<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K/A
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO ______________
COMMISSION FILE NUMBER 333-61433
------------------------
EPIC RESORTS, LLC
(Exact name of registrant as specified in its charter)
DELAWARE 23-2888968
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1150 FIRST AVENUE, SUITE 900 19406
KING OF PRUSSIA, PA (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (610) 992-0100
Securities registered pursuant to Section 12(b) of The Act: NONE
Securities registered pursuant to Section 12(g) of The Act: NONE
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days: Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Annual Report on Form 10-K or any
amendment to this Form 10-K. Yes /X/ No / /
As of March 30, 1999, 1,118,000 Membership Interests of the Registrant were
outstanding.
Documents incorporated by reference: NONE
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<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) FINANCIAL STATEMENTS
Exhibit 27--Financial Data Schedule.
(b) REPORTS. No reports on Form 8-K have been filed during the last quarter of
the fiscal year ended December 31, 1998.
(c) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ----------- ------------------------------------------------------------------
<C> <S>
3.1 Certificate of Formation of Epic Resorts, LLC. (incorporated by
reference to Exhibit 3.1 to the Company's registration statement
on Form S-4, File No. 333-61433)
3.2 Operating Agreement of Epic Resorts, LLC. (incorporated by
reference to Exhibit 3.2 to the Company's registration statement
on Form S-4, File No. 333-61433)
3.3 By-Laws of Epic Resorts, LLC. (incorporated by reference to
Exhibit 3.3 to the Company's registration statement on Form S-4,
File No. 333-61433)
3.4** Restated Certificate of Incorporation of Epic Vacation Club.
3.5** By-Laws of Epic Vacation Club
4.1 Indenture, dated July 8, 1998 between Epic Resorts, LLC, Epic
Capital Corp., the Subsidiary Guarantors signatory thereto and
United States Trust Company of New York, as Trustee relating to
the 13% Senior Secured Redeemable Notes due 2005 (the form of
which is included in such indenture). (incorporated by reference
to Exhibit 4.1 to the Company's registration statement on
Form S-4, File No. 333-61433)
4.2 Form of Global Exchange Note (included in Exhibit 4.1).
(incorporated by reference to Exhibit 4.2 to the Company's
registration statement on Form S-4, File No. 333-61433)
4.4 First Supplemental Indenture, dated January 7, 1999 between Epic
Resorts, LLC, Epic Capital Corp., the Subsidiary Guarantors
signatory thereto, Epic Marketing, LLC, Epic Resorts--Vacation
Showplace LLC, Epic Resorts Management, LLC and United States
Trust Company of New York as trustee.
4.5 Second Supplemental Indenture, dated February 3, 1999 between
Epic Resorts, LLC, Epic Capital Corp., the Subsidiary Guarantors
signatory thereto and United States Trust Company of New York,
as trustee.
10.1* Employment Agreement between Epic Resorts, Inc. and Thomas F.
Flatley, dated May 20, 1998. (incorporated by reference to
Exhibit 10.1 to the Company's registration statement on Form S-4,
File No. 333-61433)
10.2* Employment Agreement between Epic Resorts, Inc. and Scott J.
Egelkamp, dated May 20, 1998. (incorporated by reference to
Exhibit 10.2 to the Company's registration statement on Form S-4,
File No. 333-61433)
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ----------- ------------------------------------------------------------------
<C> <S>
10.3 Escrow and Disbursement Agreement, dated July 8, 1998 between
United States Trust Company of New York, as Trustee under the
Indenture and as Escrow Agent, Epic Resorts, LLC and Epic Capital
Corp. (incorporated by reference to Exhibit 10.3 to the Company's
registration statement on Form S-4, File No. 333-61433)
10.4 Security Agreement, dated July 8, 1998 made by the Grantors named
therein in favor of United States Trust Company of New York, as
trustee under the Indenture, Collateral Agent and Depository for
the benefit of the Noteholders of the 13% Senior Secured Notes
due 2005 issued by Epic Resorts, LLC and Epic Capital Corp.
(incorporated by reference to Exhibit 10.4 to the Company's
registration statement on Form S-4, File No. 333-61433)
10.5 Registration Rights and Members' Agreement, dated July 8, 1998
between Epic Resorts, LLC, Epic Membership Corp., Members of Epic
Resorts LLC, Epic Capital Corp., Epic Warrant Co. and NatWest
Capital Markets Limited, as Initial Purchaser. (incorporated by
reference to Exhibit 10.5 to the Company's registration statement
on Form S-4, File No. 333-61433)
10.6 Warrant Agreement, dated July 8, 1998 between Epic Warrant Co.,
as Issuer and United States Trust Company of New York, as Warrant
Agent. (incorporated by reference to Exhibit 10.6 to the
Company's registration statement on Form S-4, File No. 333-61433)
10.7 Warrant Agreement, dated July 8, 1998 between Epic Resorts, LLC,
as Issuer and United States Trust Company of New York, as Warrant
Agent. (incorporated by reference to Exhibit 10.7 to the
Company's registration statement on Form S-4, File No. 333-61433)
10.8 Form of Epic Warrant Co. Warrant Certificate (included in and
incorporated by reference to Exhibit 10.6 to the Company's
registration statement on Form S-4, File No. 333-61433)
10.9 Form of Epic Resorts, LLC Warrant Certificate (included in and
incorporated by reference to Exhibit 10.7 to the Company's
registration statement on Form S-4, File No. 333-61433)
10.10 Mortgage and Security Agreement, granted July 8, 1998 by Epic
Resorts--Hilton Head, LLC, as mortgagor to United States Trust
Company of New York, as trustee under the Indenture and
mortgagee. (incorporated by reference to Exhibit 10.10 to the
Company's registration statement on Form S-4, File No. 333-61433)
10.11 Deed of Trust, granted July 8, 1998 by Epic Resorts--Westpark
Resort, LLC, as trustor to United Title of Nevada, as trustee for
the benefit of United States Trust Company of New York, as
trustee under the Indenture. (incorporated by reference to
Exhibit 10.11 to the Company's registration statement on
Form S-4, File No. 333-61433)
10.12 Form of Leasehold Deed of Trust, Assignment of Leases and Rents
Security Agreement and Fixture Filing, granted July , 1998 by
Epic Resorts--Palm Springs Marquis Villas, LLC, as trustor to
Barbara J. Goodman, Esq., as trustee for the benefit of United
States Trust Company of New York, as trustee under the Indenture.
(incorporated by reference to Exhibit 10.12 to the Company's
registration statement on Form S-4, File No. 333-61433)
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ----------- ------------------------------------------------------------------
<C> <S>
10.13 Mortgage, granted July 8, 1998 by Daytona Beach Regency, Ltd., as
mortgagor to United States Trust Company of New York, as trustee
under the Indenture and mortgagee. (incorporated by reference to
Exhibit 10.13 to the Company's registration statement on
Form S-4, File No. 333-61433)
10.14 Deed of Trust, granted July 8, 1998 by Epic Resorts--Scottsdale
Links Resort, LLC, as trustor to Jones Osborn, II, Esq., as
trustee for the benefit of United States Trust Company of
New York, as trustee under the Indenture. (incorporated by
reference to Exhibit 10.14 to the Company's registration
statement on Form S-4, File No. 333-61433)
10.15 Receivables Loan and Security Agreement, dated October 11, 1996
between London Bridge Resort, Inc. and Finova Capital
Corporation. (incorporated by reference to Exhibit 10.15 to the
Company's registration statement on Form S-4, File No. 333-61433)
10.16 Trust Indenture, dated September 28, 1998 between Epic Master
Funding Corporation, Epic Resorts, LLC as administrator and
Marine Midland Bank, as trustee. (incorporated by reference to
Exhibit 10.16 to the Company's registration statement on
Form S-4, File No. 333-61433)
10.17 Credit Agreement, dated September 28, 1998 between Epic Master
Funding Corporation, Epic Resorts, LLC and Prudential Securities
Credit Corporation. (incorporated by reference to Exhibit 10.17
to the Company's registration statement on Form S-4, File
No. 333-61433)
10.18 Form of Security Agreement for vacation club property, between
United States Trust Company of New York, as trustee under the
Indenture and the resort subsidiary transferring vacation
ownership units to Epic Vacation Club.
10.19** Rules of Epic Vacation Club.
10.20** Management Agreement between Epic Vacation Club and Epic Resorts
Management, LLC.
10.21** Escrow Agreement between Epic Resorts, LLC, Epic Vacation Club
and Intercity Escrow Services.
10.22** Form of Sublease between resort subsidiaries and Epic Vacation
Club.
10.23** Form of Vacation Plan Agreement between Epic Resorts, LLC and
Epic Vacation Club.
10.24** Form of Vacation Owner Security Agreement between the resort
subsidiary and Epic Vacation Club.
10.25** Form of Reimbursement Agreement between Epic Resorts, LLC and
Epic Vacation Club.
21 Subsidiaries of Epic Resorts, LLC.
27 Financial Data Schedule.
</TABLE>
- ----------
* Denotes a management contract.
** Filed herewith.
(d) FINANCIAL STATEMENT SCHEDULES
Schedules are omitted because they are not applicable or are not required or
because the information is reported in the consolidated financial statements
or notes thereto.
34
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the registrant has duly caused this annual report on Form 10-K to be
signed on its behalf by the undersigned thereunto duly authorized.
EPIC RESORTS, LLC
Date: May 13, 1999 By: /s/ SCOTT J. EGELKAMP
-----------------------------------------
Scott J. Egelkamp
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
(DULY AUTHORIZED OFFICER AND
PRINCIPAL FINANCIAL OFFICER)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this annual report on Form 10-K has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
President and Chief
/s/ THOMAS F. FLATLEY Executive Officer
- ------------------------------ (Principal Executive May 13, 1999
Thomas F. Flatley Officer)
Vice President and Chief
/s/ SCOTT J. EGELKAMP Financial Officer
- ------------------------------ (Principal Financial and May 13, 1999
Scott J. Egelkamp Accounting Officer)
Managing Member May 13, 1999
/s/ THOMAS F. FLATLEY
- ------------------------------
Epic Membership Corp.
By: Thomas F. Flatley,
President
</TABLE>
35
<PAGE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 11/30/1998
981458755 - 2955659
RESTATED
CERTIFICATE OF INCORPORATION
OF
EPIC VACATION CLUB
A NONSTOCK NONPROFIT CORPORATION
INTRODUCTION. EPIC VACATION CLUB hereby relates and replaces the Certificate
of Incorporation of EPIC VACATION CLUB filed with the Secretary of State on
October 15, 1998, under Authentication No. 9355692. This restated
Certificate was duly adopted by the Board of Directors as required by the
Certificate of Incorporation, Bylaws, and 8 Del. Laws c.l, Sections 242 and
245.
1: NAME. The name of this corporation is EPIC VACATION CLUB.
2: REGISTERED AGENT. The address of the corporation's registered office in
the State of Delaware is 1209 Orange Street, City of Wilmington, County of
New Castle, Delaware 19801. The name of the corporation's registered agent
at such address is The Corporation Trust Company.
3: PURPOSE.
3.1 GENERAL. This corporation is a nonstock, nonprofit corporation
organized under the Delaware General Corporation Law. The purpose of this
corporation is to engage in any lawful act or activity for which a
corporation may be organized under such law.
3.2 SPECIFIC. The specific and primary purpose for which the
corporation is formed is to care for, own, lease, maintain, operate and
manage the real property and Improvements thereon and personal property
therein, or which it owns, wherever located, which has been dedicated to the
Epic Vacation Club Vacation Ownership Plan by a Declaration recorded or filed
in various states and countries.
3.3 LIMITATION; NONPROFIT STATUS. Notwithstanding any of the above
statements of purposes and powers, this corporation shall not, except in an
insubstantial degree, engage in any activities or exercise any powers that
are not in furtherance of the specific purpose of this corporation. No part
of the net earnings of the corporation shall benefit any private member or
individual (other than by acquiring, constructing, or providing management,
maintenance, and care of property held by the corporation, or by a rebate of
excess membership dues, fees, or assessments).
<PAGE>
4: NO AUTHORITY TO ISSUE STOCK. The corporation is a nonprofit corporation
and has no authority to issue capital stock.
5: MEMBERS. The conditions of membership in this corporation are stated in
the Bylaws of the corporation.
5.1 VOTING. Each membership carries the power to vote in the Club and
proxy rights as provided in the Bylaws.
5.2 MEETINGS. Meetings of Members may be held within or without the
State of Delaware, as the Bylaws of the corporation provide.
6: EXISTENCE. This corporation shall have perpetual existence.
7: AMENDMENT. Except as provided in Section 7.1, amendment of this
Restated Certificate of Incorporation requires the affirmative vote or
written assent of a majority of the corporation's Board of Directors and; (i)
a majority of the Voting Power of each Class of Members, (as defined in the
Bylaws of the corporation), if there is more than one class, or (ii) if there
is only one Class of Members, a majority of the Voting Power of Members other
than Declarant, or its successor, plus the approval of a majority of the
total Voting Power. Except that the votes required for an amendment shall
not be less than the affirmative votes required for action to be taken under
the clause being affected.
7.1 BOARD ONLY. Except further, the Board of Directors alone may
amend this Restated Certificate of Incorporation to make technical
corrections or additions required by
7.1(a) COURT. A court of competent jurisdiction, or
7.2(b) AGENCY. A Federal or state agency, to comply with consumer
protection, sales regulation and/or tax exemption laws.
7.2 "VOTING POWER" is the aggregate votes of Members, including, if
applicable, both Classes, unless otherwise specified.
8: INDEMNIFICATION. To the full extent permitted by the Delaware General
Corporation Law or any other applicable laws presently or hereafter in
effect, no director of the corporation is to be personally liable to the
corporation or its members for or with respect to any acts or omissions in
the performance of his or her duties as a director of the corporation. Any
repeal or modification of this Section 8 will not adversely affect any right
or protection of a director of the corporation existing immediately prior to
such repeal or modification. Each person who is or was or had agreed to
become a director or officer of the corporation, or each such person who is
or was serving or who had agreed to serve at the request of the Board of
Directors or an officer of the corporation as an employee or agent of the
corporation or as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise (including
the heirs, executors, administrators or estate of such person), is to be
indemnified by the corporation to the full extent permitted by the Delaware
General Corporation Law or any other applicable laws as presently or
hereafter in effect. Without limiting the
2
<PAGE>
generality or the effect of the foregoing, the corporation may enter into one
or more agreements with any person which provide for indemnification greater
or different than that provided herein. Any repeal or modification of this
Section 8 will not adversely affect any right or protection existing
hereunder immediately prior to such repeal or modification.
9: DIRECTORS.
9.1 INITIAL DIRECTOR. The powers of the incorporator ceased upon
issuance of the Certificate of Incorporation, and the following person is to
serve as director of the corporation until his successor(s) are elected and
qualified: THOMAS F. FLATLEY, Epic Resorts, LLC, 1150 First Avenue, Suite
900, King of Prussia, PA 19406.
9.2 ELECTION. Election of directors need not be by written ballot
except to the extent provided for in the Bylaws of the corporation.
9.3 BYLAWS. The Board of Directors is authorized to amend the Bylaws
only under the specific exceptions set forth in the Bylaws.
/s/Thomas F. Flatley
------------------------------------
Thomas F. Flatley, President
10: ACKNOWLEDGMENT. The undersigned hereby acknowledges, under penalties of
perjury, that this instrument is the act and deed of the corporation, and
that the facts stated therein are true.
/s/Thomas F. Flatley
------------------------------------
Thomas F. Flatley
3
<PAGE>
BYLAWS
OF
EPIC VACATION CLUB
A DELAWARE NONPROFIT CORPORATION
ADOPTED JANUARY 26, 1999
AMENDED MARCH 31, 1999
1: IDENTIFICATION AND PURPOSE
1.1 NAME. The name of this corporation is EPIC VACATION CLUB, a
Delaware nonprofit corporation ("Club").
