling. However, there can be no assurance that the Department will
not modify the opinions provided in the original ruling. The Company, 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.
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 September 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 September 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 September 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 September 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, resulting in an economic gain of approximately $1,020,000.
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, resulting in an economic gain of approximately $1,000,000.
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, resulting in an economic
loss of approximately $1,423,000.
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 as amended (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.
PROPERTY LIQUIDATIONS
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Partnership Property Purchase Price Sales Price Computed Economic Gain
and Date and Date (Loss)
DCIP Laguna Vista $5,200,000 $6,220,000
Apartments-235 units 12/86 02/90 $1,020,000
DCIP Woodbridge $4,400,000 $5,400,000
Apartments-168 units 06/92 08/93 $1,000,000
DCIP Ashley Pointe $4,493,000 $3,070,00
Apartments-200 units 01/90 04/94 ($1,423,000)
</TABLE>
<PAGE>
REFINANCING
Purchase Date Tax-Free
Partnership PropertyDate Refinanced Distribution
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
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 September 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 September 1, 1997.
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
TABLE IV
RESULTS OF COMPLETED PROGRAMS
<PAGE>
<TABLE>
<CAPTION>
Decade Decade
Program Name Decade Decade Decade Wisconsin Sunbelt
80-II 80-III 80-XII Properties Properties
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 $1,000 $0
Source (On Cash Basis)
--Sales $0 $1,045 $813 $1,700 $0
--Refinancing $0 $0 $01 $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
</TABLE>
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>
<S> <C> <C> <C> <C> <C> <C> <C>
TABLE V
SALES OR DISPOSALS OF PROPERTIES
SELLING PRICE, NET OF CLOSING
COSTS
AND GAAP ADJUSTMENTS
----------------------------
CASH PURCHASE ADJUSTMENTS
RECEIVED NET MORTGAGE MONEY RESULTING
DATE OF CLOSING BALANCE MORTGAGE FROM
DATE OF SALE COSTS AT TIME OF TAKEN BY APPLICATIONS
PROPERTY ACQUIRED (1) SALE PROGRAM OF GAAP TOTAL
2 RESIDENTIAL UNITS, 01/31/81 08/31/94 $81,089 $0 $0 $0 $81,089(2)
MILWAUKEE, WI
2 RESIDENTIAL UNITS, 01/31/81 07/28/95 $77,473 $0 $0 $0 $77,473(3)
MILWAUKEE, WI
2 RESIDENTIAL UNITS, 12/31/80 04/08/96 $76,248 $0 $0 $0 $76,248(4)
HARTLAND, WI
2 RESIDENTIAL UNITS, 04/30/82 09/30/94 $149,921 $0 $0 $0 $149,921(5)
MILWAUKEE, WI
2 RESIDENTIAL UNITS, 04/30/82 10/17/94 $79,883 $0 $0 $0 $79,883(6)
MILWAUKEE, WI
2 RESIDENTIAL UNITS, 03/31/82 11/29/94 $76,945 $0 $0 $0 $76,945(7)
MILWAUKEE, WI
2 RESIDENTIAL UNITS, 04/30/82 12/12/95 $77,235 $0 $0 $0 $77,235(8)
MILWAUKEE, WI
2.5 UNDEVELOPED ACRES, 08/16/89 08/20/96 $49,145 $0 $0 $0 $49,145(9)
NEW BERLIN, WI
76 APARTMENT UNITS, 06/30/82 06/30/94 $2,569,545 $1,061,165 $0 $0 $3,630,710(10)
MIDDLETON, WI
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
COST OF
PROPERTIES
INCLUDING
CLOSING AND
RELATED COSTS
-----------------
EXCESS (DEFICIENCY) OF
TOTAL ACQUISITION COST, PROPERTY OPERATING
ORIGINAL MORTGAGE CAPITAL IMPROVEMENT, CASH RECEIPTS OVER CASH
PROPERTY FINANCING CLOSING AND SOFT COSTS TOTAL EXPENDITURES
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
</TABLE>
<PAGE>
(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
LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
Certain indemnification agreements to be entered into with the Company
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 with specific tax considerations not
discussed above or special circumstances should seek the advice of qualified
and independent legal counsel.
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 August 31, 1997 and
statements of operating revenues and certain expenses of Chart House Suites
hotel for the fiscal years ending November 30, 1994 through 1996 have been
audited by Virchow, Krause & Company, LLP, independent auditors, and they are
included in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
On September 8, 1997, the Company approved the engagement of Virchow, Krause
& Company, LLP as its independent auditors for the balance sheet dated August
31, 1997, to replace the firm of Ernst & Young LLP, who were dismissed as
auditors of the Company.
The decision to change the Company's independent auditors was due to reduce
costs and administrative reasons.
The reports of Ernst & Young LLP on the Company's balance sheets dated
December 31, 1996 and June 30, 1997, did not contain an adverse opinion or a
disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principles.
In connection with the audits of the Company's balance sheets as of December
31, 1996 and June 30, 1997, and in the subsequent interim period, there were
no disagreements with Ernst & Young LLP on any matters of accounting
principles or practices, financial statement disclosure, or auditing scope
and procedures which, if not resolved to the satisfaction of Ernst & Young
LLP would have caused Ernst & Young LLP to make reference to the matter in
their report.
FINANCIAL STATEMENTS AND RELATED INFORMATION
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.
"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.
ANNEX A
CHARTHOUSE SUITES VACATION LICENSE PLAN
ANNEX B
RULES AND REGULATIONS FOR CHART HOUSE SUITES HOTEL
ANNEX C
TIME SHARE PUBLIC OFFERING STATEMENT
ANNEX D
SUBSCRIPTION AGREEMENT
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.
<TABLE>
<CAPTION>
1997
Week Number Sunday to Sunday
<S> <C>
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 --
</TABLE>
<TABLE>
<CAPTION>
1998
Week Number Sunday to Sunday
<S> <C>
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 --
</TABLE>
<TABLE>
<CAPTION>
1999
Week Number Sunday to Sunday
<S> <C>
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 --
</TABLE>
ANNEX F
ANNUAL DUES BUDGET INFORMATION
ANNEX G
ARTISTIC RENDERINGS
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
The Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Description Of The Chart House Suites Hotel. . . . . . . . . . . . . . . 18
The Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Chart House Results. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . . . . . . . 25
Certain Rental Pool Financial Information. . . . . . . . . . . . . . . . 30
Certain Occupancy Information. . . . . . . . . . . . . . . . . . . . . . 34
Annual Dues and Special Assessments. . . . . . . . . . . . . . . . . . . 34
Differences in Allocating Rental Pool and Annual Dues
and Special Assessments. . . . . . . . . . . . . . . . . . . . . . . . . 36
Pro Forma Results With Various Occupancy Levels. . . . . . . . . . . . . 38
Guaranteed Rental Arrangement. . . . . . . . . . . . . . . . . . . . . . 42
License Payment Options. . . . . . . . . . . . . . . . . . . . . . . . . 44
Summary of Income and Costs to Holders . . . . . . . . . . . . . . . . . 44
Determination of Offering Price. . . . . . . . . . . . . . . . . . . . . 46
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 47
How to Subscribe . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Summary of Promotional and Sales Material. . . . . . . . . . . . . . . . 48
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Decade Properties, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . 51
Conflicts of Interest of Management
and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Certain Federal Income Tax Considerations. . . . . . . . . . . . . . . . 52
Certain Florida Tax Matters. . . . . . . . . . . . . . . . . . . . . . . 65
Prior Performance of Jeffrey Keierleber and Affiliates . . . . . . . . . 68
Liability and Indemnification of Officers and Directors. . . . . . . . . 77
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Financial Statements and Related Information . . . . . . . . . . . . . .F-1
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F-2
Charthouse Suites Vacation
License Plan . . . . . . . . . . . . . . . . . . . . . . . .Annex A-1
Rules and Regulations for Chart
House Suites Hotel. . . . . . . . . . . . . . . . . . . . . .Annex B-1
Time Share Public Offering Statement . . . . . . . . . . . . . . .Annex C-1
Subscription Agreement . . . . . . . . . . . . . . . . . . . . . .Annex D-1
Schedule of Weeks. . . . . . . . . . . . . . . . . . . . . . . . .Annex E-1
Annual Dues Budget Information . . . . . . . . . . . . . . . . . .Annex F-1
Artistic Renderings. . . . . . . . . . . . . . . . . . . . . . . .Annex G-1
CHARTHOUSE VACATION OWNERSHIP
150
Class A-F Interests
___________
PROSPECTUS
___________
October 17, 1997
(as updated through March 16, 1998)
PART II
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:
<TABLE>
<S> <C>
TYPE OF FEE AMOUNT
_______________
REGISTRATION FEE $ 1,288
NASD FILING FEE 750
FLORIDA TIME SHARE FILING FEE 2,400
PRINTING (ESTIMATE) 15,000
LEGAL FEES (ESTIMATE) 180,000
ACCOUNTING FEES (ESTIMATE) 50,000
BLUE SKY FEES AND EXPENSE 5,000
(ESTIMATE)
MARKETING EXPENSES (ESTIMATE) 100,000
MISCELLANEOUS (ESTIMATE) 6,562
TOTAL $361,000
</TABLE>
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
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.
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 March 18, 1998.
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 Keierleber
Jeffrey Keierleber
President, Sole Director,
Principal Financial
Officer and Principal
Accounting Officer
CHARTHOUSE SUITES VACATION OWNERSHIP, INC.
* * * * *
EXHIBIT INDEX
TO
REGISTRATION STATEMENT ON FORM S-11
<TABLE>
<S> <C>
Exhibit Description
Number
1.1 Form of Underwriting Agreement**
1.2 Form of 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 and
filed herewith)
4.2 Form of License Plan (attached as an Annex and filed herewith)
4.3 Rules and Regulations for Chart House Suites Hotel (attached as
an Annex)**
4.4 Time Share Public Offering Statement
5.1 Opinion re: Legality of Interests**
8.1 Tax Opinion**
10.1 Property Management Agreement**
10.2 Form of Non-Disturbance and Notice to Creditors
10.3 Form of 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 Form of Non-Exclusive Easement**
10.8 Form of Private Letter Ruling Request**
10.9 Form of Revised IRS Private Letter Ruling Request, dated July
16, 1997**
10.10 Real Estate Sales and Purchase Agreement**
10.11 Personal Property Purchase and Subscription Agreement**
10.12 Escrow Agreement**
10.13 Quit Claim Deed**
10.14 Form of Letter Withdrawing IRS Private Letter Ruling Request,
dated September 9, 1997**
10.15 Ernst & Young LLP letter dated October 3, 1997**
10.16 Artistic Renderings (attached as an Annex)**
23.1 Consent of Quarles & Brady (included in Exhibits 5.1 and 8.1)**
23.2 Consent of Virchow, Krause & Company, LLP
</TABLE>
*To be filed **Previously filed
<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>
PUBLIC OFFERING STATEMENT
FOR
CHARTHOUSE SUITES VACATION LICENSE PLAN
THIS PUBLIC OFFERING STATEMENT CONTAINS IMPORTANT MATTERS TO BE
CONSIDERED IN ACQUIRING A TIME SHARE PERIOD. 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 CONTRACT AND THIS PUBLIC OFFERING STATEMENT.