1.2 PURPOSE. The Club is formed and shall be operated to own, lease,
care for, maintain, operate and manage the real property and Improvements
thereon and personal property therein or which it owns, whichever located, which
has been dedicated to the Epic Vacation Club, Vacation Ownership Plan by a
recorded Declaration.
1.3 CONTENTS.
<TABLE>
<S> <C> <C>
1: IDENTIFICATION AND PURPOSE. . . . . . . . . . . . . . . . . . . . . . . .1
1.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.3 Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
2: DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.1 Basic Membership . . . . . . . . . . . . . . . . . . . . . . . . .3
2.2 Bonus Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.3 Home Resort. . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.4 Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.5 Membership . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.6 Point. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.7 Point Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.8 Resort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.9 Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
2.10 Voting Power . . . . . . . . . . . . . . . . . . . . . . . . . . .4
3: MEMBERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
3.1 Joint Membership . . . . . . . . . . . . . . . . . . . . . . . . .4
3.2 Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
3.3 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
3.4 Discipline . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
3.5 Transfer of Membership . . . . . . . . . . . . . . . . . . . . . .8
<PAGE>
4: BOARD OF DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
4.1 Powers and Duties. . . . . . . . . . . . . . . . . . . . . . . . .9
4.2 Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3 Qualification. . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.4 Election and Removal . . . . . . . . . . . . . . . . . . . . . . 11
4.5 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.6 Action Without Meeting . . . . . . . . . . . . . . . . . . . . . 14
5: OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.1 Election/Term. . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.2 Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.3 Removal/Resignation. . . . . . . . . . . . . . . . . . . . . . . 15
5.4 Offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6: ASSESSMENTS AND SPECIAL CHARGES.. . . . . . . . . . . . . . . . . . . . 16
6.1 Annual Assessments . . . . . . . . . . . . . . . . . . . . . . . 16
6.2 Special Assessments. . . . . . . . . . . . . . . . . . . . . . . 17
6.3 Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.4 Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.5 Late Charges/Costs . . . . . . . . . . . . . . . . . . . . . . . 18
6.6 Suspensions. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.7 Lien/Foreclosure . . . . . . . . . . . . . . . . . . . . . . . . 19
6.8 Disposition of Funds . . . . . . . . . . . . . . . . . . . . . . 19
6.9 Statement of Charges . . . . . . . . . . . . . . . . . . . . . . 19
7: RECORDS AND REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.1 Inspections. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.2 Accountings and Reports. . . . . . . . . . . . . . . . . . . . . 20
7.3 Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.4 Quarterly Review . . . . . . . . . . . . . . . . . . . . . . . . 22
7.5 Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
8: INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.1 Generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.2 Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9: GENERAL BYLAWS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.1 Principal Office . . . . . . . . . . . . . . . . . . . . . . . . 24
9.2 Liability of Agents. . . . . . . . . . . . . . . . . . . . . . . 24
9.3 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 24
9.4 Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.5 Dissolution. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.6 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.7 Amendments.. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.8 Master Association.. . . . . . . . . . . . . . . . . . . . . . . 27
9.9 Bankruptcy.. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10: CERTIFICATION.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
2
<PAGE>
2: DEFINITIONS. Except as set forth below, and unless the context otherwise
requires, the Definitions set forth in the DECLARATION OF VACATION OWNERSHIP
PLAN (EPIC VACATION CLUB) as recorded in each county where the Club owns or
leases real property, as may be amended from time to time ("Declaration"), are
hereby adopted as the definitions herein. A substantially similar Declaration
shall be recorded in each county, and shall describe each Resort, where the Club
owns or leases real property subject to the Vacation Plan and Club Memberships.
The provisions of recorded Declarations shall have priority over the Bylaws, and
inconsistent provisions among various Declarations shall be resolved in favor of
the most restrictive provision on the Club or Declarant and/or the most
favorable provision for protecting the Members. For convenience, some of the
Definitions from the Declaration are repeated here:
2.1 BASIC MEMBERSHIP; 5,000 Points, the minimum required to be held to
constitute a Membership.
2.2 BONUS USE; a specific time period of consecutive days during which
a Member has exclusive use rights in a Unit under a Reservation made according
to the Rules in addition to such Member's Point Use and for which the specified
fee is paid to the Club. The fee must bear a reasonable relationship to the
actual cost of the use. Bonus Use is time made available because of no prior
Reservation for Point Use.
2.3 HOME RESORT. The Resort, if any, so designated on an Owner's
Vacation Owner Agreement and in which the Owners so designated have a priority
Reservation right for Point Use.[3/99].
2.4 MEMBER; a Member of the Club, further described in Declaration
Section 4.2; also known as "OWNER".
2.5 MEMBERSHIP; the relationship of a Member to the, Club; the bundle
of rights, duties, and benefits of a Member, as further described in Declaration
Section 4.3; also known as "VACATION OWNERSHIP INTEREST".
2.6 POINT; the essential element and measure of a Membership, further
described in the Declaration Section 4.4. Initially some Memberships may be
measured in "Intervals".
2.7 POINT USE; a specific time period of consecutive days during which
a Member has exclusive use rights in a Unit under a Reservation made according
to the Rules and for which Points are surrendered.
2.8 RESORT; collectively, the Property and all Common Area and other
separately owned or rented dwelling units governed or administered under a
common plan, pursuant to the Master Declaration, if applicable, including all
Improvements constructed thereon or therein, and the Units, and the recreational
facilities and Common Area appurtenant thereto. The term "Resort" may also
refer to any and all Resorts that are dedicated to the Vacation Plan if the
context so allows or requires.
2.9 UNIT; the portion of the Property to which a Member receives
exclusive use rights when a Reservation is made under the Rules, which Unit may
consist of a single family home,
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condominium unit, a dwelling on a lot in a planned development, an apartment,
a hotel room or suite, a mobilehome, a house boat, a motor home, a park
trailer, a recreational vehicle, a cabin, and/or any similar facility
including human living quarters.
2.10 VOTING POWER; the aggregate votes of Members, including, if
applicable, both Classes, unless otherwise specified.
3: MEMBERS. Members and Memberships are defined in the Declaration. The
rights, powers and duties of Members are more fully described in these Bylaws.
3.1 JOINT MEMBERSHIP. When two (2) or more persons jointly hold a
Membership, any proxy, ballot or communication which requires the signature of a
Member, must be signed by all such persons or their agent designated on the
books of the Club. All such persons may attend meetings, but no vote of such
Membership shall be cast without the majority consent of all co-owners present
at such meeting holding such Membership unless cast by their designated agent.
In the event joint holders of a Membership cannot agree among themselves how
their vote shall be cast, their vote shall be lost.
3.2 VOTING. Each Membership carries the power to vote in the Club
from and after the commencement of assessments on the Membership except as
otherwise provided in an approved and effective Reimbursement Agreement.
Except as otherwise provided by law, only Members in whose names Memberships
entitled to vote stand on the records of the Club on the record date for
voting purposes, as provided herein, and Declarant (except as otherwise
specifically excluded), shall be entitled to vote at any meeting or by
written ballot without a meeting. Such vote may be by voice or by written
ballot; except that an election for directors must comply with Bylaw 4.4.
3.2(a) TWO CLASSES OF MEMBERS. There are two (2) classes of
Members:
(i) CLASS A. Class A Members hold Memberships
primarily for occupancy or personal use, and are entitled to one (1) vote for
a Basic Membership and one (1) vote for each additional increment of Points
owned which equals the number of Points in the Basic Membership.
(ii) CLASS B. Declarant is a Class B Member, and shall
be entitled to vote for each Membership deemed held by Declarant under the
Declaration, on the same basis as Class A Members. Class B shall
automatically and irreversibly become Class A as soon as the Voting Power of
Class B falls below twenty percent (20%) of the total Voting Power.
3.2(b) MEMBERSHIP APPROVAL. A requirement in the Articles,
Bylaws, Rules, Declaration, or any agreement by the Club for approval of the
Members, of the Membership, or of the Voting Power means the affirmative vote or
written assent of a majority of the Voting Power represented at a meeting, or
cast in an election by written ballot, where a quorum is represented or
responds, respectively, unless a different number or portion is specifically
prescribed. The required portion of affirmative vote shall be from:
(i) each class of Voting Power if there is more than
one class; or
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(ii) if there is only one class of Voting Power, from
Voting Power residing in Members other than Declarant and from the total
Voting Power.
3.2(c) VOTING WITHOUT A MEETING. Any matter or issue requiring
the vote of the Members may be submitted for vote by written ballot without a
meeting of the Members if the following requirements are met:
(i) DECISION. The determination to conduct an election
in this fashion shall be made by a majority of the Board or by Members having
ten percent (10%) of the total Voting Power signing a written request and
delivering same to the Secretary.
(ii) BALLOT. The officers shall thereupon distribute a
written ballot to every Member entitled to vote on the matter. Such ballot
shall set forth the proposed action or actions and candidates, provide an
opportunity to specify approval or disapproval of any proposal, provide that
the votes shall be cast as specified, and provide a reasonable time, not less
than twenty (20) nor more than sixty (60) days after distribution, within
which to return the ballot to the Club. A written ballot may not be revoked.
(iii) SOLICITATION. All solicitations shall indicate the
number of responses needed to meet the quorum requirement, the percentage of
approvals necessary to pass the measure submitted, and the time by which the
ballot must be received in order to be counted.
(iv) PROCEDURE. Distribution of ballots and
solicitations shall be in the same manner as specified herein for notice of
meetings of Members. Approval by written ballot pursuant to this section
shall be valid only when the number of votes cast by ballot within the time
period specified equals or exceeds the quorum required to be present at a
meeting authorizing the action, and the number of approvals equals or exceeds
the number of votes that would be required to approve at a meeting at which
the total number of votes cast was the same as the number of votes cast by
ballot. Counsel or the accountants for the Club shall be retained to
supervise the secrecy and control of the election, if deemed necessary by the
Board or if requested by the Members requesting the election. Upon
tabulation of the ballots, the Board shall promptly notify the Members of the
outcome of the election or that insufficient votes to constitute a quorum
were cast.
3.2(d) PROXIES. Every Member entitled to vote or execute consents
shall have the right to do so either in person or by an agent or agents
authorized by a written proxy signed by such Member or its duly authorized agent
and filed with the Secretary of the Club.
(i) DURATION. No such proxy shall be valid after the
expiration of three (3) years from the date of its execution unless the
person executing it specifies therein the length of time for which such proxy
is to continue in force, which may be for a term of years or perpetual.
(ii) CONTENTS. Each proxy shall (A) provide a choice
between approval and disapproval of each matter proposed to be acted upon;
(B) provide that it shall be voted as indicated therein, if so indicated; (C)
identify who is authorized to exercise it; and (D) indicate the length of
time it will be valid.
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(iii) MATTERS. A proxy shall be valid as to the
following matters only if the general nature of the matter is described in
the proxy: (A) removal of director or filling a vacancy on the Board; (B)
approving transactions involving directors; (C) amending proxy rights; (D)
amending the Articles; (E) selling substantially all Club assets; (F)
mergers; (G) dissolution; and/or (H) distributions.
3.2(e) RECORD DATE. The Board may fix a time in the future as a
record date for the determination of the Members entitled to notice of and to
vote at any meeting of Members or on any action without a meeting. The
record date so fixed shall be not more than sixty (60) nor less than thirty
(30) days prior to the date of the meeting or such action. When a record
date is so fixed, only Members of record on that date shall be entitled to
notice of and to vote at the meeting, notwithstanding any transfer of
Memberships on the books of the Club after the record date.
3.2(f) QUORUM. The presence or participation in person, by
written ballot, and/or by proxy of the holders of at least fifteen percent
(15%) of the Voting Power, excluding Declarant, shall constitute a quorum for
the transaction of business. A "Super Quorum" means more than fifty percent
(50%) of the Voting Power. The Members present at a duly called or held
meeting at which a quorum is present shall be deemed to constitute a quorum
until adjournment, notwithstanding the withdrawal of enough Members to leave
less than a quorum.
(i) LESS THAN A QUORUM. In the absence of a quorum no
business shall be conducted, and the meeting shall be adjourned by the
presiding officer without rescheduling it. However, if the notice of the
meeting so provided, the taking of votes may be extended for a specified
period after the meeting, under Bylaw 3.2(c), to allow the required quorum or
vote to respond.
(ii) LESS THAN ONE-THIRD. If less than one-third (1/3)
of the total Voting Power is in attendance or represented at a meeting, only
those matters described in the notice of the meeting may be voted upon by the
Members.
3.3 MEETINGS.
3.3(a) PLACE. Any meeting of the Club Members shall be held at a
suitable location that is readily accessible at reasonable cost to the
largest possible number of Members, as determined by resolution of the Board.
3.3(b) ANNUAL MEETINGS. A meeting of the Members for the
election of directors and for the transaction of such other business as may
properly come before the Members, shall be held at least once each calendar
year at a time and place determined by the Board. The first annual meeting
of the Members shall be held not later than one (1) year after the first
closing of the sale of a Membership.
3.3(c) SPECIAL MEETINGS. Special meetings of the Members for any
lawful purpose and at any time, shall be scheduled in response to a call by
the President, by the Board, or upon receipt of a written request signed by
Members holding five percent (5%) of the Voting Power held by Members other
than Declarant. Such meetings must be duly noticed and held not less than
thirty-five (35) days nor more than ninety (90) days after request therefor
is received by
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the President or Secretary. If notice is not given by the Secretary within
twenty (20) days of such receipt by the Club of a request for special
meeting, then the person(s) requesting the meeting may give notice.
3.3(d) NOTICE. Written notice of each meeting of the Members
shall be given to each Member who, on the record date for notice of the
meeting, is entitled to vote thereat, either by personal delivery, by first
class mail or other means of written communication, charges prepaid,
addressed to such Member at his record address appearing on the books of the
Club, or given to the Club by the Member for notice purposes. All such
notices shall (i) be sent to each Member entitled thereto not less than
thirty (30) and not more than ninety (90) days before the subject meeting;
(ii) specify the place, the date and the time of such meeting; (iii) provide
a brief statement of the matters which the Board intends to present or
believes that others will present for consideration by the Members; and (iv)
provide the name, address and a brief biographical sketch of each person who
has announced the intention to stand for election to the Board.
3.3(e) CONSENT OF ABSENTEES. Any defects in the call, notice,
time or location of a meeting, shall not affect the validity of transactions
at the meeting which are otherwise valid, if a quorum is present, either in
person or by proxy, and if each Member entitled to vote, not present in
person or by proxy, signs a written approval of the minutes. Such approvals
shall be made a part of the minutes of the meeting. Nothing in this
Subsection shall be construed as requiring the consent of absentees to
transactions at a properly called, noticed and held meeting at which a quorum
is present.
3.3(f) ADJOURNED MEETINGS. Any Members' meeting, annual or
special, if a quorum is present, may be adjourned from time to time by the
vote of a majority of the Voting Power present in person or by proxy. When
(i) any Members' meeting is adjourned for not less than five (5) days and not
more than thirty (30) days, (ii) announcement of the time and place of the
adjourned meeting is made prior to adjournment, and (iii) there is no change
in the record date, then no additional notice need be given. Otherwise,
notice of the adjourned meeting shall be given as in the case of an original
meeting.
3.4 DISCIPLINE. The Club Board shall establish uniform fines and
temporary suspensions which shall be imposed for violation of the Articles,
Declaration, Bylaws or Rules. Determination of responsibility, such as for
maintenance or repairs of damage, or determination of what constitutes a
nuisance, shall be only by the following procedures, or by a court or
arbitration proceeding. Violations may be determined and penalties imposed
only after thirty (30) days' written notice to the offending Member served
personally or by mail, first class postage prepaid, return receipt requested,
mailed to the latest address for such Member shown on the Club records,
specifying the possible action and the alleged reasons therefor, and an
opportunity for the Member to be heard before a quorum of the Board at least
five (5) days before the effective date of any possible action.
3.5 TRANSFER OF MEMBERSHIP. Transfer or abandonment of the
Membership does not relieve Member of Member's obligations under the
Governing Documents, unless Club agrees to the transfer or terminates the
Membership. A Membership may be transferred entirely or partially if the
following conditions are fulfilled as to such Membership in a manner
reasonably satisfactory to Club:
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3.5(a) FEE. A transfer fee of a reasonable amount has been paid
to Club.