TABLE OF CONTENTS TO SINGLE SITE/COMPONENT SITE TIME SHARE PLAN
PUBLIC OFFERING STATEMENT TEXT AND EXHIBITS
1. Declaration of Condominium*
2. Cooperative Documents*
3. Declaration of Covenants and Restrictions*
4. Association Articles of Incorporation*
5. Association Bylaws*
6. Underlying Lease*
7. Management Contract and Other Contracts
8. Estimated Operating Budget and Schedule of Required
Purchasers' Expenses
9. Survey and Floor and Plot Plans
10. Leases of Facilities to be Used Only by Purchasers*
11. Leases of Facilities to be Used by Purchasers and
Others*
12. Form of Timeshare Period Lease for Leasehold Offer*
13. Declaration of Servitude of Properties*
14. Statement of Condition
15. Statement of Termite Inspection
16. Form Purchase Contract
17. Executed Purchaser Deposit Escrow Agreement and
Bond
18. Rules and Regulations for Use of Accommodations and
Facilities
19. Other Documents Creating the Timeshare Plan
20. Other Contracts or Leases Signed by Purchasers
21. Executed Agreement for Tax Escrow Payments and
Bond*
22. Nondisturbance Agreement
23. Escrow concerning Sale of Property
*Exhibit is Not Applicable
SINGLE SITE/COMPONENT SITE PUBLIC OFFERING STATEMENT TEXT
TAB # PAGE
I. DEFINITIONS AND ABBREVIATIONS. . . . . . . . . . . 1
II. REQUIRED DISCLOSURES . . . . . . . . . . . . . . . 4
IIA. DEVELOPER DISCLOSURES. . . . . . . . . . . . . . . 6
III. PUBLIC OFFERING STATEMENT TEXT . . . . . . . . . . 8
1. The Timeshare Plan. . . . . . . . . . . . . 8
a. The Plan . . . . . . . . . . . . . . . 8
b. Common Expenses and Elements of the
Plan . . . . . . . . . . . . . . . . .12
2. Club Membership or Recreational Lease . . .14
3. Term of the Plan. . . . . . . . . . . . . .14
4. Site Entities and Operations, Judgments
and Lawsuits. . . . . . . . . . . . . . . .14
a. The Entities . . . . . . . . . . . . .14
b. Judgments and Pending Lawsuits . . . .16
5. Resort/Component Site . . . . . . . . . . .16
a. Accommodations and Facilities and
Restrictions On Use. . . . . . . . . .16
(1) Restrictions On Use . . . . . . .18
(2) Lock-out Provisions . . . . . . .21
b. Completion of Construction and
Phasing. . . . . . . . . . . . . . . .21
c. Recreational Facilities. . . . . . . .21
d. Financial Arrangements for Promised
Improvements . . . . . . . . . . . . .22
e. Utilities. . . . . . . . . . . . . . .23
f. Insurance. . . . . . . . . . . . . . .23
g. Leasing of Units/Sale
of Whole Units . . . . . . . . . . . .25
h. Disclosures Regarding
Real Property. . . . . . . . . . . . .25
i. Description of Developer
Financing. . . . . . . . . . . . . . .25
j. Control of Association . . . . . . . .25
6. Budgets, Dues and Fees. . . . . . . . . . .26
7. Purchase of an Ownership Interest . . . . .27
a. Licensee's Right of
Cancellation . . . . . . . . . . . . .27
b. Total Financial Obligation
of the Licensee. . . . . . . . . . . .27
c. Status of Title Underlying
Resort/Component Site. . . . . . . . .28
d. Restrictions upon Rental
or Resale. . . . . . . . . . . . . . .28
8. Exchange Program Opportunities. . . . . . .29
EXHIBIT "I"
CHARTHOUSE SUITES VACATION LICENSE PLAN
PUBLIC OFFERING STATEMENT TEXT
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 be 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, 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 Suites 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 and further provided, under the Act, there is
a rebuttable presumption that an owner who has acquired more than
7 time share periods did not acquire them for his own use or
occupancy and would then be deemed a 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 Department of Business and Professional Regulation,
Bureau of Timeshare.
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 Suites Vacation License Plan, as amended from
time to time.
Q. "Resort Facility" means the property described on Exhibit
"A", attached to the Charthouse Suites 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 License Plan.
S. "Service Period" means that period of time designated by
Charthouse Suites Vacation License Plan, 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 "Interest" means the ownership of
a time share license to occupy a timeshare unit, which is neither
coupled with a freehold interest nor coupled with 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.
II. REQUIRED DISCLOSURES
A. 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 AND
CANCELLATION OF THE RIGHT TO USE THE UNIT.
For a more complete description, please refer to Article
V of the Charthouse Suites 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 LICENSE PLAN, 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 Suites
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. ANY RESALE OF THIS TIME SHARE LICENSE MUST BE ACCOMPANIED
BY CERTAIN DISCLOSURES IN ACCORDANCE WITH SECTION 721.065, FLORIDA
STATUTES.
H. THIS PUBLIC OFFERING STATEMENT CONTAINS IMPORTANT MATTERS
TO BE CONSIDERED IN ACQUIRING A TIME SHARE. 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.
IIA. DEVELOPER'S DISCLOSURES
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 TIME TO TIME, CHARTHOUSE SUITES
VACATION OWNERSHIP, INC. WILL OBTAIN, AT ITS OWN EXPENSE,
EQUIVALENT ACCOMMODATIONS FOR A PURCHASER.
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 OCTOBER 30, 1998.
THE DEVELOPER REFERS TO THE TEXT OF PUBLIC OFFERING STATEMENT AND
THE PLAN FOR DETAILS.
PURCHASERS SHOULD ALSO UNDERSTAND, HOWEVER, THAT SINCE THERE
CAN BE NO ASSURANCE AS TO THE 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.
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.
This Summary does not purport to be a complete description of
the Charthouse Suites Vacation License Plan and the 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 a purchase of the Interests.
Pursuant to Section 721.05(27)(a) under Florida law a person
who acquires more than seven Unit Weeks may be considered a
developer and there is a rebuttable presumption that a person who
has acquired such may be deemed a Developer. Pursuant to Section
721.05(27)(c) a person who sells his entire Interest in a single
transaction, in other words all vacation Interests, is not a
developer. If a person intends to sell partial Interests (i.e.
Unit Weeks), they will need to consider their obligations under
Florida law, including an obligation to register as a developer in
order to sell partial Unit Weeks. Registering as a developer
involves completing forms, paying a fee, and, among other things
agreeing to follow rules governing advertising and licensing of
sellers.
III. PUBLIC OFFERING STATEMENT TEXT
This Summary does not purport to be a complete description of
the Charthouse Suites Vacation License Plan and the 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 a purchase of 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 studios and 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.
1. THE TIME SHARE PLAN
a. The Plan
The name of the Time Share Plan is Charthouse Suites
Vacation License Plan, and all accommodations and facilities are
located at 850 Bayway Blvd., Clearwater Beach, Florida. The Resort
Facility is owned in fee simple by the Developer, without any
outstanding mortgages, except for an unrecorded obligation to
Decade Properties, Inc., a related party. The deed is held in
escrow by the Developer's law firm. 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:
1. 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.
2. 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
Suites 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 neither coupled
with a freehold interest nor coupled with 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 contractual right to
participate in the Charthouse rental pool 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.
Pursuant to Section 721.05(27)(a) under Florida law a person
who acquires more than seven Unit Weeks may be considered a
developer and there is a rebuttable presumption that a person who
has acquired such may be deemed a Developer. Pursuant to Section
721.05(27)(c) a person who sells his entire Interest in a single
transaction, in other words all vacation Interests, is not a
developer. If a person intends to sell partial Interests (i.e.
Unit Weeks), they will need to consider their obligations under
Florida law, including an obligation to register as a developer in
order to sell partial Unit Weeks. Registering as a developer
involves completing forms, paying a fee, and, among other things
agreeing to follow rules governing advertising and licensing of
sellers.
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 Interest--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, its 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 Developer. 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.
b. 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 Suites 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. Such 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
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 Suites 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.
2. CLUB MEMBERSHIP OR RECREATIONAL LEASE, AS APPLICABLE
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 AND CANCELLATION
OF THE RIGHT TO USE THE UNIT.
The Common Amenities are available pursuant to the Plan, and,
specifically, there are no other recreational leases or club
memberships associated with this Charthouse Suites 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.
3. TERM OF THE PLAN
The interests being conveyed in the Resort Facility shall be
a Time Share License 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 October 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.
The Interests being conveyed in the Resort Facility shall be
a Time Share License, terminating on December 31, 2040.
4. SITE ENTITIES AND OPERATIONS, JUDGMENTS AND LAWSUITS
a. 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
License Plan. Charthouse Suites Vacation Ownership, Inc. is also
responsible for the operation, management and maintenance of the
Common Amenities. A holder of an Interest does not have a right to
change the managing entity, which shall be solely selected by
Charthouse Suites Vacation Ownership, Inc.
The Charthouse Suites 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 Property 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.
The duties of Decade Properties, 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 Suites 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 Suites 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 Suites 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 (or $30,000 annually) 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.
A purchaser has no right to cancel any service,
maintenance or recreational contract or lease.
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, but has no
experience in creating or selling time shares.
b. 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 Suites
Vacation License Plan.
5. RESORT/COMPONENT SITE
a. Accommodations and Facilities and Restrictions on
Use
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. With respect to the Resort Facility, there shall be a total
of one hundred fifty (150) Interests (or 1300 timeshare periods,
i.e., 52 weeks times 25 Units). 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 participate
in the rental arrangement or 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:
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.
1. 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.
1. 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.
2. 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.
3. 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 of other Licensees or
Charthouse Suites Vacation Ownership, Inc. or the Managing Entity.
4. 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.
5. 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.
6. 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).
7. 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.
8. 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.
9. 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.
10. 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 for 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.
11. 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.
12. 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.
13. 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.
14. 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.
15. 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.
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.
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
Suites 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. Lockout Provisions
Under the Plan, the Developer has the ability to lock out
persons who stay past the appropriate time threshold as set forth
in the Rules and Regulations or who have not paid the annual dues
or special assessments. The Developer has the ability to cancel
Interests under the Charthouse Suites Vacation License Plan for the
late payment of Interest payments.
b. Completion of Construction and 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".
c. 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. The Developer may, but
is not obligated to, provide additional facilities not described.
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:
1. Swimming Pool
(a) Location: As shown on the Plot Plan, as
set forth on Exhibit "A9" to the Public
Offering Statement
(b) Approximate size: 546 sq. ft.
(c) Approximate depth: 3-5 feet
(d) Maximum capacity: 20 persons
(e) The swimming pool is heated.
2. Administrative Office
(a) Location: As shown on the Plot Plan, as
set forth on Exhibit "A9" to the Public
Offering Statement
(b) Approximate size: 1325 sq. ft.
(c) Maximum capacity: 3 persons
3. Laundry Room
(a) Location: As shown on the Plot Plan, as
set forth on Exhibit "A9" to the Public
Offering Statement
(b) Approximate size: 170 sq. ft.
(c) 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 terminate 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).
d. Financial Arrangements for Promised Improvements
All accommodations and facilities are presently complete.
e. Utilities
The manner in which the utilities and other services are
to be provided and the person or entity furnishing them are as
follows:
1. Electricity: Florida Power Corporation
2. Solid waste disposal: City of Clearwater
3. Sewer and water: City of Clearwater
4. Storm drainage: Natural gravity flow
5. Garbage disposal: City of Clearwater
6. Telephone: GTE Florida and BTI
Telecommunications Service (long distance)
f. 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 Suites Vacation License Plan. Insurance policies
will be made reasonably available for inspection by Licensees or
their agents in accordance with law.
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 43. 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.
g. 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.
h. 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.
i. 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 of
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.
j. Control of Association
THE DEVELOPER HAS THE RIGHT TO RETAIN CONTROL OF
CHARTHOUSE SUITES VACATION LICENSE PLAN 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 Suites Vacation License
Plan, attached as Exhibit "A19" to the Public Offering Statement.
6. BUDGETS, DUES AND FEES
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, 1998. 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 Licensees,
pursuant to Chapter 721, Florida Statutes.
Pursuant to the Charthouse Suites 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.
7. PURCHASE OF AN OWNERSHIP INTEREST
a. 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 Suites Vacation License
Plan and this Public Offering Statement. In such event, the
Charthouse Suites Vacation License Plan provides that a Licensee
will receive the price of their Interest (exclusive of assessments)
less any benefits received. The Charthouse Suites 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.
b. 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:
1. 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.
2. Maintenance fees, as set forth in the Plan,
attached as Exhibit "A19" to this Public Offering Statement.
3. 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.
4. Sales and document taxes imposed by the Florida
Department of Revenue.
5. The only additional charges which a Licensee
shall be subject to are reoccurring maintenance fees and special
assessments, pursuant to the Plan, property taxes and exchange
membership fees.
No title insurance policy or title opinion is available
for purchase.
c. 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 8012, at Page 1432 of the
Public Records of Pinnelas County, Florida.
A Non-Disturbance and Notice to Creditors, in the form
attached as Exhibit "A22" 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 Suites 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.
d. Restrictions Upon Rental or Resale
THE SALE, LEASE, OR TRANSFER OF TIME SHARE PERIODS IS
RESTRICTED OR CONTROLLED. Please see Article XVIII of the License
Plan for details.
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 Suites 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
is in accordance with all applicable 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 Suites 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.
Pursuant to Section 721.05(27)(a) under Florida law a person
who acquires more than seven Unit Weeks may be considered a
developer and there is a rebuttable presumption that a person who
has acquired such may be deemed a Developer. Pursuant to Section
721.05(27)(c) a person who sells his entire Interest in a single
transaction, in other words all vacation Interests, is not a
developer. If a person intends to sell partial Interests (i.e.