3.5(b) CURRENT. All payments for charges due Club are current.
3.5(c) POINTS. The Membership transferred and the Membership
retained, if any, must each include enough Points to be a Basic Membership at
the then current requirements.
3.5(d) QUALIFICATIONS. The transferee must satisfy all
qualifications of a Member and Club's reasonable credit requirements. Absent
written objection by Club specifying the reasons therefor, approval shall be
deemed given 15 days following receipt by Club of (i) an application for
transfer, (ii) the proposed transferee's credit information, and (iii) a
Vacation Owner Agreement signed by the transferee.
3.5(e) RIGHT OF FIRST REFUSAL. Every Member, before selling or
transferring any Points or Intervals (collectively "Points", in this Bylaw
3.5(e)) must first offer the Points to the Declarant in the following manner:
(i) NOTICE. The Member shall first give notice (the
"Notice") in writing to the Declarant of its intention to sell or transfer
such Points. The Notice shall specify, (A) the number of Points to be sold,
(B) the price, (C) the terms for payment, and (D) the names and addresses of
the proposed transferee(s). Each offer, notice, or statement provided for in
this Bylaw 3.5(e) shall be considered given when it is personally delivered
to the person to whom it is to be given, or when it is deposited in the
United States mail, first class mail, return receipt requested, properly
addressed to such person and with all postage and other charges fully prepaid.
(ii) DECLARANT RESPONSE. The Declarant shall have first
right to purchase all of the Points offered at the price and on the terms
stated in the Notice, by giving written notice to the offering Member of its
election to purchase all the Points offered, within fifteen (15) days after
the Notice is given.
(iii) SALE. If fewer than all the Points specified by
the selling Member in the Notice are timely elected to be purchased under
subsection (ii) of this Bylaw, the offering Member may dispose of all of the
specified Points to the proposed transferee(s) within sixty (60) days after
the date of the Notice, provided that such Member shall not sell these Points
at a lower price or on terms less favorable to the selling Member than those
specified in the Notice to the Declarant. If the selling Member does not
sell or transfer all Points referred to in the Notice within the aforesaid
60-day period, the Points which are not disposed of shall become again
subject to this Bylaw 3.5(e). A sale shall be deemed to have occurred under
this Bylaw 3.5(e) whenever any Points are transferred voluntarily for
valuable consideration.
3.5(f) VALIDITY OF TRANSFER. Any sale, or purported sale, of
Points shall be null and void unless made in accordance with this Bylaw 3.5.
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4: BOARD OF DIRECTORS
4.1 POWERS AND DUTIES. Subject to the provisions of the Articles,
the Declaration, these Bylaws, and the laws of Delaware, all corporate powers
of the Club shall be exercised by or under the authority of, and the business
and affairs of the Club shall be controlled by, the Board.
4.1(a) RESPONSIBILITIES. Without prejudice to its general
powers, but subject to the same limitations, the Board shall have the power
and responsibility to perform the following duties:
(i) OFFICERS AND AGENTS. To select all officers,
agents and employees of the Club and prescribe powers and duties for them;
and to delegate authority to a managing agent to carry out duties and
obligations as set forth in a written management agreement;
(ii) MANAGEMENT. To conduct, manage and control the
affairs and business of the Club, including contracting for such insurance,
goods, services, professional management, legal and accounting services as is
required by the Declaration, Articles or these Bylaws, provided that any
management agreement (A) shall not exceed a term of three (3) years, (B)
shall be automatically renewed annually after expiration of the first term
unless renewal is denied by a majority of the Voting Power residing in
Members other than Declarant and sixty (60) days written notice is given of
the intent not to renew; and (C) may be terminated for cause by the Board at
any time, subject to binding arbitration under Club Bylaw 9.6.
(iii) RULES. To promulgate Rules regarding conduct of
Club business, behavior of members and guests, and use of the Resorts,
including, but not limited to, the following subjects: (A) length of stay;
(B) frequency of use; (C) reservations; (D) number of occupants and guests
and fees; (E) provision for the rental of Resorts by Club to non-members when
not in use by Members; (F) charges for use of specific facilities; (G)
personal conduct and behavior; (H) check-out times; (I) care and maintenance
of Units and facilities.
(iv) PLACES. To prescribe the location of the
principal office for the transaction of the business of the Club and to
designate the place for the holding of any Members meeting or Board meeting.
(v) ENFORCEMENT AND DISCIPLINE. To enforce the
Articles, Declaration, Bylaws, Rules, and any other instruments affecting
Membership, management and control of the Resorts; and to initiate and
execute disciplinary proceedings against Members for violation of the
Articles, Declaration, Bylaws or Rules, in accordance with the "Discipline"
section of these Bylaws.
(vi) PAYMENTS. To pay any taxes, assessments or
charges which are or could become a lien on Club Property; and
(vii) MAINTENANCE. To provide for maintenance of the
Resorts including all Improvements and Club personal property, except to the
extent another entity has the duty of maintenance.
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4.1(b) DISCRETIONARY POWERS. In addition to the foregoing
mandatory duties, the Board shall have the power to:
(i) REMOVE OFFICERS, agents or employees of the Club,
with or without cause;
(ii) CHANGE THE LOCATION of the principal office of
the Club;
(iii) APPOINT COMMITTEES composed of Members to assist it
in its duties; and
(iv) PRESCRIBE REASONABLE FEES for use of specific Club
property which is individual-use intensive and not
normally furnished with a Unit as part of the Common
Furnishings.
4.1(c) LIMITATION OF POWERS. The Board must obtain the
approval of a majority of a Super Quorum of the Members for taking any of the
following actions:
(i) CONTRACTS. Entering into a contract with a third
person for goods or services for the Property or the Club for a term greater
than one (1) year, except:
(A) a contract with a public utility for the
shortest possible term and at rates regulated by a public utilities
commission; or
(B) a contract for prepaid casualty and/or
liability insurance not to exceed three (3) years and which allows short rate
cancellation by the insured; or
(C) five-year or shorter contracts or leases
for the following (so long as the lessor or provider is not an entity in
which Declarant or Manager has a direct or indirect interest of ten percent
(10%) or more): (1) Common Furnishings, (2) laundry room fixtures and
equipment, (3) cable or satellite TV equipment or services, and/or (4) alarm
services or equipment;
(D) ten years or less for access to a
well-established exchange program by Members electing to participate therein;
or
(E) any contract for a term not to exceed
three (3) years that is terminable by the Club after no longer than one year
without cause, penalty or other obligation, upon ninety (90) days written
notice of termination from the Club to the other party.
(ii) COMPENSATING directors or officers other than
reimbursements for expenses incurred in pursuing the business of the Club.;
(iii) CAPITAL EXPENSES. Incurring during any fiscal
year aggregate capital expenditures in excess of five percent (5%) of the
budgeted gross expenses of the Club for that year;
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(iv) SELLING during any fiscal year property of the
Club having an aggregate fair market value in excess of five percent (5%) of
the budgeted gross expenses of the Club for that year, except for exchanging
Units or Resorts under Declaration Section 10.1 (d); or
(v) ENCUMBERING or allowing encumbrance of Club
Property to secure repayment of financial obligations. See Declaration
Section 6.10.
4.2 NUMBER. There shall be five (5) directors on the Board.
4.3 QUALIFICATION. Directors need not be Members of the Club.
4.4 ELECTION AND REMOVAL. Directors shall be chosen, hold office
and be removed as follows:
4.4(a) ELECTION. The first directors shall be those
individuals named by the incorporator, or their successors determined
pursuant to this Bylaw, who shall serve until the first annual meeting.
Thereafter, all directors whose terms expire shall be elected by written
ballot at an annual meeting of the Members. If for any reason any such
annual meeting is not held, or not all the authorized number of directors are
elected thereat, or it is necessary for the Members to fill a vacancy on the
Board, directors may be elected at any special meeting of Members held for
that purpose or by Members voting without a meeting under Bylaw 3.2(c).
4.4(b) NOMINATION. The Board shall prescribe reasonable
procedures and opportunities for nomination of directors, communication by
nominees with the Members as to qualifications and reasons for candidacy and
solicitation of votes, and for elections.
4.4(c) CUMULATIVE VOTING. Every Member entitled to vote at any
election for directors shall have the right to cumulate its votes and give
one candidate a number of votes equal to the number of directors to be
elected multiplied by the number of votes to which such Member is entitled,
or to distribute its votes on the same principle among as many candidates as
it thinks fit, provided that:
(i) To receive cumulative votes, a candidate's name
must be placed in nomination prior to the voting, and
(ii) To cast cumulative votes, a Member, or any other
Member, must have given notice, at the meeting and prior to the voting, of
its intention to cumulate its votes.
The candidates receiving the highest number of votes, up to the
number of directors to be elected, shall be elected. Except at least one (1)
director shall be elected solely by the votes of Class A Members so long as
the Declarant holds a majority of the Voting Power, or so long as there are
two classes of Membership. The ballots from Class A Members shall be
deposited and counted separately.
4.4(d) TERM OF OFFICE. Term of office for directors shall be
two years. The terms of two directors will expire in even-numbered years and
the terms of three directors will expire in odd-numbered years. Terms shall
begin at the conclusion of the meeting at which directors are elected to fill
expiring terms, and expire at the conclusion of the annual meeting
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approximately two years later at which directors are voted upon to replace
those whose terms are expiring. Except two directors elected at the first
annual meeting shall be designated to serve until the next annual meeting in
an even-numbered year, and three shall be designated to serve until the next
annual meeting in an odd-numbered year.
4.4(e) Vacancies.
(i) CAUSES. A vacancy or vacancies in the Board
shall be deemed to exist in case of the death, resignation or removal of any
director, or if the authorized number of directors be increased, or if at any
annual or special meeting of Members at which any director or directors are
to be elected, the Members fail to elect the full authorized number of
directors to be elected at that meeting, or if a vacancy is declared by the
Board for any reason permitted by law.
(ii) FILLING. Vacancies in the Board maybe filled by
a majority of the remaining directors, though less than a quorum, or by a
sole remaining director, or by the Members; provided, however, that a vacancy
on the Board created by the removal of a director by the Members can only be
filled by the Members. If the Board accepts the resignation of a director
tendered to take effect at a future time, the Board or the Members shall have
power to elect a successor, pursuant to the provisions hereof, to take office
when the resignation is to become effective. Each director so elected shall
hold office for the remainder of the term of the position to which he was
elected.
4.4(f) REMOVAL. The Board may remove a director who (i) has
been declared of unsound mind by a final court order, or (ii) has been
convicted of a felony while in office, or (iii) fails to meet any required
qualification for director which was in effect at the beginning of its
current term. Removal for any other reason must be approved by the Members;
except that unless an entire Board is removed, a director may not be removed
prior to the expiration of its term if the votes cast against removal, or not
consenting in writing to such removal, would be sufficient to elect the
director by cumulative voting at an election at which the same total number
of votes were cast and the entire number of directors authorized at the time
of the subject director's most recent election were then being elected. A
director elected solely by the votes of Members other than the Declarant
shall not be removed other than by the approval of Members other than
Declarant. No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of his term of office.
4.5 MEETINGS. A "meeting" of the Board includes any congregation
of at least one-third (1/3) of the members of the Board at the same time and
place to hear, discuss, or deliberate upon any item of business scheduled to
be heard by the Board, except those matters that may be discussed in
executive session.
4.5(a) REGULAR MEETINGS. Immediately following each annual
meeting of Members, the Board shall hold an annual regular meeting for the
purpose of organization, election of officers, and the transaction of other
business. The Board shall also hold a regular meeting approximately six (6)
months from such annual meeting, and more often if deemed necessary.
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4.5(b) SPECIAL MEETINGS. Special meetings of the Board may be
held at any time, at a place designated by the Board in accordance with these
Bylaws, upon call by the President or by any two (2) directors.
4.5(c) EMERGENCY MEETINGS. An emergency meeting of the Board
may be called by the President, or by any two members of the Board other than
the President, if there are circumstances that could not have been reasonably
foreseen which require immediate attention and possible action by the Board,
and which of necessity make it impracticable to provide notice as required by
this Bylaw 4.5.
4.5(d) NOTICE. Written notice of the time and place of Board
meetings, including notice of any special business to be considered, shall be
given to each director at least thirty (30) days for regular meetings and
fifteen (15) days for special meetings, prior to the meeting by personal
delivery, or by first-class mail, first class postage or charges prepaid,
addressed to the address as shown upon the records of the Club. Except
notice need not be given to any director who has signed a waiver of notice or
a written consent to holding the meeting.
4.5(e) MINUTES. If a Board takes any action by unanimous
written consent or at a meeting for which notice was not posted, other than
action in executive sessions or disciplinary hearings, then an explanation of
such action shall be posted at a prominent place or places within each Resort
within three (3) days after such resolution is adopted. Minutes of Board
Meetings shall be made available to the Members within thirty (30) days after
each meeting, and shall be given to any Member upon request and payment of
reasonable copy and distribution costs.
4.5(f) ATTENDANCE. Members may attend and speak at any Board
meeting, except for meetings of the Board held in executive session. A
reasonable time limit for all Members of the Club to speak to the Board shall
be established by the Board, and Members must give the Board advance notice
of what they desire to discuss. (Such notice may be included in the Club
notice to the directors.) Directors may participate in a meeting through use
of conference telephone, electronic video screen communications, or other
communications equipment. Participation in a meeting pursuant to this Bylaw
4.5(f) constitutes presence in person at that meeting if all of the following
apply:
(i) HEAR AND SPEAK. Each director participating in
the meeting can communicate with and hear all of the other directors
concurrently;
(ii) PARTICIPATE. Each director is provided the means
of participating in all matters before the Board, including the capacity to
propose, or to interpose an objection to, a specific action to be taken by
the Club; and
(iii) VERIFICATION. The Club adopts and implements
some means of verifying both of the following:
(A) IDENTIFICATION. A person communicating by
telephone, electronic video screen, or other communications equipment is a
director entitled to participate in the Board meeting; and
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(B) EXCLUSIVE. All statements, questions,
actions, or votes were made by that director and not by another person not
permitted to participate as a director.
4.5(g) EXECUTIVE SESSION. The Board may, upon approval of a
majority of a quorum of the Board, adjourn a meeting and reconvene in
executive session without Members present to discuss and vote on (i)
personnel, (ii) contracts with parties outside the Club, (iii) Member
discipline, (iv) litigation, or (v) similar matters, after first announcing
in open session the nature of all business to be considered. The Board shall
meet in executive session if requested by a Member who is subject to a fine,
penalty or other form of discipline, and such Member may attend. Matters
discussed in executive session shall be generally noted in the Minutes of
Board meetings.
4.5(h) CONSENT OF ABSENTEES. Any defects in the call, notice,
time or location of a Board meeting, shall not affect the validity of
transactions at the meeting which are otherwise valid, if a quorum is
present, and if, after the meeting, each of the directors not present signs a
written approval of the minutes thereof. All such approvals shall be made a
part of the minutes of the meeting. Nothing in this Bylaw 4.5(h) shall be
construed as requiring the consent of absentees to transactions at a properly
called, noticed and held meeting at which a quorum is present.
4.5(i) QUORUM. A majority of the authorized number of
directors shall constitute a quorum for the transaction of business. Every
act or decision done or made by a majority of the directors present at a
meeting duly held at which a quorum is present shall be regarded as the act
of the Board unless a greater number be required by law or by the Articles or
Declaration. A meeting at which a quorum is present may continue to transact
business, notwithstanding the withdrawal of directors, if any action taken is
approved by at least a majority of a quorum or such greater number as may be
required by law, the Articles, Bylaws or Declaration.
4.5(j) ADJOURNMENT. A majority of the directors present,
whether or not a quorum is present, may adjourn any Board meeting to another
time and place; provided, however, that in the absence of a quorum a majority
of the directors present at any directors' meeting, either regular or
special, may adjourn from time to time until the time fixed for the next
regular meeting of the Board. Notice of the time and place of holding an
adjourned meeting need not be given to absent directors if the time and place
be fixed at the meeting adjourned.