Unit Weeks), they will need to consider their obligations under
Florida law, including an obligation to register as a developer in
order to sell partial Unit Weeks. Registering as a developer
involves completing forms, paying a fee, and, among other things
agreeing to follow rules governing advertising and licensing of
sellers.
1. The future value of time share interests is
very uncertain; do not count on appreciation.
2. 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.
3. 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.
8. EXCHANGE PROGRAM OPPORTUNITIES
The Developer has entered into an Agreement with RCI registered
trademark for the purpose of providing a reciprocal exchange program. The
Licensee should note that all representations concerning the
exchange program are solely those of RCIregistered trademark and not those of
the Developer, and further, that RCIregistered trademark is an independent
company not affiliated or connected with the Developer in any way. Developer
has agreed to pay to RCIregistered trademark, on behalf of Licensee, the
first year's exchange membership dues. All future membership or exchange
dues assessed by RCIregistered trademark shall be the sole responsibility of
Licensee. The participation by Licensee in the exchange program is voluntary
on the part of Licensee.
Licensees may enroll in RCI 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.
CHARTHOUSE SUITES
RECEIPT FOR TIME SHARE DOCUMENTS
The undersigned acknowledges that the items listed below
have been received and, as to plans and specifications, such plans
and specifications have been made available for inspection.
Name of Time Share Plan: CHARTHOUSE SUITES
Address of Time Share Plan: 850 Bayway Blvd.
Clearwater, Florida, 34630
Address of Developer: Charthouse Suites Vacation
Ownership, Inc.
250 Patrick Blvd., Suite 140
Brookfield, WI 53045
DOCUMENTS:
Offering Statement Text
Vacation License Plan
Articles of Incorporation
By-Laws
Estimated Operating Budget for Resort Facility
License Agreement
Rules and Regulations
Plot Plan
Floor Plan
Receipt for Time Share Documents
Plans and Specifications (Made Available)
Nondisturbance and Notice to Creditors
Notice of Election to Be Deemed a Member Resort Facility
Management Agreement
Form of License
Termite Inspection Report (not applicable because Resort Facility
is a cement building)
EXECUTED THIS ______ DAY OF ______________________, 19____.
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. IF YOU DECIDE TO CANCEL
THE CONTRACT, 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. AT 250 PATRICK BLVD., SUITE 140, BROOKFIELD,
WISCONSIN 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.
________________________________ ______________________________
PURCHASER PURCHASER
________________________________ ______________________________
PURCHASER PURCHASER
EXHIBIT "1"
CHARTHOUSE SUITES VACATION LICENSE PLAN
DECLARATION OF CONDOMINIUM
NOT APPLICABLE
EXHIBIT "2"
CHARTHOUSE SUITES VACATION LICENSE PLAN
COOPERATIVE DOCUMENTS
NOT APPLICABLE
EXHIBIT "3"
CHARTHOUSE SUITES VACATION LICENSE PLAN
DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS
NOT APPLICABLE
EXHIBIT "4"
CHARTHOUSE SUITES VACATION LICENSE PLAN
ASSOCIATION ARTICLES OF INCORPORATION
EXHIBIT "5"
CHARTHOUSE SUITES VACATION LICENSE PLAN
ASSOCIATION BY-LAWS
NOT APPLICABLE
EXHIBIT "6"
CHARTHOUSE SUITES VACATION LICENSE PLAN
UNDERLYING LEASE
NOT APPLICABLE
EXHIBIT "7"
CHARTHOUSE SUITES VACATION LICENSE PLAN
MANAGEMENT AGREEMENT AND RELATED CONTRACTS
EXHIBIT "8"
CHARTHOUSE SUITES VACATION LICENSE PLAN
ESTIMATED OPERATING BUDGET AND SCHEDULE OF REQUIRED
PURCHASERS' EXPENSES
CHARTHOUSE SUITES VACATION OWNERSHIP, INC.
ESTIMATED OPERATING BUDGET
from January 1, 1997 to December 31, 1997
<TABLE>
<CAPTION>
(approxi-
mately) Per
INCOME YEAR MONTH Interest*
(8 Unit
Weeks)
<S> <C> <C> <C>
Maintenance Fees - Unit Owners $302,380 $25,198 $1,861
Telephone 10,500 875 65
Miscellaneous
(Rentals/Services/Fees/etc) 1,500 125 9
$314,380 $26,198 $1,935
TOTAL INCOME
EXPENSES
SALARIES
Salaries Administration 13,512 1,126 83
Salaries Housekeeping 30,655 2,554 188
Manager on Site 22,560 1,880 138
Pool & Recreation -- -- --
Security -- -- --
Operators/Front Desk 20,539 1,712 126
Maintenance Salaries 8,640 720 53
Payroll Taxes (included above)
Management Fee 30,000 2,500 185
TOTAL SALARIES 125,906 10,492 773
DIRECT EXPENSES
Insurance 13,300 1,108 82
Maintenance Services/
Supplies 8,158 680 50
Electric - Units 15,494 1,291 95
Electric-Club House/
Office/Recreational 8,670 722 53
Water/Sewer 1,718 143 11
Trash Removal 3,024 252 18
Utilities Cable TV 2,558 213 16
Lawn Maintenance 14,360 1,197 88
Sales & Marketing 9,836 820 61
Telephone 20,828 1,736 128
Laundry/Linen Supplies 29,116 2,426 179
Real Estate Taxes upon
Timeshare Property 1,560 130 10
Annual T.S. Division Fee 2,400 200 16
Rent for recreational and other
commonly used facilities n/a -- --
Taxes upon leased areas n/a -- --
Security provisions n/a -- --
Operating capital 16,083 1,324 97
Administrative Misc.
146,905 12,242 904
TOTAL DIRECT EXPENSES
RESERVED FOR DEFERRED EXPENSES
Roof $2,000 $ 156 $ 1
Painting 4,000 333 25
Furniture/Fixtures/ 19,000 1,583 117
Equipments
Pool Maintenance 1,200 100 7
Pavement 1,200 100 7
Reserved for Others 4,569 381 28
TOTAL RESERVES $31,969 $ 2,663 185
TOTAL EXPENSES $295,780 $24,648 $ 1,862
TOTAL INCOME MINUS MAINTENANCE FEE 12,000 1,000 74
EXPENSES TOTAL 295,780 24,698 1,862
TOTAL MAINTENANCE FEE (EXPENSES- 283,780 23,648 1,788
INCOME)
</TABLE>
* Average of All Interests, Classes A - F
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,
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 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. The Developer will pay
any amount in excess of the specified annual dues.
<TABLE>
<S> <C> <C> <C> <C> <C>
RESERVE ANALYSIS 1998
REMAINING EST. EST. YEARLY
FUND TYPE USEFUL USEFUL 1/1/98 REPLACE. ASSESSMENT
LIFE LIFE RES. COST
BALANCE
Roof 15 15 years 0 30,000 2,000
years
Painting 7 7 years 0 28,000 4,000
years
Furniture/
Fixtures/ 7
Equipment years 7 years 0 133,000 19,000
Pool 20
Maintenance years 20 years 0 24,000 1,200
Pavement 20
years 20 years 0 24,000 1,200
Heating/air 10 10 years 0 45,690 4,569
conditioning years
Water
heaters/
boilers
Tile & Vinyl
replacement
Carpeting
Curtains/
drapes &
blinds
Landscaping
Interior
Maintenance
Exterior
Maintenance
</TABLE>
EXHIBIT "9"
CHARTHOUSE SUITES VACATION LICENSE PLAN
SURVEY AND FLOOR AND PLOT PLANS
EXHIBIT "10"
CHARTHOUSE SUITES VACATION LICENSE PLAN
LEASES OF FACILITIES TO BE USED ONLY BY PURCHASERS
NOT APPLICABLE
EXHIBIT "11"
CHARTHOUSE SUITES VACATION LICENSE PLAN
LEASES OF FACILITIES TO BE USED BY PURCHASERS AND OTHERS
NOT APPLICABLE
EXHIBIT "12"
CHARTHOUSE SUITES VACATION LICENSE PLAN
FORM OF TIMESHARE PERIOD LEASE FOR LEASEHOLD OFFER
NOT APPLICABLE
EXHIBIT "13"
CHARTHOUSE SUITES VACATION LICENSE PLAN
DECLARATION OF SERVITUDE OF PROPERTIES
NOT APPLICABLE
EXHIBIT "14"
CHARTHOUSE SUITES VACATION LICENSE PLAN
STATEMENT OF CONDITION
NOT APPLICABLE
EXHIBIT "15"
CHARTHOUSE SUITES VACATION LICENSE PLAN
STATEMENT OF TERMITE INSPECTION
Not Applicable As Cement Building
EXHIBIT "16"
CHARTHOUSE SUITES VACATION LICENSE PLAN
FORM PURCHASE CONTRACT
EXHIBIT "17"
CHARTHOUSE SUITES VACATION LICENSE PLAN
EXECUTED PURCHASER DEPOSIT ESCROW AGREEMENT AND BOND
EXHIBIT "18"
CHARTHOUSE SUITES VACATION LICENSE PLAN
RULES AND REGULATIONS FOR USE OF ACCOMMODATIONS AND FACILITIES
EXHIBIT "19"
CHARTHOUSE SUITES VACATION LICENSE PLAN
OTHER DOCUMENTS CREATING THE TIMESHARE PLAN
EXHIBIT "20"
CHARTHOUSE SUITES VACATION LICENSE PLAN
OTHER CONTRACTS OR LEASES SIGNED BY PURCHASERS
NOT APPLICABLE
EXHIBIT "21"
CHARTHOUSE SUITES VACATION LICENSE PLAN
EXECUTED AGREEMENT FOR TAX ESCROW PAYMENTS AND BOND
Not Applicable As Taxes Paid By Developer
EXHIBIT "22"
CHARTHOUSE SUITES VACATION LICENSE PLAN
NONDISTURBANCE AGREEMENT
EXHIBIT "23"
CHARTHOUSE SUITES VACATION LICENSE PLAN
ESCROW CONCERNING SALE OF PROPERTY
EXHIBIT "21"
CHARTHOUSE SUITES VACATION LICENSE PLAN
EXECUTED AGREEMENT FOR TAX ESCROW PAYMENTS AND BOND
Not Applicable As Taxes Paid By Developer
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
AMENDED AND RESTATED 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 or interest holders, on or
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 (the "Plan"), a copy of which is available
from Charthouse Suites Vacation Ownership, Inc. 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, the instrument may be enforced by both the
Seller and any purchaser of the time share plan.
3. This instrument shall be effective as between the time-
share purchaser and any of the interest holders, despite any
rejection or cancellation of the contract between the time-share
purchaser and developer during bankruptcy proceedings of the
developer.
4. So long as any of the interest holders has any interest
in the accommodations, facilities or plan, the interest holders
will fully honor all the rights of the Licensees in and to the
time-share plan, will honor the purchasers' right to cancel their
contracts and receive appropriate refunds, and will comply with
all other applicable requirements of Chapter 721, Florida
Statutes, and rules promulgated thereunder.
5. Creditors of the below interest holders shall take
notice of the existence of the plan and of the rights of
purchasers and shall serve to protect the interests of the time-
share purchasers from any claims of subsequent creditors.
DATED: _______________________, 1998.
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: Secretary Its: Secretary
Print Name: Michael G. Sweet Print Name: Michael G. Sweet
STATE OF WISCONSIN )
) SS.
COUNTY OF MILWAUKEE )
The foregoing instrument was acknowledged before me this
14th day of January, 1998, by Michael G. Sweet, as Secretary, of
Decade Properties, Inc. and Charthouse Suites Vacation Ownership,
Inc., on behalf of the respective corporations. He is personally
known to me and did take an oath.
___________________________________
Print Name: Walter J. Skipper
Notary Public, State of:Wisconsin
Serial Number, if any:_____________
My commission expires:
Is Permanent
EXHIBIT A
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.
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 __________, 1998, by CHARTHOUSE SUITES
VACATION OWNERSHIP, INC., a Florida corporation (the "Developer").
WHEREAS, the Developer has the escrowed right to acquire the
property described on Exhibit A (the "Property") and the current
owner which owns in fee simple of the real property has agreed to
sell the property to the Developer; and
WHEREAS, the Developer desires to sell Vacation Interests,
with Rental Pool Arrangement (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., 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 and
further provided, under the Act, there is a rebuttable
presumption that an owner who has acquired more than 7 time
share periods did not acquire them for his own use or
occupancy and would then be deemed a developer. Nothing
herein shall be deemed to contradict the definition of
Developer in the Act with regard to the sale of time share
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 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 and means any timeshare
plan consisting exclusively of time share licenses, subject to
the definition of "Vacation Plan" in the Act.