4.5(k) REIMBURSEMENT. The Club shall reimburse directors for
actual transportation expenses incurred and reasonable per diem payments for
attendance at regular and special meetings of the Board.
4.6 ACTION WITHOUT MEETING. Any action required or permitted by
the Board may be taken without a meeting if all the directors shall
individually or collectively consent, in writing, to such action. Such
action by written consent shall have the same force and effect as a unanimous
vote of the Board. Such written consent shall be filed with the minutes of
the proceedings of the Board.
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5: OFFICERS
5.1 ELECTION/TERM. Each officer of the Club must be a natural
person and shall be elected by the Board and shall hold office until it shall
resign, shall be removed or otherwise disqualified to serve, or its successor
shall be elected and take office.
5.2 QUALIFICATIONS. Officers, other than the President, need not
be directors or Members. One person may hold two (2) or more offices, except
those of President and Secretary.
5.3 REMOVAL/RESIGNATION. Any officer may be removed, either with
or without cause, by a majority of the Board at any regular or special
meeting of the Board. Any officer may resign at any time by giving written
notice to the Board. Any such resignation shall take effect at the date of
the receipt of such notice or at any later time specified therein, and,
unless otherwise specified therein, the acceptance of such resignation shall
not be necessary to make it effective. Removal or resignation shall not
prejudice the rights of the Club or the officer under any contract of
employment or the position on the Board of an officer who is also a director.
5.4 OFFICES. The Club shall have the following officers, and such
other officers, including one (1) or more Assistant Secretaries, as may be
appointed by the Board. The duties of officers shall be as prescribed in the
Articles, Declaration or Bylaws, or as assigned from time to time by the
Board and, as to other officers, the President:
5.4(a) PRESIDENT. The President, who shall be chosen from the
Board, shall be the chief executive officer of the Club and shall, subject to
the control of the Board, have general supervision, direction and control of
the business and officers of the Club. The President shall preside at all
meetings of the Members and of the Board of Directors.
5.4(b) VICE PRESIDENT. In the absence or disability of the
President, the Vice President shall perform all the duties of the President,
and when so acting shall have all the powers of and be subject to all the
restrictions upon the President.
5.4(c) SECRETARY. The Secretary shall keep or cause to be
kept, at the principal office, or at such other place as the Board may order,
a book of minutes of all meetings of directors and Members, or a duplicate
thereof, with the time and place of holding, whether regular or special, and,
if special, how authorized, the notice thereof given, the names of those
present at directors' meetings, the number of Memberships present or
represented at Members' meetings, and the proceedings thereof.
The Secretary shall keep or cause to be kept, in any form
permitted by law, at the principal office or such other place as the Board
may order, a Membership register, or a duplicate thereof, showing the names
of the Club Members and their addresses, the number and date of Memberships
issued, and the number and date of cancellations of Membership.
The Secretary shall give, or cause to be given, notice of all
meetings of the Members and of the Board required by these Bylaws or by law
to be given, and shall keep the seal of the Club in safe custody.
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5.4(d) CHIEF FINANCIAL OFFICER. The Chief Financial Officer
shall keep and maintain, or cause to be kept and maintained, adequate and
correct accounts of the properties and business transactions of the Club,
including accounts of its assets, liabilities, receipts, disbursements, gains
or losses. The books of account for the Club shall at all times be open to
inspection by any director.
The Chief Financial Officer shall deposit, or cause to be
deposited, all moneys and other valuables in the name of and to the credit of
the Club with such depositories as may be designated by the Board, shall
disburse, or cause to be disbursed, the funds of the Club as may be ordered
by the Board, and shall render, or cause to be rendered, to the President and
directors, whenever they request it, an account of all of its transactions as
Chief Financial Officer and of the financial condition of the Club.
6: ASSESSMENTS AND SPECIAL CHARGES.
6.1 ANNUAL ASSESSMENTS. Each year the Board shall consider the
current and future needs of the Club as to its operation, the operation and
maintenance of the Resorts in good condition and maintain any personal
property leased or owned by the Club, including reasonable reserves for
capital improvements and replacements, payment of taxes, and protecting and
promoting the common interests of the Members pursuant to the Articles,
Declaration, Bylaws and Rules, and, in light of such needs, determine the
annual budget of the Club and fix by resolution the amount of annual
assessments to be levied against the Memberships for the coming year.
6.1(a) ASSESSMENT FORMULA. Annual assessments shall be based
on the respective numbers of Points held by each Membership. The amount of
assessment per Point (i) shall be decided by the Board of Directors, and (ii)
may vary, based on the number of Points owned. Except that a Member who
joins the Club by surrendering a preexisting time share Membership in a Club
Resort pay Club assessments on the following conditions, if the preexisting
assessment for such Member is 20% or more lower than the Club assessment at
the time of conversion:
(i) REIMBURSEMENT AGREEMENT. The Club is the
beneficiary of a Reimbursement Agreement from Declarant, which requires
Declarant to pay all Club operating expenses not covered by the collection of
assessments from Members.
(ii) BEGINNING AMOUNT. The beginning annual
assessment for such new Member must be at least seventy-five percent (75%) of
what the Club assessment would be for that Member at the time of conversion.
(iii) ANNUAL INCREASES. The annual assessment for such
Member shall begin at an amount at least seventy-five percent (75%) of the
normal annual assessment for such Member, and shall increase annually so that
at the end of its fifth Use Year such Member will be paying the normal Club
annual assessment. Such increases shall be a fraction of the difference
between the normal annual assessment at the beginning of each Use Year and
the amount of such Member's actual annual assessment at the beginning of such
Use Year. The fraction shall have a numerator of one (1) and a denominator
of one (1) plus the number of years remaining in the five year phase-in.
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6.1(b) LIMITATION. No annual assessment shall be increased
more than the GREATER of the following two amounts above the annual
assessment for the immediately preceding fiscal year without the approval of
a majority of a Super Quorum of the Members: (i) ten percent (10%), or (ii)
the LESSER of twenty percent (20%) or the percentage increase in the U.S.
Consumer Price Index for All Urban Consumers as reported by the U.S.
Department of Labor, Bureau of Labor Statistics, for the calendar year
immediately preceding the year in which the increase is being made. Except
any increase in annual assessments due to an increase in real property taxes
against Units or a Resort, or an increase in Master Association assessments
at a Resort, shall be excluded from the calculation of percentage increase
for applying this limitation.
6.1(c) RESERVES. The Club shall maintain a reserve fund
adequate to cover major maintenance, major repair and/or replacement of those
properties, including personal property, for which the Club is responsible
(excluding property for which another entity has responsibility), which are
subject to major maintenance or repair or replacement on a periodic basis.
Such reserves shall be funded from the periodic payments of assessments for
reserves and shall be held in a separate account.
6.2 SPECIAL ASSESSMENTS. Special assessments maybe levied at
anytime upon determination by the Board that such assessments are necessary
for capital improvements or major expenses, repairs or acquisitions for which
no reserves have been established or for deficiencies in such reserves, or
for any purposes related to the mutual health, safety and welfare of the
Members pursuant to the Articles, Declaration, Bylaws and Rules.
6.2(a) LIMITATIONS. No special assessments shall be levied
without the approval of the Members, except in the following situations:
(i) 5%. To the extent special assessments in the
aggregate in any fiscal year do not exceed five percent (5%) of the budgeted
gross expenses for the Club for that fiscal year, except as provided in
subsections (ii) through (vii) below;
(ii) REBUILDING. For the repair or rebuilding of
Unit(s), which does not exceed ten percent (10%) of the budgeted gross
expenses for the Club for the fiscal year in which the special assessment is
imposed;
(iii) REIMBURSEMENTS. Against a Member(s) for
reimbursing the Club for costs of bringing such Member(s) into compliance
with the Governing Documents, or fines levied under Declaration Section 4.5
and Bylaw 3.4;
(iv) COURT ORDER. As required by an order of a court;
(v) SAFETY REPAIRS. As necessary to repair or
maintain a Resort or any part of it for which the Club is responsible or a
threat to personal safety is discovered, or if required by Federal, State or
local laws;
(vi) RESERVES. As required under Bylaw 7.5 (b) for
reimbursement of the reserve account; and/or
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(vii) UNEXPECTED REPAIRS. A special assessment
necessary to repair or maintain a Resort or any part of it for which the Club
is responsible that could not have been reasonably foreseen by the Board in
preparing the Pro Forma Operating Budget under Section 7.2(a) below, but only
if the Board shall first pass a resolution containing written findings as to
the necessity of such extraordinary expense and why it could not have been
reasonably foreseen in the budgeting process, which resolution shall be
distributed with the Notice of Assessment.
6.2(b) FORM OF LEVY. Special assessments shall be levied upon
the same basis as annual assessments, except special charges levied against
less than all the Members for reimbursement to the Club, fines, or remedies
for violation of the Governing Documents.
6.3 STATEMENT. The Secretary of the Club shall mail to each
Member, first class postage prepaid, at such Member's record address, a
written statement of each annual assessment or special assessment or special
charges at least thirty (30) days prior to the date such assessment or charge
shall become due and payable. Such statement shall set forth:
6.3(a) AMOUNT of the installment or payment of assessments,
fines or charges due from that Member;
6.3(b) DATE such payment or installment is due;
6.3(c) DATE such payment or installment becomes delinquent (thirty
(30) days past due);
6.3(d) WHERE and to whom payment is to be made;
6.3(e) PURPOSE for the charge or levy; and
6.3(f) DATES when late charges and interest begin to accrue (ten
(10) days past due), when Membership rights will be
suspended as to annual assessments and special assessments
(thirty (30) days past due), and when collection costs and
attorneys' fees must be paid (thirty (30) days past due).
6.4 PAYMENT. All such assessments shall be paid to the Club or its
designated agent for collection in lawful money of the United States, on or
before the date or period established by the Board pursuant to the resolution
adopted by the Board fixing the amount of such. Annual assessments shall be
paid in such periodic payments as the Board shall prescribe.
6.5 LATE CHARGES/COSTS. Any such assessment not paid within ten
(10) days of its due date, shall be subject to the following: (a) a late
charge in an amount determined by the Board, to compensate the Club generally
for the added cost of collection, plus (b) interest at a rate determined by
the Board, per annum, on any such unpaid installment, which interest shall
accrue from the tenth day after the due date. A late charge may be imposed
only once for a particular payment. A Member shall also be liable to the
Club for actual costs and attorney fees incurred in collecting assessments
not paid within thirty (30) days of when due.
6.6 SUSPENSIONS. The Club shall not transfer a Membership on its
books, or allow the exercise of any rights or privileges of Membership on
account thereof by any Member or any
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person claiming under such Member, unless and until all delinquent annual
assessments and special assessments to which such Membership is subject are
paid, provided the procedures of Bylaw 3.4 regarding "Discipline" have been
followed.
6.7 LIEN/FORECLOSURE. The Board shall enforce collection of
assessments (a) by suit at law, (b) by foreclosure of the lien rights, or (c)
by exercise of the power of sale established in the Declaration. There can
be no suit at law following foreclosure or sale under the power of the sale.
6.8 DISPOSITION OF FUNDS. The funds arising from assessments,
insofar as possible, shall be applied toward the payment of expenses pursuant
to the annual budget adopted by the Board. Excess assessments, after making
allowance for budgeted reserves for replacement, may be returned to the
Members on an equitable basis or, held in trust for future budgeted needs.
6.9 STATEMENT OF CHARGES. The Board, on not less than twenty (20)
days prior written request, shall execute, acknowledge and deliver to the
party making such request, a written statement whether or not to the
knowledge of the Club, a particular Member is in default as to its
assessments, and disclosing the amount of delinquent assessments, late
charges, attorneys fees and other penalties assessed against such Member's
Membership, and further stating the dates to which installments of
assessments, have been paid as to its Membership. Any such certificate may be
relied on by any prospective purchaser or mortgagee of the Membership, but
reliance on such certificate may not extend to any default not involving the
payment of assessments of which the signer had no actual knowledge. The Club
may charge a fee reasonably related to the cost of preparing such statement.
7: RECORDS AND REPORTS
7.1 INSPECTIONS.
7.1(a) MEMBERS. The Articles (certified by the Secretary of
State), Bylaws, Declaration, Rules, Membership register and directors roster
(including mailing addresses and telephone numbers) or duplicate Membership
register and directors roster, revised at least annually, the books of
account and minutes of proceedings of the Members, the Board and any
committees, and all other Records of the Vacation Plan and any amendments
thereto (collectively "Records") shall all be maintained in written form at
the principal office of the Club and shall be made available for inspection
and copying, upon written demand and reasonable notice, by any Member or its
duly appointed representative, at any reasonable time and for a purpose
reasonably related to its interests as a Member. The Club may restrict the
use of information from the Membership register by requiring Members to sign
a written agreement not to use or allow use of Membership information for
commercial or other purposes not reasonably related to the affairs of the
Club. The Records shall be made available for inspection at the office where
the records are maintained. Upon receipt of an authenticated written request
from a Member along with the fee prescribed by the Board to defray the costs
of reproduction, the Manager or other custodian of Records shall prepare and
transmit to the Member a copy of any and all Records requested.
7.1(b) DIRECTORS. Each director shall have the absolute right
at any reasonable time to inspect all Records and physical properties owned
or controlled by the Club, and to make copies and extracts thereof at the
expense of the Club, and subject only to signing a written
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agreement not to use or allow use of Membership information for commercial or
other purposes not reasonably related to the affairs of the Club.
7.1(c) POLICIES. The Board shall establish reasonable policies
("Records Policies") regarding notice to be given the custodian of the
Records by a Member desiring to make an inspection, times Records are
available, and payment of costs of reproduction.
7.2 ACCOUNTINGS AND REPORTS. The Board shall cause to be prepared
and distributed to the Members the following:
7.2(a) BUDGET. A pro forma operating budget, or summary
thereof, distributed not less than forty-five (45) days and not more than
sixty (60) days before the beginning of each fiscal year, containing the
following:
(i) Estimated revenue and expenses on an accrual
basis.
(ii) Only as to Club Resorts in jurisdictions where
the following is required, a summary of the reserves based upon the most
recent review or study conducted pursuant to Section 7.5(b) below, which
shall be printed in bold type and include all of the following:
(A) The current estimated replacement cost,
estimated remaining life, and estimated
useful life of each major component.
(B) As of the end of the fiscal year for which
the study is prepared:
(1) The current estimate of the amount of
cash reserves necessary to repair,
replace, restore, or maintain the
major components.
(2) The current amount of accumulated cash
reserves actually set aside to repair,
replace, restore or maintain major
components.
(C) The percentage that [the amount determined
under (B)(2)] is of [the amount determined
under (B)(1)].
(iii) A statement as to whether the Board has
determined or anticipates that the levy of one or more special assessments
will be required to repair, replace, or restore any major component or to
provide adequate reserves therefor.
(iv) A general statement setting forth the procedures
used by the Board in the calculation and establishment of reserves to defray
the costs of repair, replacement or additions to major components of the
Resorts and facilities for which the Club is responsible.
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(v) If a summary of the budget is provided, it shall
contain a notice on the front page thereof in at least 10-point bold type,
that copies of the complete budget, as summarized, are available upon request
at the business office of the Club, without charge to the Members. If
requested by mail, the Club shall mail a copy by first-class mail within 5
days, postage prepaid.
7.2(b) INITIAL STATEMENTS distributed within sixty (60) days of
an accounting date which is the last day of the month closest in time to six
(6) months from the date of the first close of the sale of a Membership,
which shall consist of the following:
(i) A BALANCE SHEET as of such accounting date; and
(ii) An OPERATING STATEMENT for the period from the
date of the first close of the sale of a Membership to said accounting date,
which operating statement shall include a schedule of assessments received or
receivable itemized by Membership number and by the name of the person or
entity assessed.
7.2(c) ANNUAL REPORT. Thereafter, within one hundred twenty
(120) days after the last day of the Club's fiscal year, an Annual Report
containing the following:
(i) A BALANCE SHEET as of the last day of the fiscal
year;
(ii) An OPERATING (INCOME) STATEMENT for the fiscal
year, including amounts (and description of property) received from Declarant
under a Reimbursement Agreement, if any;
(iii) A STATEMENT OF NET CHANGES in financial position
for the fiscal year;
(iv) A COPY OF THE REVIEW prepared under Bylaw 7.3
below;
(v) A list of the NAMES, ADDRESSES AND TELEPHONE
NUMBERS of current directors on the Board;
(vi) A description of any TRANSACTION or series of
transactions by the Club involving $40,000 or more in which a director,
officer or holder of ten percent (10%) or more of the Voting Power had a
direct or indirect financial interest, other than the sale of Memberships in
the normal course of business or performing under the Management Agreement;
(vii) A description of any INDEMNIFICATIONS or advances
aggregating more than $10,000 paid during the fiscal year to any officer or
director of the Club; and
(viii) If not prepared by an independent accountant, the
Annual Report shall be prepared by the Manager or an officer of the Club, and
shall include a CERTIFICATE by an authorized officer that the Annual Report
was prepared from the books and records of the Club without independent audit
or review.
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7.2(d) ENFORCEMENT POLICIES. Within sixty (60) days prior to
the beginning of the fiscal year, a statement of the Club's policies and
practices ("Assessment Policies") in enforcing its remedies against Members
for defaults in the payment of regular and special assessments, including the
foreclosing of liens against Memberships.
7.2(e) MINUTES. At the time that the budget required in Bylaw
7.2(a) is distributed, or at the time of any general mailing to the entire
membership of the Club, notice of their right to have copies of the minutes
of meetings of the Board, and how and where those minutes may be obtained.
7.3 REVIEW. A review of the financial statement of the Club shall
be prepared in accordance with generally accepted accounting principles by a
licensee of a State Board of Accountancy for any fiscal year in which the
gross income to the Club exceeds $75,000.
7.4 QUARTERLY REVIEW. The Board shall do the following at least
quarterly:
7.4(a) OPERATING ACCOUNT. Cause a current reconciliation of
the Club's operating accounts to be made and review the same.
7.4(b) RESERVE ACCOUNT. Cause a current reconciliation of the
Club's reserve accounts to be made and review the same.
7.4(c) RESERVE EXPENSES. Review the current year's actual
reserve revenues and expenses compared to the current year's budget.
7.4(d) ACCOUNT STATEMENT. Review the most current account
statements prepared by the financial institution where the Club has its
operating and reserve accounts.
7.4(e) INCOME. Review an income and expense statement for the
Club's operating and reserve accounts.
7.5 RESERVES. The Club shall maintain a reserve fund adequate to
cover maintenance, repair and replacement of those common elements for which
the Club is responsible, which are subject to major maintenance or repair or
replacement on a periodic basis. Such reserves shall be funded from the
regular payments of assessments.
7.5(a) WITHDRAWALS AND DISPOSITION. The Club shall not expend
reserve funds for any purpose other than the repair, restoration,
replacement, or maintenance of, or litigation involving such, major
components which the Club is responsible for and for which the reserve fund
was established. However, the Board may authorize the temporary transfer of
money from a reserve fund to the Club's general operating ftmd to meet
short-term cash-flow requirements or other expenses.
7.5(b) RESTORATION. The transferred reserve funds shall be
restored to the reserve fund within one year of the date of the initial
transfer, except that the Board may, upon making a finding supported by
documentation that a delay would be in the best interests of the Club, delay
the restoration until the time which the Board reasonably determines to be
necessary. The Board shall exercise prudent fiscal management in delaying
restoration of these funds and in restoring
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the expended funds to the reserve account, and shall, if necessary, levy a
special assessment to recover the full amount of the expended funds within
the time limits required by this Bylaw 7.5(b).
8: INSURANCE
8.1 GENERALLY. Where practicable, insurance policies shall be
blanket policies covering (i) the Club and the Resorts, to the extent the
Club may have exposure for liability or property loss, (ii) any properties
owned or administered by the Club, and (iii) activities of the Club and its
employees and agents, within or without the Resorts. Such policies may also
cover any property or activities of Declarant, located within or nearby the
Resorts, in which case the Club and Declarant shall each pay their
proportionate share of the premium and be named co-insureds. Each Member
shall be a named insured, whether named individually or as part of a group
under any policy insuring the Property and any personal property available
for use by the Members. With respect to insurance proceeds paid in
connection with a loss of Club property only, the Board shall be deemed
trustee of the interests of all Members in any insurance proceeds paid to it
under any such policies, and shall have full power to receive and to receipt
for their interest in such proceeds and to deal therewith as set forth in the
Declaration and Bylaws. The limits and coverage should be reviewed at least
every three (3) years.
Every policy of insurance obtained by the Club shall contain
(a) an express waiver, if available, of any and all rights of subrogation
against Declarant, Declarant's agents and representatives, any person, firm,
or corporation affiliated with Declarant in the Resorts or Plan, the Board
and individual members of the Board, individual officers of the Club,
Members, and their families and guests, and exchange users; (b) a
severability of interest endorsement, as applicable; and (c) a
cross-liability endorsement, as applicable. No act or omission by a Member,
unless acting in the scope of authority on behalf of the Club, will void a
policy or operate as a condition to recovery under a policy by any other
person.
8.2 POLICIES. The Board shall obtain and maintain in force at all
times the following policies of insurance:
8.2(a) FIRE AND EXTENDED COVERAGE insurance on all personal
property, Structures and Improvements, including building service equipment,
owned by the Club in the Resorts, insuring eighty percent (80%) of the
aggregate full insurable value, meaning actual replacement value, exclusive
of the cost of land, excavations, foundations and footings, from an insurance
carrier designated Class VI or better in Best's Key Rating Guide, or any
successor or similar guide. Such insurance shall insure the Club, shall
contain a deductible clause of no more than $10,000, shall contain an
inflation guard endorsement, and shall insure against loss or damage by fire,
theft and other hazards covered by the standard extended coverage
endorsement, and by sprinkler leakage, debris removal, cost of demolition,
vandalism, malicious mischief, windstorm, water damage and other risks
customarily insured against in similar projects, including temporary
replacement quarters.
8.2(b) PUBLIC LIABILITY insurance, with limits of not less than
Five Hundred Thousand Dollars ($500,000) per person and Ten Million Dollars
($10,000,000) per occurrence for death, medical payments, and personal
injury, not less than One Hundred Thousand Dollars ($100,000) for property
damage, and a deductible of not more than Five Thousand Dollars
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($5,000), insuring against liability for bodily injury, death and property
damage, including water damage, arising from the activities of the Club or
with respect to property under its jurisdiction or used for its benefit or
business, such as nonowned and hired automobiles, and for such other risks as
are customarily covered in similar programs.
Liability insurance shall name as separately protected
insureds the Declarant, the Club, the Board and the Members as a class, and
their representatives, members and employees, with respect to any liability
arising out of the maintenance or use of any Resorts or Club Property.
8.2(c) FLOOD AND EARTHQUAKE insurance in amounts and on terms
customarily carried for similar projects, if reasonably affordable.
8.2(d) WORKERS' COMPENSATION insurance to the extent necessary
to comply with any applicable laws, which shall cover the risk of all Members
as well as the Club.
8.2(e) FIDELITY BOND or bonds in a penal amount equal to at
least the maximum amount of funds of the Club over which the principal(s)
under the bond(s) may reasonably be expected to have control or access at any
time, naming the members of the Board, officers, employees, any person
responsible for handling funds, and such other persons as may be designated
by the Board as principals, and the Club as obligee, and containing waivers
of any defense based on the exclusion of persons who serve without
compensation from any definition of "employee" or a similar expression.
8.2(f) SUCH OTHER INSURANCE, including indemnity and other
bonds, as the Club Board shall deem necessary or expedient to carry out the
Club's functions as set forth in the Declaration, Articles and Bylaws.
9: GENERAL BYLAWS
9.1 PRINCIPAL OFFICE. The principal office of the Club shall be at
such specific location as may from time to time be designated by the Board.
9.2 LIABILITY OF AGENTS. No director, officer, employee, agent or
representative (collectively "agent") of the Club shall be personally liable
in any action or proceeding to any Member, person, or the Club for any
damage, loss or prejudice suffered or claimed on account of any act,
negligence, error or omission of the Club, the Board or any agent of the Club
or any committee, provided that such agent has acted in good faith and
without willful or intentional misconduct upon the basis of such information
as may be possessed by it or available to it upon reasonable inquiry.
9.3 INDEMNIFICATION. If any action or proceeding is brought
against any agent because such person is or was an agent of the Club, then
upon approval of (a) a majority of a quorum of directors who are not parties
to such proceeding; (b) the Voting Power, pursuant to Bylaw 3.2(b), excluding
those who are parties to such action; or (c) the court in which such action
is or was pending; the Club shall indemnify such person against expenses,
judgments, fines, settlements and other amounts actually and reasonably
incurred in connection with such proceeding or action, if such person acted
in good faith and in a manner such person reasonably
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believed to be in the best interests of the Club and, in the case of a
criminal proceeding, had no reasonable cause to believe the conduct of such
person was unlawful. The termination of any proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent
shall not, of itself, create a presumption that the person did not act in
good faith and in a manner which the person reasonably believed to be in the
best interests of the Club or that the person had reasonable cause to believe
that the person's conduct was unlawful, If the Club is required to incur any
cost or expense hereunder, the Club shall be entitled to levy a special
assessment for the amount so expended.
9.4 DISTRIBUTIONS. There shall be no distribution of gains,
profits or dividends to any Member except upon dissolution or upon the lawful
redemption of a Membership. Refunds of excess or erroneous assessments are
not "distributions."
9.5 DISSOLUTION. Upon dissolution and winding up of the Club, the
Board shall, after payment or making provision for the payment of all
liabilities of the Club, distribute all of the remaining assets to the
Members in the same proportion that the Points held by a Member bears to the
total outstanding Points. For purposes of this Section 9.5, Declarant shall
be deemed to hold the number of Points allocable to each Basic Membership
deemed held by it regardless of qualification or registration for sale to the
public. If it is impractical to transfer the assets to the Members, the
Board. shall appoint a trustee to own and liquidate the assets and distribute
the net proceeds thereof to the Members in the same proportion that the
Points held by a Member bears to the total outstanding Points. If the Club or
its trustee fails to liquidate the assets of the Club within one year from
the date which the Club voted as the date of dissolution, then the States in
which the assets are located will perform or cause to be performed the
liquidation for the assets in that State. Each State is hereby granted a
permanent and irrevocable power of attorney to perform such liquidation.
9.6 ARBITRATION. Any dispute as to the violation, interpretation
or application of any provision herein or of the Articles or Rules of the
Club or of any Declaration or other Governing Document or of any contract to
which the Club is a party, shall, upon written request of one party to the
dispute served on the other(s), be submitted to binding arbitration according
to the following procedures. Matters not covered below shall be determined by
reference to the commercial arbitration rules of the American Arbitration
Association.
9.6(a) FEES AND COSTS. The Declarant, if a party, shall
advance the fees necessary to initiate the arbitration, with the costs and
fees, including ongoing costs and fees, to be paid as agreed by the parties,
and if they can't agree, then as determined by the arbitrators, with the
costs and fees of the arbitration to ultimately be borne as determined by the
arbitrators.
9.6(b) ARBITRATORS. The arbitration shall be administered by a
panel of three neutral and impartial retired judges.
9.6(c) APPOINTMENT. The neutral and impartial individuals to
serve as arbitrators shall be appointed within not more than sixty (60) days
from receipt of a written request for arbitration by one party from the party
requesting the arbitration. In selecting the arbitrators Section 1297.121 of
the Code of Civil Procedure shall apply. An arbitrator may be challenged for
any of the grounds listed therein.
25
<PAGE>
9.6(d) LOCATION. The arbitration proceeding shall be held (i)
at, or as near as conveniently possible to, the subject Resort, if the
dispute pertains to a particular Resort; or (ii) at the location agreed to by
the parties to the arbitration.
9.6(e) COMMENCEMENT. The arbitration proceeding shall begin
promptly and timely in accordance with (i) the rules of the arbitration
procedure being followed, or if the rules don't so specify, then (ii) the
date agreed to by the parties to the arbitration, and if none, (iii) a date
determined by the arbitrators.
9.6(f) RULES. The arbitration shall be conducted in accordance
with rules and procedures which are reasonable and fair to the parties.
9.6(g) CONCLUSION. The arbitration shall be conducted and
concluded in a prompt and timely manner.
9.6(h) REMEDIES. The arbitrators are authorized to provide all
recognized remedies available in law or equity, other than punitive damages,
for any cause of action that is the basis of the arbitration.
9.7 AMENDMENTS. New Bylaws may be adopted, or these Bylaws may be
amended or repealed, only by the affirmative vote or written assent of.
9.7(a) BOARD. A majority of the Club Board plus:
9.7(b) MEMBERS. Voting Power of the Members as follows:
(i) EACH CLASS. At least twenty-five percent (25%)
of each Class of Voting Power, if there is more than one Class, or
(ii) ONE CLASS. If there is only one class of Voting
Power, at least twenty-five percent (25%) of Voting Power residing in Members
other than Declarant along with at least twenty-five percent (25%) of the
total Voting Power.
9.7(c) SUPER MAJORITY. Except that the votes required for an
amendment shall not be less than the affirmative votes required for action to
be taken under the clause being amended.
9.7(e) BOARD ONLY. Notwithstanding the foregoing, the Board
alone can amend the Bylaws to make technical corrections or additions, but
(A) only if notice has been given to all Club Members, of the Board meeting
where the Amendment is to be considered, with details of the Amendment and
the reasons for it, and (B) only if required by:
(i) COURT. A court of competent jurisdiction, or
(ii) AGENCY. A Federal or state agency, to comply with
consumer protection, sales regulation and/or tax exemption laws, or
26
<PAGE>
(iii) ASSESSMENT FORMULA. Changes under Bylaw 6.1(a) to
reflect actual operating experience, as long as the annual assessments do not
change more than is allowed under Bylaw 6. 1 (b).
9.8 MASTER ASSOCIATION. The Board is authorized to appoint and
authorize the Manager of the Club, one or more of the Directors of the Club,
or a Member of the Club to represent the Club at any meeting or in an
election or ballot of a Master Association to which the Property or a portion
of the Property of the Club - is subject, to represent the Club and vote in
the manner directed by the Board, or if no such direction is given, then in a
manner that such authorized agent shall, in its sole discretion, deem to be
in the best interest of the Club.
9.9 BANKRUPTCY. Any action to cause the Club to voluntarily
commence a proceeding under the Federal Bankruptcy Code or any similar state
statute shall require the affirmative vote or written consent of one hundred
percent (100%) of the Club Board plus one hundred percent (100%) of the
Voting Power. [3/99]
10: CERTIFICATION. I, the undersigned, do hereby certify:
10.1 That I am the Secretary of EPIC VACATION CLUB, a Delaware
nonprofit corporation.
10.2 That the foregoing Bylaws, comprising twenty-seven (27) pages,
including this page, constitute the Bylaws of said corporation as duly
adopted by the Incorporator on January 26, 1999, and amended by the Board of
Directors March 31, 1999, before there are any Members.
SIGNED April __, 1999.
------------------------------------------
Scott J. Egelkamp , Secretary
27
<PAGE>
RULES
OF
EPIC VACATION CLUB
ADOPTED DECEMBER, 1998
These Rules have been established for the benefit of all EPIC VACATION CLUB
("Club") Memberships, under the Vacation Ownership Plan ("Plan") as described
and established in the Governing Documents.