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 operations.
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. "Subscription Agreement" means the purchase contract to
acquire an Interest in the Plan.
O. "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.
P. "Unit" means one of the 25 suites in the Resort Facility.
"Units" means more than one Unit.
Q. "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 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.
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.
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 Decade Properties, Inc. which has agreed
to sell the property to 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 proceeds
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 Interest-- The ownership of B Interests allows the
King Studio: Licensee use of a spacious king 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 Interest-- The ownership of C Interests allows the
Large Studio: Licensee use of a large studio with two
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 Licensee
1 Bedroon Suite use of a one-bedroom suite, with lanai, with a
(with lanai): 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 Licensee
Penthouse: 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 their
heirs, successors and assigns, as their interests may appear. A
Licensee may purchase 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.
Pursuant to Section 721.05(27)(a) under Florida law a person
who acquires more than seven Unit Weeks may be considered a
developer and there is a rebuttable presumption that a person who
has acquired such may be deemed a Developer. Pursuant to Section
721.05(27)(c) a person who sells his entire Interest in a single
transaction, in other words all vacation Interests, is not a
developer. If a person intends to sell partial Interests (i.e.
Unit Weeks), they will need to consider their obligations under
Florida law, including an obligation to register as a developer in
order to sell partial Unit Weeks. Registering as a developer
involves completing forms, paying a fee, and, among other things
agreeing to follow rules governing advertising and licensing of
sellers.
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
Entity 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
Department of Business and Professional Regulation, Division of
Florida Land Sales, Condominiums and Mobile Homes, Bureau of
Timeshare 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 Department of
Business and Professional Regulation, Division of Florida Land
Sales, Condominiums and Mobile Homes, Bureau of Timeshare, the
books and records of the Plan, upon request of the Department of
Business and Professional Regulation, Division of Florida Land
Sales, Condominiums and Mobile Homes, Bureau of Timeshare;
(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:
<TABLE>
<CAPTION>
Total
Per Interest
Total By Class
Per Class (8 Unit
Weeks)
<S> <C> <C>
Class A Interest 19.6045% .5027%
13.0696% .5027%
21.1522% .5424%
29.4067% .7540%
10.4901% .8069%
6.2769% .9657%
100% 4.0744%
</TABLE>
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.
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 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 liability and assessment right
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 October
31, 1998, and the Developer, in its sole discretion decides to
cancel the Plan in order to calculate the benefit for calculating
the anticipated return, the amount shall be:
<TABLE>
<CAPTION>
Dollar Amount
Benefit Per Night
<S> <C>
Interest A $ 70.00
Interest B $ 75.00
Interest C $ 85.00
Interest D $120.00
Interest E $130.00
Interest F $175.00
</TABLE>
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 the weeks in
a year, as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Off
Season Gross
Number Nightly Potential Total % Per Total % Per
Number of Walk-in Daily Total % Total % Week (52 Interest 8
Class of Rooms Interests Rate Revenue Per Class Per Suite Weeks) Weeks
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%
25 150 $2,385 100.000% 27.4633% 0.5281% 4.2251%
</TABLE>
The Developer or Managing Partner shall calculate the results
and forward the net funds collected on a quarterly basis to holders
of the Interests.
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 and except as required by Chapter 721
F.S., 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 law 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
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 Developer's sole 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 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.
For the period from October 31, 1997 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:
<TABLE>
<S> <C> <C>
Class A - $190.00
Class B - $190.00
Class C - $205.00
Class D - $285.00
Class E - $305.00
Class F - $365.00
</TABLE>
The Developer guarantees a total of $[ ].
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, electricity, 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 only 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 October
31, 1998, the Developer has the right to cancel the Interests sold
by refunding to the Licensees the purchase price paid by the
Licensee less any and all income earned by such Licensee or
benefits received in connection with the ownership of the Interest
or rentals earned for the assigned Unit Weeks. In determining
benefits for use, 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 holder, (d) the transfer, sale, or conveyance
complies with the applicable 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 ____________________, 1998.
Signed, Sealed and Delivered
In the Presence of: CHARTHOUSE SUITES VACATION
OWNERSHIP, INC.
_____________________________ BY: _______________________________
Print Name: _________________ Its: ______________________________
_____________________________
Print Name: _________________
ACKNOWLEDGMENT
STATE OF ________________)
) SS.
COUNTY OF _______________)
The foregoing instrument was acknowledged before me this ____
day of ___________________, 1998, 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>
EXHIBIT A
LEGAL DESCRIPTION OF PROPERTY
SUBSCRIPTION AND PURCHASE AGREEMENT
FOR CHARTHOUSE SUITES VACATION INTERESTS
With Rental Pool Arrangement
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":
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.
ANY RESALE OF THIS TIMESHARE INTEREST MUST BE ACCOMPANIED BY
CERTAIN DISCLOSURES IN ACCORDANCE WITH SECTION 721.065, FLORIDA
STATUES.
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 THE 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 DOCUMENTS, BEFORE EXPIRATION OF
YOUR TEN (10) DAY CANCELLATION PERIOD, IS PROHIBITED.
(1) Purchaser Signature: ________________________________________
DATE EXECUTED: __________________________________________________
(2) Purchaser Signature: ________________________________________
DATE EXECUTED: __________________________________________________
(1) Name of Purchaser (Principal Contact) (Printed or Typed)
_________________________________________________________________
_________________________________________________________________
1. For purposes of the above, Notify shall mean that a
written notice of cancellation is delivered, by any means which may
include certified mail return receipt requested, to the entity
designated to receive the notice of cancellation in the statement
required by sections 721.06(1)(f) or 721.065(2)(c), Florida
Statutes, which in this is Charthouse.