CONTENTS
<TABLE>
<CAPTION>
RULE TITLE PAGE
<S> <C> <C>
1: DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.1 Basic Membership . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.2 Bonus Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.3 Home Resort. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
1.4 Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
1.5 Membership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
1.6 Point. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
1.7 Point Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
1.8 Resort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
1.9 Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2: POINT USE RESERVATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.1 Booking Order. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.2 How. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.3 Advance Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
2.4 Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
2.5 Confirmation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
2.6 Cancellations/Changes. . . . . . . . . . . . . . . . . . . . . . . . . . .4
2.7 Minimum Stays. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
2.8 Maintenance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
2.9 Borrowing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
2.10 Carry-over . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
2.11 Delinquency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
3: BONUS USE RESERVATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
3.1 Reservations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
3.2 Advance Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
3.3 Maximum Stay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
3.4 Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
3.5 "Weekends" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
3.6 Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
3.7 Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
<PAGE>
4: CHECK-IN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
5: CARE OF UNITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
5.1 Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
5.2 Modifications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
5.3 Maid Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
5.4 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
5.5 Entry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
5.6 Number of Persons. . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
5.7 Signs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
5.8 Minors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
6: CONDUCT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
6.1 Animals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
6.2 Barbecuing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
6.3 Clothes Drying . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
6.4 Children . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
6.5 Controlled Substances. . . . . . . . . . . . . . . . . . . . . . . . . . .7
6.6 Personal Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
7: GUESTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
8: VIOLATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
8.1 Generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
8.2 Failure to Vacate. . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
8.3 Conflicts/Priority . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
9: AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
EXHIBIT
1.5 SEASONS
2 POINT VALUES
</TABLE>
1: DEFINITIONS. The terms used in these Rules shall have the same meanings as
set forth in the Declaration, unless the context otherwise requires. For
convenience, some of the Definitions from the Declaration are repeated here:
1.1 BASIC MEMBERSHIP; 5,000 Points, the minimum required to be held to
constitute a Membership.
1.2 BONUS USE; a specific time period of consecutive days during which a
Member has exclusive use rights in a Unit under a Reservation made according to
these Rules in addition to such Member's Point Use and for which the specified
fee is paid to the Club. The fee must bear a reasonable relationship to the
actual cost of the use. Bonus Use is time made available because of no prior
Reservation for Point Use.
2
<PAGE>
1.3 HOME RESORT. The Resort so designated on an Owner's Vacation Owner
Agreement, in which the Owners so designated have a 60-day priority Reservation
right for Point Use.
1.4 MEMBER; a Member of the Club, further described in Declaration Section
4.2; also known as "OWNER".
1.5 MEMBERSHIP; the relationship of a Member to the Club; the bundle of
rights, duties, and benefits of a Member, as further described in Declaration
Section 4.3; also known as "VACATION OWNERSHIP INTEREST."
1.6 POINT; the essential element and measure of a Membership, further
described in the Declaration Section 4.4.
1.7 POINT USE; a specific time period of consecutive days during which a
Member has exclusive use rights in a Unit under a Reservation made according to
the Rules and for which Points are surrendered.
1.8 RESORT; collectively, the Property and all Common Area and other
separately owned or rented dwelling units governed or administered under a
common plan, pursuant to the Master Declaration, if applicable, including all
Improvements constructed thereon or therein, and the Units, and the recreational
facilities and Common Area appurtenant thereto. The term "Resort" may also
refer to any and all Resorts that are dedicated to the Vacation Plan if the
context so allows or requires.
1.9 UNIT; the portion of the Property to which a Member receives exclusive
use rights when a Reservation is made under the Rules, which Unit may consist of
a single family home, condominium unit, a dwelling on a lot in a planned
development, an apartment, a hotel room or suite, a mobilehome, a house boat, a
motor home, a park trailer, a recreational vehicle, a cabin, and/or any similar
facility including human living quarters.
2: POINT USE RESERVATIONS. You have the right to occupy the Club Units on a
space available basis and to the extent allowed by the annual use of Points
which you have purchased. Point Use value for each Unit for each week of the
year will be determined by the Club Board and published to the Owners as part of
the Rules. See Exhibit 2, "Point Values."
2.1 BOOKING ORDER. Reservations will be honored on a first-received,
first-confirmed, space available basis. The Club may implement a Reservation
waiting list or establish another system to prioritize Members' reservation
requests in high-demand vacation time to ensure fair and equitable access by all
Members. Reservation of a specific time is dependent on space availability.
The Club cannot guarantee that a particular reservation request can be
fulfilled.
2.2 HOW. Reservations may be made by telephone, telegraph, e-mail, fax or
mail, but it is recommended that the telephone be used, as the Club will not be
responsible for lost papers or timeliness of bookings.
3
<PAGE>
2.3 ADVANCE NOTICE. A Reservation may be made no earlier than (a) 14
months at your Home Resort, (b) 12 months at any Resort other than your Home
Resort, and (c) in any case no later than 24 hours before the first day of
occupancy. However, a Reservation made later than 14 days before occupancy will
be competing with possible Bonus Use Reservations. Certain Minimum Stay periods
apply. See Rule 2.7 below.
2.4 NUMBER. You may hold only one Point Use Reservation at one time for
each equivalent of a Basic Membership owned. "Weekend" and "Holiday"
Reservations are limited to one Reservation per Use Year for each equivalent of
a Basic Membership owned. "Weekend" means any period which includes a Friday or
Saturday night. A Holiday is New Year's Day, Presidents' Day, Easter, Memorial
Day, July 4th , Labor Day, Veterans' Day, Thanksgiving, and Christmas.
2.5 CONFIRMATION. Your Reservation request must be confirmed by the Club
in writing or by facsimile or telegram and a Reservation number assigned before
it is valid. If you do not promptly receive a Reservation confirmation,
telephone the Reservation department of the Club. You must present such written
confirmation or, if unavailable, the confirmation number, at check-in at the
applicable Resort.
2.6 CANCELLATIONS/CHANGES. It is recommended that all changes or
cancellations be made by telephone. The Club will not be responsible for lost
papers or timeliness of cancellations when done by letter or fax. Any change or
cancellation more than 24 hours after a Reservation is made will require a
$29.00 change fee. Points for which a Reservation is cancelled within 30 days
of intended use can only be used for Reservations of 30 days or less and cannot
be carried-over.
2.7 MINIMUM STAYS. Point Use Reservations must be for 3 or 4 consecutive
nights; for any number of full weeks, or for any number of full weeks plus 3 or
4 consecutive nights, subject to the following, based on how far in advance a
Reservation is made:
<TABLE>
<CAPTION>
Minimum
Advance Notice Night Stay
-------------- ----------
<S> <C>
14 Months to 61 Days 7
60 Days to 31 Days 3
30 Days to 24 Hours 1
</TABLE>
2.8 MAINTENANCE. The Club shall reserve up to 7 nights and days, not
necessarily consecutively, during each calendar year as a maintenance period for
each Unit, when the Club shall maintain, refurbish, and repair the Unit as
necessary. No Reservations for a Unit shall be accepted during its maintenance
period.
2.9 BORROWING. You may borrow for use in your current Use Year all or
part of your Points from your next following Use Year upon the following
conditions:
4
<PAGE>
2.9.1 ASSESSMENT. You have paid the Club annual assessment for
the following year, unless Points are being borrowed only to partially complete
the last night of a Reservation period;
2.9.2 60 DAYS. The last night of a Reservation using borrowed
Points must be within 60 days of the date the Reservation is being made;
2.9.3 CARRY-OVER POINTS cannot be borrowed;
2.9.4 LIMITS PER USE YEAR. Borrowing may occur multiple times;
but only when making a Reservation and only to the extent necessary to complete
the Reservation; and in total not in excess of Points that will be allocated
directly to the following Use Year;
2.9.5 CANCELLATION of a Reservation using borrowed Points will
return the borrowed Points to the allocation for the following Use Year, and
make them subject to the last sentence of Rule 2.6, if applicable.
2.10 CARRY-OVER. Points which are unused may carry-over for use in the
following Use Year upon the following conditions:
2.10.1 WRITTEN REQUEST is received by the Club more than 4 months
before the end of the current Use Year;
2.10.2 ASSESSMENTS and charges owed to Club are current;
2.10.3 IRREVOCABLE. Points designated for carry-over cannot be
used in the current Use Year and the carry-over designation cannot be revoked;
2.10.4 ONLY ONE carry-over designation is allowed per Use Year;
2.10.5 EXPIRATION. Carry-over Points expire at the end of the year
to which they are carried over; and
2.10.6 PRIORITY. Reservations will be charged first against
current Points then against carry-over Points.
2.11 DELINQUENCY. No Reservation request will be confirmed if you are
delinquent in the payment of any amount owed to the Club or owed under your
Owner Agreement for purchase of your Membership.
3: BONUS USE RESERVATIONS. Only perpetual Members have the right to occupy
Club Units through Bonus Use, subject to the following. Guests cannot occupy a
Unit during Bonus Use without a Member present. Term Members are not entitled
to Bonus Use.
3.1 RESERVATIONS. Point Use Reservations Rules 2.1, 2.2, 2.8 and 2.11
apply.
3.2 ADVANCE NOTICE. Reservations for Bonus Use may be made no earlier
than 14 days before the first day of occupancy.
5
<PAGE>
3.3 MAXIMUM STAY. Bonus Use may be reserved for 1 night and no more than
4 consecutive nights per stay, but may be joined with Point Use Reservations to
extend the Bonus Use or the Point Use period of stay. Even if Point Use and
Bonus Use Reservations are joined, each is still subject to its own specific
Reservation rules.
3.4 NUMBER. You may hold only one Bonus Use Reservation at one time.
3.5 "WEEKENDS." You may use only one Bonus Use Reservation which includes
a Friday, Saturday or holiday night every 90 days. There is no restriction on
the number of weekday night Bonus Uses.
3.6 FEE. The fee for Bonus Use shall be established by the Board.
3.7 CANCELLATION. If you cancel a Bonus Use Reservation less than 2 days
prior to check-in you will still be charged the Bonus Use daily fee for the
day(s) reserved to the extent they cannot be charged to another Member.
4: CHECK-IN. Check-In shall be 4 p.m. or later and Check-Out shall be 11:00
a.m. or earlier. Check-In for any Reservation of one week or more must be on
Friday, Saturday or Sunday.
5: CARE OF UNITS. When you or your guests occupy a Unit, you, the Owner, are
responsible for any damage to or loss of furnishings during such occupancy,
other than normal wear and tear.
5.1 CHARGES. Any unpaid charges for service, damage or loss will be added
to your bill at Check-Out or will be billed directly to you. Nonpayment of such
charges will be cause for suspension of occupancy privileges until paid.
5.2 MODIFICATIONS. No structural changes, reorganization or removal of
furniture, wall hangings, or floor coverings or redecorating of any type within
the Units or other areas of the Property are permitted.
5.3 MAID SERVICE. Members who own at least the equivalent of two Basic
Memberships may be subject to additional maid service charges for more than one
Point Use occupancy per Use Year. Members who own less than the equivalent of
two Basic Memberships may be subject to additional maid charges for more than
one Point Use occupancy every two Use Years. Additional maid services are
available for an additional charge, which shall be payable upon departure.
5.4 INVENTORY. At Check-In you may be given an inventory list for
approval. You should report any missing items, damage or deterioration of your
assigned Unit or its Common Furnishings to the Manager as soon as possible after
checking in. During the four-hour maintenance period after each Member's period
of occupancy, a complete inventory of the furnishings and equipment allocated to
each Unit will be conducted. Any items which are missing or damaged following
your or your guest's departure will be charged to you.
6
<PAGE>
5.5 ENTRY. The Manager has a pass key to all Units. In case of
emergency, the Manager or the Manager's employee may enter your Unit, and shall
notify you, as soon as reasonably possible, of the reason for such entry.
5.6 NUMBER OF PERSONS. Rollaway beds and cribs may be available for a
nominal charge. Check with the Resort office for specific details. You must
observe the published occupancy limit for each Resort and Unit. Occupancy
limits are typically set by local fire ordinances and will be strictly enforced.
5.7 SIGNS. No sign, advertisement, notice or other lettering shall be
exhibited, displayed, inscribed, painted or affixed to or on any part of the
Property without written permission from the Club.
5.8 MINORS. No one under age eighteen (18) may occupy a Unit unless
accompanied by a person, twenty-one (21) or older.
6: CONDUCT. The Club may establish and post specific rules governing
potentially loud or disturbing activities such as musical instruments, sound
equipment, or late-evening entertainment.
6.1 ANIMALS. No animals may be brought onto the Property.
6.2 BARBECUING. Barbecuing is allowed only in designated areas.
6.3 CLOTHES DRYING. Towels, bathing suits and other items may not be left
on patios or railings so as to be visible from other Units or the Common Area.
6.4 CHILDREN. Members are responsible for the conduct of their children.
6.5 CONTROLLED SUBSTANCES. Illegal drugs cannot be brought to the
Property, and doing so will result in suspension or termination of your
Membership. Prescription drugs should be brought only in quantities required
while at the Resort.
6.6 PERSONAL PROPERTY. Neither the Manager nor the Club are responsible
for any belongings left by you or your guests. You and your guests are
responsible for removing all nonClub personal property from the Unit prior to
Check-Out. Except in areas which may be designated for such purpose by the
Manager (for example, storage lockers), neither you nor your guest may keep
personal property at the Resort other than in your assigned Unit during your
Point Use or Bonus Use.
7: GUESTS. During your reserved period you may allow others to use your
Unit, subject to these Rules. The Manager will not give access to any Unit
without written permission from the Member in whose name there is a confirmed
Reservation. If you intend for a guest to use your reserved period you must
inform the Club in writing prior to the first day of the reserved period.
Please indicate name(s) and address(es) of the guest(s). Guests will be
required to show proof of identification and sign a registration card at
Check-In.
7
<PAGE>
CHARGING GUESTS. You may charge guests for using your Point Use
Reservations, at your discretion.
8: VIOLATIONS.
8.1 GENERALLY. Your failure to abide by these Rules or the terms and
conditions of the Plan could result in temporary or permanent suspension of your
rights and privileges as an Owner.
8.2 FAILURE TO VACATE. If you or your guests fail to vacate a Unit by
Check-Out of the last day of your reserved period of occupancy, you will be
subject to the repayment of all costs incurred by the Club and other Members,
and other consequences, as described in the Declaration.
8.3 CONFLICTS/PRIORITY. If there is a conflict between the Declaration or
Bylaws, and the Rules, the Declaration, the Bylaws and then the Rules shall
control, in that order.
9: AMENDMENTS. The Club Board may amend these Rules from time to time in
accordance with the Plan, except Rules specifying the following can only be
changed by approval of the Members: (1) the advance notice required for making
or canceling Reservations, or (2) the number of Reservations for Point Use which
can be held at one time, or (3) the designations of Seasons.
8
<PAGE>
EXHIBIT 1.5
SEASONS*
<TABLE>
<CAPTION>
RESORT SEASON DATES
------ ------ ----------------------------------
1999 2000 2001 2002 2003
<S> <C> <C> <C> <C> <C> <C>
Daytona Beach
Hilton Head
Las Vegas
London Bridge
Palm Springs
Scottsdale
</TABLE>
- ------------------
* Exchange companies may designate different Season periods.
EXHIBIT 1.5
<PAGE>
EXHIBIT 2
POINT VALUES
<TABLE>
<CAPTION>
UNIT TYPE POINTS
RESORT SEASON (BEDROOMS) PER WEEK
------ ------ ---------- --------
<S> <C> <C> <C>
Daytona Beach
Hilton Head
Las Vegas
London Bridge
Palm Springs
Scottsdale
</TABLE>
EXHIBIT 2
<PAGE>
MANAGEMENT AGREEMENT
EPIC VACATION CLUB
THIS MANAGEMENT AGREEMENT is dated and effective December 1, 1998 by and
between EPIC VACATION CLUB, a Delaware nonprofit corporation ("Club"), and EPIC
RESORTS MANAGEMENT, LLC, a Delaware limited liability company ("Manager").
1: ASSERTIONS. Each of the following assertions is a material provision of
this Agreement.
1.1 PLAN DECLARATION. The Vacation Plan (the "Plan") has been created
or will be created and may be enlarged by the recording in the office of the
county recorder of each county where Property subject to the Plan is located,
a DECLARATION OF VACATION OWNERSHIP PLAN (EPIC VACATION CLUB - _________)
("Declaration"), which was originally recorded ____________, 1998, in Volume
_____, Page _______, Official Records, Riverside County, California. A
substantially similar Declaration shall be recorded in each county, and shall
describe each Resort, where the Club owns or leases real property subject to
the Plan and Club Memberships. The provisions of recorded Declarations shall
have priority over this Agreement, and inconsistent provisions among various
Declarations shall be resolved in favor of the most restrictive provision on
the Club or Declarant and/or the most favorable provision for protecting the
Members.
1.2 PROPERTY. Pursuant to the Declaration, Declarant shall convey or
transfer or cause to be conveyed or transferred each Phase of Property to the
Club at the same time the Declaration is recorded or filed as to that Phase.
1.3 CLUB. The Club is and will be responsible for ownership or leasing
and maintenance, control, operation, and management of the Property within the
Plan, and for cleaning, maintenance, furniture repair and replacement, maid
service and general care of the Property.
1.4 MANAGER. The Club is authorized to retain a professional manager and
to delegate to such manager certain of the Club's powers and responsibilities.
The Board of Directors of the Club desires to engage Manager to manage and
operate the Plan contemplated by the Declaration, and Manager desires to accept
such engagement, all on the terms and conditions set forth below and pursuant to
the Governing Documents.
1.5 GOVERNING DOCUMENTS. The Governing Documents of the Plan and Club
consist of the Declaration, the Restated Certificate of Incorporation of the
Club filed with the Delaware Secretary of State on November 30, 1998 under
Corporation No. 2955659, the Bylaws of the Association adopted December 1,
1998, and the Rules of the Club, all as may be amended from time to time.
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1.6 CONTENTS.
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1: ASSERTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 Plan Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.3 Club . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.4 Manager. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.5 Governing Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.6 Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2: ENGAGEMENT OF MANAGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
3: DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
3.1 Basic Membership . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
3.2 Bonus Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
3.3 Home Resort. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
3.4 Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
3.5 Membership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
3.6 Point. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
3.7 Point Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
3.8 Resort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
3.9 Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
3.10 Voting Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
4: TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
4.1 Initial Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
4.2 Automatic Renewal. . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
4.3 Notice of Nonrenewal . . . . . . . . . . . . . . . . . . . . . . . . . . .5
4.4 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
4.5 Resignation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
4.5(a) Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
4.5(b) New Agreement. . . . . . . . . . . . . . . . . . . . . . . . . .6
4.5(c) No New Agreement . . . . . . . . . . . . . . . . . . . . . . . .6
4.6 Return of Materials. . . . . . . . . . . . . . . . . . . . . . . . . . . .6
4.7 Audit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
5: DUTIES AND OBLIGATIONS OF MANAGER . . . . . . . . . . . . . . . . . . . . . . .6
5.1 Generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
5.1(a) Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
5.1(b) Delegation . . . . . . . . . . . . . . . . . . . . . . . . . . .7
5.1(c) Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . .7
5.1(d) Licensing. . . . . . . . . . . . . . . . . . . . . . . . . . . .7
5.2 Administrative Services. . . . . . . . . . . . . . . . . . . . . . . . . .7
5.2(a) Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
5.2(b) Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
5.2(c) Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
5.2(d) Roster . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
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5.2(e) Club Insurance . . . . . . . . . . . . . . . . . . . . . . . . .7
5.2(f) Reservations . . . . . . . . . . . . . . . . . . . . . . . . . .8
5.2(g) Exchanges. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
5.2(h) Rentals. . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
5.2(i) Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
5.2(j) Professionals. . . . . . . . . . . . . . . . . . . . . . . . . .8
5.2(k) Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . .8
5.3 Financial Services . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
5.3(a) Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
5.3(b) Special Assessments. . . . . . . . . . . . . . . . . . . . . . .9
5.3(c) Collections. . . . . . . . . . . . . . . . . . . . . . . . . . .9
5.3(d) Bank Accounts. . . . . . . . . . . . . . . . . . . . . . . . . .9
5.3(e) Disbursements. . . . . . . . . . . . . . . . . . . . . . . . . .9
5.3(f) Financial Statements . . . . . . . . . . . . . . . . . . . . . .9
5.3(g) Books and Records. . . . . . . . . . . . . . . . . . . . . . . .9
5.3(h) Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
5.3(i) Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
5.4 Physical Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.4(a) Inspections. . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.4(b) Repair and Maintenance . . . . . . . . . . . . . . . . . . . . 10
5.4(c) Check-In and Check-Out . . . . . . . . . . . . . . . . . . . . 10
5.4(d) Maid Service . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.4(e) Major Cleaning . . . . . . . . . . . . . . . . . . . . . . . . 10
5.4(f) Right of Entry . . . . . . . . . . . . . . . . . . . . . . . . 10
5.5 Manager Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.5(a) Worker's Compensation. . . . . . . . . . . . . . . . . . . . . 11
5.5(b) Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.5(c) Fidelity . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.5(d) Errors and Omissions . . . . . . . . . . . . . . . . . . . . . 11
5.6 Limitations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.6(a) Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.6(b) Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.7 Limited Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6: COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.1 Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.3 Advances and Reimbursements. . . . . . . . . . . . . . . . . . . . . . . 12
6.4 Rentals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.5 Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.6 Discounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7: GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.1 Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.2 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.3 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.4 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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7.5 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.6 Competition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.8 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.9 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.10 Hold Harmless and Indemnity. . . . . . . . . . . . . . . . . . . . . . . 13
7.11 Law Applicable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.12 Legal Effects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.13 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.13(a) Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.13(b) Club. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.14 Parties In Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.15 Reasonableness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.16 Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.17 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.18 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.19 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.20 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.21 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.22 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.23 Word Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8: SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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2: ENGAGEMENT OF MANAGER. Club hereby engages Manager as the exclusive
managing and servicing agent of the Plan contemplated by the Declaration, and
Manager hereby accepts said appointment and undertakes to perform all of the
services and responsibilities set forth herein in such capacity, to implement
and to comply with all the provisions of this Agreement and the Governing
Documents. If there is a conflict, the Declaration and Bylaws shall supersede
this Agreement.
3: DEFINITIONS. Unless the context otherwise requires, the Definitions set
forth in the Declaration and Bylaws are hereby adopted as the definitions
herein. For convenience, some of the Definitions from the Declaration are
repeated here:
3.1 BASIC MEMBERSHIP; 5,000 Points, the minimum required to be held to
constitute a Membership.
3.2 BONUS USE; a specific time period of consecutive days during which a
Member has exclusive use rights in a Unit under a Reservation made according to
the Rules in addition to such Member's Point Use and for which the specified fee
is paid to the Club. The fee must bear a reasonable relationship to the actual
cost of the use. Bonus Use is time made available because of no prior
Reservation for Point Use.
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3.3 HOME RESORT. The Resort so designated on an Owner's Vacation Owner
Agreement and in which the Owners so designated have a 60-day priority
Reservation right for Point Use.
3.4 MEMBER; a Member of the Club, further described in Declaration Section
4.2; also known as "OWNER".
3.5 MEMBERSHIP; the relationship of a Member to the Club; the bundle of
rights, duties, and benefits of a Member, as further described in Declaration
Section 4.3; also known as "VACATION OWNERSHIP INTEREST".
3.6 POINT; the essential element and measure of a Membership, further
described in Declaration Section 4.4.
3.7 POINT USE; a specific time period of consecutive days during which a
Member has exclusive use rights in a Unit under a Reservation made according to
the Rules and for which Points are surrendered.
3.8 RESORT; collectively, the Property and all Common Area and other
separately owned or rented dwelling units governed or administered under a
common plan, pursuant to the Master Declaration, if applicable, including all
Improvements constructed thereon or therein, and the Units, and the recreational
facilities and Common Area appurtenant thereto. The term "Resort" may also
refer to any and all Resorts that are dedicated to the Vacation Plan if the
context so allows or requires.
3.9 UNIT; the portion of the Property to which a Member receives exclusive
use rights when a Reservation is made under the Rules, which Unit may consist of
a single family home, condominium unit, a dwelling on a lot in a planned
development, an apartment, a hotel room or suite, a mobilehome, a house boat, a
motor home, a park trailer, a recreational vehicle, a cabin, and/or any similar
facility including human living quarters.
3.10 VOTING POWER; the aggregate votes of Members, including, if
applicable, both Classes, unless otherwise specified.
4: TERM.
4.1 INITIAL TERM. The initial term of this Agreement shall commence on
the date first written above ("effective date") and shall expire on the earlier
of (a) the first annual meeting of the Members of the Club or (b) three (3)
years after the effective date, unless terminated earlier pursuant to Paragraph
4.4 below.
4.2 AUTOMATIC RENEWAL. The term of this Agreement shall be automatically
renewed annually for one (1) year at each renewal beginning on the expiration of
the initial term under 4.1 above.
4.3 NOTICE OF NONRENEWAL. The Club may prevent automatic renewal by the
vote or written assent of a majority of the Voting Power residing in Members
other than Declarant and
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providing written notice of nonrenewal to Manager at least sixty (60) days
prior to expiration of the then current term.
4.4 TERMINATION. This Agreement may be terminated by the Board, the
Manager, or a Majority of the Members for cause at any time prior to expiration,
except that, if the cause constitutes a breach or default of this Agreement
which is capable of being cured, this Agreement shall not be terminated unless
such breach or default shall not have been cured within 30 days following
receipt by Manager of written notice of such breach or default. If Manager
shall dispute a termination by the Club pursuant to this paragraph, the dispute
may, at Manager's option, be submitted to arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association.
4.5 RESIGNATION. Manager may resign only upon the following conditions:
4.5(a) NOTICE. Manager shall have given at least 90 days prior
written notice to the Club; and
4.5(b) NEW AGREEMENT. Prior to or at the expiration of the 90-day
notice period Club shall have entered into a management agreement with another
management firm in accordance with applicable provisions of the Governing
Documents, or shall have made a determination to discharge the duties delegated
to Manager hereunder with its own personnel or otherwise; except that if the
Club shall fail to make reasonable efforts during such 90-day period, Manager's
resignation shall be effective at the end of such 90-day notice period.
4.5(c) NO NEW AGREEMENT. If the Club has made reasonable efforts
during such 90-day period to satisfy such requirements and has not entered into
a new management agreement and has not determined to discharge the duties
delegated to Manager hereunder with its own personnel or otherwise, and
thereafter continues to use reasonable efforts to fulfill such requirements, the
resignation of Manager shall not be effective until such a new management
agreement is entered into between the Club and a new management firm, or the
Club has determined to discharge such duties with its own personnel or
otherwise. Except Manager shall not be required to remain in place under this
subsection longer than one (1) year after giving notice of resignation.
4.6 RETURN OF MATERIALS. On or before the effective date of Manager's
resignation or termination or expiration of this Agreement, Manager shall give
to the successor managing agent or the Club all books and records relating to
the management and operation of the Club and the Plan and any Club proprietary
materials.
4.7 AUDIT. Any audit requested upon termination or expiration of this
Agreement shall be at the expense of the party requesting the audit.
5: DUTIES AND OBLIGATIONS OF MANAGER.
5.1 GENERALLY. Manager shall provide or cause to be provided all services
and personnel required to administer the affairs of the Club and to manage and
operate the Plan
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contemplated by the Declaration, at all times not inconsistent with the
Governing Documents, the resolutions of the Board and Members, and this
Agreement.
5.1(a) POWERS. Manager shall have all the powers and authority,
and limitations thereon, which the Club Board has, pursuant to the Governing
Documents, to the extent necessary to perform its duties and obligations
hereunder.
5.1(b) DELEGATION. Subject to Paragraph 5.6 below, Manager may
delegate its authority and responsibilities to one or more subagents or
subcontractors, whether or not affiliated with Manager, for such periods and
upon such terms as Manager deems proper, but shall remain ultimately responsible
for the performance of any such subagents.
5.1(c) EFFICIENCY. Manager will furnish its services and use its
best efforts to provide Club with economic efficiency consistent with safe and
proper management and enjoyment of the Plan by the Members and their guests.
Manager will use its best efforts to keep total operating costs within the
Budget.
5.1(d) LICENSING. Manager will obtain and maintain a real estate
broker license in all jurisdictions where such is required to carry out its
duties under this Agreement.
5.2 ADMINISTRATIVE SERVICES. Without limiting the generality of the
foregoing, Manager shall provide the following administrative services:
5.2(a) MEETINGS. Manager shall organize and attend the meetings of
the Board and of the Members, including the preparation and delivery of notices
of meetings, in accordance with the Bylaws. Manager shall prepare the agenda
for all meetings and assist in the conduct of the meetings and oversee the
election of directors and other business. Manager shall circulate minutes of
any such meeting as prepared by the secretary of the Club.
5.2(b) RECORDS. Manager shall maintain all records of the affairs
of the Club, including, but not limited to, minutes of meetings, correspondence,
financial records and modification of Bylaws and Rules and Regulations.
5.2(c) RULES. Manager shall, from time to time as necessary or
desirable, recommend to the Club that it amend or supplement the Rules.
5.2(d) ROSTER. Manager shall compile and maintain a complete and
accurate list of Members ("Roster") setting forth the name and mailing address
of each Member. Manager shall, upon written request from a Member, furnish a
copy of the Roster to the Member, provided that the Manager may (i) charge a
reasonable fee to such Member for the cost of preparation of the Roster, (ii)
require that such Member agree in writing to make no commercial use of the
Roster, and shall (iii) require compliance with any provisions of the Governing
Documents relating to Member Rosters.
5.2(e) CLUB INSURANCE. Manager shall procure and keep in force all
insurance required by the Governing Documents. Manager shall administer all
such insurance and any claims under such insurance policies.
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5.2(f) RESERVATIONS. Manager shall establish and operate a
reservation system implementing the reservation procedure set forth in the
Rules. The reservation system shall include the books and records required to
reflect reservations made, Point Use actually used, and such other information
as shall be necessary to coordinate efficiently the Plan operation.
5.2(g) EXCHANGES. Manager shall administer any exchange or
reciprocal use program with which Club may be affiliated from time to time.
5.2(h) RENTALS. Manager shall conduct a rental program on behalf
of the Club, and shall be responsible for advertising and reservations in
accordance with the Governing Documents.
5.2(i) VOTE. If specifically authorized by Club, Manager shall
represent and act and vote for the membership of the Club in all Home Owner or
Condominium Associations ("Master Associations") at Projects where the Club owns
or leases Property. Manager shall exercise such vote and representation in the
best interest of the Club, in Manager's discretion unless specifically directed
by the Club.
5.2(j) PROFESSIONALS. Manager may hire or retain on behalf of
Club, and coordinate with professionals such as attorneys, accountants and
engineers, but must obtain Board or Member approval if the cost of such
professional(s) is not included in the Budget.
5.2(k) EMPLOYEES. Manager shall select, appoint and supervise
personnel required for the performance of the Club's duties relating to the
operation, maintenance and security of the Club and Resorts, and shall supervise
the selection, hiring and work of such personnel. All personnel hired by
Manager, in every instance, shall be employees of Manager and not of the Club,
which shall have no right to supervise or direct such employees. The decision
in regard to any discharge of any personnel shall be at the discretion of
Manager. The salaries and all additional costs of employment of such personnel
shall be reimbursed to Manager and shall be an operating expense of the Club.
However, if Manager shall determine that the obligations of Manager hereunder
can be carried out by personnel serving in a hotel or resort operation at or
near a Club Resort, Manager may employ such personnel to additionally serve the
Club. Manager shall thereupon allocate the salaries and additional costs of
employment of such personnel equitably among the entities receiving the services
of the personnel. The salary and other related expenses (including, without
limitation, payroll taxes and the cost of employee benefits) or other
compensations for any employee whose work is solely for the Club, shall be an
expense of the Club though paid by Manager, and Manger shall be entitled to
reimburse itself from funds of the Club on a monthly basis for such expenditure,
which reimbursement shall be in addition to and separate from the compensation
paid to Manager under Section 6.1 below.