(2) Name of Purchaser (if Joint) (Printed or Typed)
_________________________________________________________________
_________________________________________________________________
Street Address __________________________________________________
__________________________________________________________________
_________________________________________________________________
_________________________________________________________________
City, State, Zip Code ___________________________________________
_________________________________________________________________
_________________________________________________________________
Telephone (Day)__________________________________________________
Telephone (Night)________________________________________________
Fax No. _________________________________________________________
(1) Social Security Number or (2) Social Security Number or
Tax Identification Number * Tax Identification Number *
___________________________ ____________________________
(COMPLETE THIS ONLY IF THERE ARE MORE PURCHASERS)
(3) Purchaser Signature: ________________________________________
DATE EXECUTED: __________________________________________________
(4) Purchaser Signature: ________________________________________
DATE EXECUTED: __________________________________________________
(3) Name of Purchaser(Printed or Typed)
_________________________________________________________________
_________________________________________________________________
(4) Name of Purchaser(Printed or Typed)
_________________________________________________________________
_________________________________________________________________
Street Address __________________________________________________
__________________________________________________________________
_________________________________________________________________
_________________________________________________________________
City, State, Zip Code ___________________________________________
_________________________________________________________________
_________________________________________________________________
Telephone (Day)__________________________________________________
Telephone (Night)________________________________________________
Fax No. _________________________________________________________
(3 Social Security Number or (4) Social Security Number or
Tax Identification Number * 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.
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 $150,000) ____(more than $150,000)
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.
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 (CIRCLE ONE OR MORE):
A (Standard Studio $18,500)
B (King Studio $21,500)
C (Large Studio $25,500)
D (1 Bedroom Suite $36,500)
E (1 Bedroom Suite with Lanai $39,500)
F (Penthouse $60,000)
Unit Weeks Requested (MUST BE 2 CONSECUTIVE WEEKS):
First Choice: Winter_____ ______ Spring ______ ______
Summer_____ ______ Fall ______ ______
Second Choice: Winter_____ ______ Spring ______ ______
Summer_____ ______ Fall ______ ______
Third Choice: Winter_____ ______ Spring ______ ______
Summer_____ ______ Fall ______ ______
If acquiring the Charthouse Vacation Interest(s) in the appropriate
time period (on or before October 17, 1998) 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 of
Interest)
Total Purchase Price. Purchaser agrees to pay the total purchase
price for the Charthouse Vacation Interest, with Rental Pool
Arrangement ("Interest") in Charthouse as follows:
A. PURCHASE PRICE OF INTEREST
(FROM PREVIOUS PAGE) $________________
B. IF APPLICABLE, CASH DISCOUNT OF
5% PRIOR TO APRIL 17, 1998,
3% PRIOR TO JULY 17, 1998,
1.5% PRIOR TO OCTOBER 17, 1998 $(_______________)
C. NET PURCHASE PRICE $________________
D. TOTAL DOWN PAYMENT ( MINIMUM 30% OF LINE C)
$________________ $(_______________)
E. FLORIDA STATE DOCUMENTARY
TAXES DUE ON SUBSCRIPTION
($.70 PER $100 OF NET PURCHASE
PRICE, LINE C) $________________
F. FLORIDA STATE DOCUMENTARY
TAXES (IF PAYING BY INSTALLMENTS
AND THE SUBSCRIPTION AGREEMENT
IS SIGNED IN FLORIDA)
($.35 PER $100 OF NET PURCHASE
PRICE, LINE C) $________________
G. TOTAL DUE UPON SUBSCRIPTION
(TOTAL OF LINES D, E, F)
MAKE YOUR CHECK PAYABLE TO:
Charthouse Escrow Account $________________
h. Total Remaining Owed for
Interests (line c minus line d) $________________
i. If Installment Method Used:
Monthly Payment of Principal
and Interest in the Amount of $________________
j. Current Payment of Annual Dues
at $_______ per month $________________
k. Current Payment of Annual Dues
at $_______ per quarter $________________
l. Make your checks payable to:
Charthouse Suites Vacation Ownership, Inc.
M. FIRST PAYMENT 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
Purchaser pays on an installment basis, the date and amount of
monthly payments. The Purchaser will have the option of having
payments automatically withdrawn for a checking account through
automatic withdraws. 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.
<TABLE>
<S> <C> <C> <C> <C>
ANNUAL FINANCE Amount Total of Total Sale Price
PERCENTAGE CHARGE Financed Payments
RATE The dollar amount The amount of credit The amount you will The total cost of your
The cost of your the credit will cost provided to you or on have paid after you purchase on credit, including
credit as a you. your behalf. have made all your down payment of
yearly rate. payments as $___________
scheduled.
% $ $ $ $
</TABLE>
YOU HAVE THE RIGHT TO RECEIVE AT THIS TIME AN ITEMIZATION OF THE
AMOUNT FINANCED. ___ I want an itemization. ___ I do not want
an itemization.
YOUR PAYMENT SCHEDULE WILL BE:
<TABLE>
<S> <C> <C> <C>
Amount of Each
Amount of Each Monthly Payment for
Number of Monthly Payment for Annual Dues. Annual dues
Payments the Interest can vary. When Payments Are Due
First day of each month until _________, 20__.
</TABLE>
If purchase of the above described Interest 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%.
Name of Soliciting Dealer Selling Interest
_________________________________________________________________
Street Address __________________________________________________
City. State, Zip Code ____________________________________________
Telephone Number _________________________________________________
Fax Number ________________________________________________________
SIGNATURE OF REGISTERED REPRESENTATIVE __________________________
Name of Registered Representative (Printed or Typed)
_________________________________________________________________
SOLICITING DEALER AUTHORIZED SIGNATURE
_________________________________________________________________
*****************************************************************
CHARTHOUSE SUITES VACATION OWNERSHIP, INC., A FLORIDA CORPORATION
BY: ______________________________________________________________
As its: ___________________________________________________________
Date: _____________________________________________________________
Weeks Accepted: Winter ______ _____ Spring _____ ______
Summer ______ _____ Fall _____ ______
(White) Original (Green) Investor (Canary) Signed
(Pink) Representative (Goldenrod) Broker-Dealer
Virchow, Krause & Company
Certified Public Accountants & Consultants
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts"
and to the use of our reports dated September 8, 1997 (except for
Note 7 as to which the date is October 15, 1997) and January 9,
1997 in Post-Effective Amendment No. 1 to the Registration Statement
(Form S-11 No. 333-13511) and related prospectus of Charthouse
Suites Vacation Ownership, Inc. for the Registration of 150
ownership interests.
/s/Virchow, Krause & Company
Virchow, Krause & Company
Waukesha, Wisconsin
March 18, 1998