5.3 FINANCIAL SERVICES. Without limiting the generality of Section 5.1
above, Manager shall, subject to the supervision of the Club, provide the
following financial services:
5.3(a) BUDGET. Manager shall prepare and submit to the Board for
approval, not less than 90 days prior to the end of each succeeding Fiscal Year,
a budget meeting the requirements of the Governing Documents. Each budget
approved by the Board is called the "Budget".
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5.3(b) SPECIAL ASSESSMENTS. Manager shall determine whether a
special assessment may be required, from time to time, and, promptly upon making
a determination that a special assessment is required, shall submit a
recommendation to the Board that a special assessment be levied.
5.3(c) COLLECTIONS. To the extent that Assessments against Members
are not otherwise collected from Members, Manager shall cause the Assessments to
be collected and enforce payment of Assessments as follows:
(i) Manager shall cause to be prepared and mailed to all Members
periodic statements setting forth the amount of all Assessments then due from
each Member, pursuant to the Bylaws; and,
(ii) Manager shall cause to be prepared and mailed to any
delinquent Members a notice of delinquency and shall use every effort to collect
delinquent Assessments as provided in the Governing Documents.
5.3(d) BANK ACCOUNTS. Manager shall establish the bank accounts
provided for in the Bylaws or designated by the Board, and shall promptly
deposit or invest funds collected from Members and all other amounts collected
by Manager in connection with the performance of its duties hereunder, in the
accounts designated for such purposes. Manager shall keep accurate books and
records reflecting the amount of such accounts attributable to each Member.
5.3(e) DISBURSEMENTS. Manager shall disburse from the bank
accounts only in the payment of all expenses incurred consistent with the
applicable Budget and as otherwise permitted by the Governing Documents and
adequately substantiated in writing, in Manager's sole discretion.
5.3(f) FINANCIAL STATEMENTS. Manager shall cause a review to be
conducted and the financial statements to be prepared and copies thereof
distributed to each Member as provided in the Governing Documents.
5.3(g) BOOKS AND RECORDS. Manager shall keep and maintain or cause
to be kept and maintained full and adequate books and records reflecting the
results of operation of the Plan in accordance with generally accepted
accounting principles. The books of account and other records relating to the
operation of the Plan shall be available to the Club and its representatives at
all reasonable times for examination, inspection and transcription.
5.3(h) REPORTS. Manager shall prepare or cause to be prepared the
reports and statements required to be prepared by the Governing Documents and
such additional membership communications and reports as to subjects and
frequency as the Board reasonably requests.
5.3(i) INVENTORY. Manager shall maintain an accurate inventory of
all chattels, equipment, tools, appliances, materials and supplies purchased for
or owned or leased by the Club.
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5.4 PHYSICAL SERVICES. Without limiting the generality of Section 5.1
above, Manager shall provide the following physical services.
5.4(a) INSPECTIONS. Manager shall make regular inspections ofthe
Units and the Property and render reports and make recommendations concerning
the Property to the Board. In addition, but not by way of limitation, after
each Member has checked-out of a Unit, the written inventory of the Common
Furnishings completed by the Member who just vacated the Unit (or, if such
occupant failed to complete a written inventory, the master written inventory
for such Unit) shall be compared with an inventory actually made by the Manager
or the Manager's agent subsequent to such occupant's departure, and both such
inventories shall be retained for a period of at least one year. In addition, a
general check shall be made of the physical condition of the Unit, and any
damage thereto (other than normal wear and tear) shall be noted. If any item is
missing or there is damage to the Unit, Manager shall, at the expense of the
Club, replace the missing item(s) and/or cause the damage to be repaired and
shall charge the Member for the missing item(s) and/or the damage, if in the
judgment of Manager it is reasonable to do so.
5.4(b) REPAIR AND MAINTENANCE. Manager shall cause the Property,
the Units and the Common Furnishings to be repaired, maintained, repainted,
furnished and refurnished in a manner consistent with the reserves established
for such purposes and as required to maintain the quality standards of the Club,
and for which adequate personnel shall be available at all times.
5.4(c) CHECK-IN AND CHECK-OUT. Manager shall cause on-site
personnel to be available at all required times in order to check-in and
check-out Members and/or their Guests.
5.4(d) MAID SERVICE. Manager shall cause maid service to be
provided to the Units as prescribed by the Club.
5.4(e) MAJOR CLEANING. Manager shall cause each Unit to be
thoroughly cleaned at least annually and otherwise assure that it is in good
condition at all times during Point Use and Bonus Use.
5.4(f) RIGHT OF ENTRY. Manager, or its duly authorized agents or
employees, shall have the right, at reasonable times and upon reasonable notice,
without liability to the Member, to enter into any Unit for the purposes of
carrying out the above described duties and responsibilities, if necessary, or
(i) maintaining such Unit in good repair and sanitary condition; (ii) removing
any Improvements constructed, reconstructed, refinished, altered or maintained
in or upon such Unit in violation of the Governing Documents; (iii) restoring
such Unit as authorized by the Governing Documents; (iv) installing utilities or
conveniences for the Unit or any other Unit; or (v) otherwise enforcing or
carrying out its duties or the duties of Club under the Governing Documents and
applicable laws and ordinances. "Reasonable notice" of entry shall mean at
least forty-eight (48) hours except in emergencies.
5.5 MANAGER INSURANCE. Manager shall, at its sole cost and expense,
furnish to Club, prior to the effective date, satisfactory evidence of the
following insurance coverages (i) showing Manager as the named insured, (ii)
written by such carrier or carriers as shall be acceptable to the Club, (iii)
naming Club as an additional insured and/or providing for waiver of subrogation
as to
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Club, (iv) and providing that they are cancelable only upon 30 days prior
written notice to the secretary of the Club:
5.5(a) WORKER'S COMPENSATION. Insurance required by the Worker's
Compensation Laws of the respective states wherein Manager has employees;
5.5(b) LIABILITY. Insurance against loss or damage resulting from
(i) damage to property in the amount of at least $100,000, and (ii) injury or
death to any person or persons in the aggregate sum of at least $ 1,000,000 per
occurrence.
5.5(c) FIDELITY. A bond or insurance in favor of the Club, against
loss from monies, securities or other properties being stolen, converted or
misappropriated by Manager or any of its directors, officers or employees, in an
amount reasonably satisfactory to the regulatory authorities in states where
Memberships are marketed; and
5.5(d) ERRORS AND OMISSIONS insurance if available at reasonable
and competitive rates.
5.6 LIMITATIONS. Notwithstanding the powers of the Manager described
above in Paragraphs 5.1 through 5.5, inclusive, Manager shall not:
5.6(a) CONTRACTS. Enter into a contract on behalf of Club unless
authority has been given for such contract under the Governing Documents and is
not prohibited by the Governing Documents.
5.6(b) BUDGET. Enter into any contract in the name of the Club for
goods or services unless (a) the amount payable by the Club pursuant thereto
shall not exceed the amount for such items set forth in the then current Budget;
(b) such contract provides that the persons or entities with whom such contract
is made shall have no claim against the Club for any amount whatsoever in excess
of the amount for such item(s) as is set forth in the then current Budget; and
(c) Manager has authorized total expenditures for such item(s) during the fiscal
year not in excess of the total amount budgeted therefor.
5.7 LIMITED LIABILITY. Manager shall not be responsible for the acts,
omissions to act or conduct of any of the Members of for the breach of any of
the obligations of any of the Members.
6: COMPENSATION.
6.1 FEE. Manager shall receive a monthly compensation equal to
one-twelfth (1/12th) of fifteen percent (15%), as a Management Fee, of the
actual annual expenses and annual budgeted reserves of the Club, exclusive of
Manager's Fee. Manager shall not be entitled to extra compensation for
attendance at meetings or other extraordinary time commitments.
6.2 EXPENSES. Club shall be responsible for and pay or reimburse Manager
for all costs and expenses arising: from: (a) Ownership and management of the
Property (except direct costs of acquisition); (b) services applied directly to
Club purposes, and solely for the benefit of
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Club, such as maid service and cleaning, telephone, postage, messenger and
delivery, photocopying, and printing; (c) rent and utilities for offices used
solely for Club business; (d) supplies and equipment used solely for (Club
business, including lease or rent payments therefor; (e) Club employees or
independent contractors for services rendered exclusively to Club; (f)
insurance for Club and Club employees as required by the Governing Documents.
Manager shall be responsible for and pay from Manager's own funds all
costs and expenses arising from: (a) services which are not applied directly to
Manager's duties hereunder and are not solely for the benefit of Club; (b)
supplies, equipment and offices not used exclusively for the benefit of Club;
(c) insurance or bonding required of Manager by this Agreement; (d) advertising
of the rental of Units to non-members, but not cleaning or maintenance of Units
which are so rented; and (e) employees of Manager not employed exclusively in
service to the Club.
6.3 ADVANCES AND REIMBURSEMENTS. Manager shall not be required to perform
any act or duty hereunder involving an expenditure of money unless there shall
be sufficient funds therefor in the bank accounts of the Club. If at any time
the funds in the bank accounts of the Club are not sufficient to pay Club
obligations in a timely manner, Manager, although not obligated to do so, may
advance such surns as it deems necessary, and Manager shall thereupon be
entitled to reimburse itself from Club funds for the amount of such advances,
together with interest at the rate of 12% per year beginning fi-om and after 20
days from the date of the advance by Manager.
6.4 RENTALS. Manager shall receive monthly a Rental Fee equal to thirty
percent (30%) of the gross receipts from rental of Club Units, other than for
Point Use and Bonus Use.
6.5 PAYMENT. Manager is hereby authorized to pay itself its Management
Fee, Administrative Fee, Rental Fee, reimbursements, and authorized expenses,
out of the General Account of the Club.
6.6 DISCOUNTS. All discounts, rebates or commissions or like items shall
benefit the Club.
7: GENERAL PROVISIONS.
7.1 AGENCY. Nothing in this Agreement shall constitute a partnership
between, or joint venture by, the parties hereto, or constitute Manager an
employee of Club. Manager is an independent contractor.
7.2 AMENDMENT. No supplement, modification or amendment of this Agreement
shall be established except in a writing executed by each of the parties.
Authorization from the Club may be made by the Board of Directors alone, except
as to matters which require approval of the Members.
7.3 ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement, or the making, performance, or interpretation thereof, shall be
settled by arbitration in accordance with Club Bylaw 9.6.
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7.4 ASSIGNMENT. This Agreement is personal between or among the parties,
and neither party may sell, assign, transfer, or hypothecate any rights or
interests created under this Agreement without the express written consent of
the other party. Any purported sale, assignment, transfer, or hypothecation of
any such rights or interests of either party without such consent shall be void.
7.5 ATTORNEYS' FEES. Should any action or proceeding be commenced between
the parties hereto concerning this Agreement or their rights and duties
hereunder, the party prevailing in such action or proceeding shall be entitled
to reasonable attorneys' fees and costs in such action or proceeding, which
shall be determined by the court or arbitrator. Each party shall bear its own
costs, expenses, and attorney fees incurred in negotiating, preparing, and
signing this Agreement.
7.6 COMPETITION. Club agrees that it will not solicit, hire, employ, or
in any way obtain or retain the services of any employee of Manager, whether or
not for compensation, during the Term of this Agreement and for a period of
twelve (12) months following the date of termination or expiration of this
Agreement.
7.7 ENTIRE AGREEMENT. This Agreement and all documents executed
contemporaneously herewith and/or specifically referred to herein, such as the
Governing Documents, constitute the complete, exclusive and final expression of
the agreement between the parties pertaining to the subject matter contained in
it; it supersedes all prior and contemporaneous agreements, representations, and
understandings of the parties; and it may not be contradicted by evidence of any
prior or contemporaneous agreement.
7.8 FURTHER ASSURANCES. The parties hereto agree to perform any further
acts and to execute and deliver any further documents which may be necessary or
appropriate to carry out the purposes of this Agreement.
7.9 HEADINGS. The paragraph or section headings or titles in this
Agreement are for convenience and reference only and do not in any way modify,
interpret, or construe the intent of the parties or affect any of the provisions
of this Agreement.
7.10 HOLD HARMLESS AND INDEMNITY. Each of the parties agrees to hold the
other party harmless and indemnify the other party from and against any and all
loss, cost, damage or liability which the other party may incur or sustain as a
result of any action by such party or any breach by such party of my warranty or
representation contained in this Agreement, or for any misrepresentation or
material omission in the representations herein, or for any violation of any
applicable law, ordinance or regulation, whether by neglect or willful act and
whether by a party or its agents, contractors, or employees. Club agrees to
hold harmless and indemnify Manager from and against any and all loss, cost,
damage or liability to which Manager may be subjected by reasonable, good faith
performance of its duties hereunder. Such indemnification shall include, among
other costs, attorneys' fees and costs of appeal, settlement or defense, and the
obligation to undertake or assume the defense of any claim.
7.11 LAW APPLICABLE. This Agreement and its interpretation, construction,
and enforcement, shall be governed by the laws of the State of Delaware.
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7.12 LEGAL EFFECTS. No representation, warranty or recommendation is made
by any party or his respective agent or attorney regarding the legal sufficiency
or effect or tax consequences of any transaction contemplated under this
Agreement to any individual or specific entity, and each party acknowledges it
has been advised to submit this Agreement to independent legal counsel before
signing it. There shall be no presumption in favor of or against any party with
regard to which party arranged for initial drafting of this Agreement.
7.13 NOTICES. Any notice required or desired to be given hereunder shall
be deemed given when personally delivered or properly sent by facsimile
transmission during normal business hours, or ninety-six (96) hours after
mailing (first class postage prepaid, return receipt requested), to the parties
at the following addresses, or at such other addresses as may be given by proper
notice:
7.13(a) MANAGER: EPIC RESORTS KkNAGEMENT, LLC, a Delaware limited
liability company ("Manager"), 1150 First Avenue, Suite 900, King of Prussia, PA
19406; Facsimile Transmittal No. 610-992-1590.
WITH A COPY TO: JOHN ROGERS BURK, A LAW CORPORATION, 2140
Professional Drive, Suite 120, Roseville, California 95661; Facsimile
Transmittal No. 916-784-7075.
7.13(b) CLUB: EPIC VACATION CLUB, 1150 First Avenue, Suite 900, King
of Prussia, PA 19406; Facsimile Transmittal No. 610-992-1590.
7.14 PARTIES IN INTEREST. Unless specifically otherwise provided herein,
(a) nothing in this Agreement, whether express or implied, is intended to confer
any rights or remedies under or by reason of this Agreement on any persons other
than the parties hereto; (b) nothing in this Agreement is intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement; and (c) nothing herein shall give any third person any right of
subrogation or action over or against any party to this Agreement.
7.15 REASONABLENESS. The parties recognize that this Agreement contains
conditions, covenants, and time limitations that are reasonably required for the
protection of the business of the parties or a particular party. If any
limitation, covenant or condition shall be deemed to be unreasonable and
unenforceable by a court or arbitrator of competent jurisdiction, then this
Agreement shall thereupon be deemed to be amended to provide for modification of
such limitation, covenant and/or condition to such extent as the court or
arbitrator shall find to be reasonable.
7.16 RECORDS. Each party shall maintain books and records containing all
transactions in furtherance of this Agreement. Such books and records shall be
maintained in accordance with usual accounting methods. Either party shall have
the right, during normal business hours and upon reasonable notice, to examine
the books and records of the other party relating to this Agreement.
7.17 REMEDIES. No remedy conferred by any of the specific provisions of
this Agreement is intended to be exclusive of any other remedy given hereunder
or now or hereafter
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existing at law or in equity. The election of any one or more remedies by
any party shall not constitute a waiver of the right to pursue other
available remedies.
7.18 SEVERABILITY. If any provision of this Agreement is held to be
unenforceable, invalid or illegal by any arbitrator or court of competent
jurisdiction, such shall not affect the remainder of this Agreement.
7.19 SUCCESSORS. Subject to the paragraph regarding Assignment, this
Agreement shall be binding upon and benefit the heirs, legal representatives,
successors, and assigns of the parties.
7.20 SURVIVAL. All covenants and warranties hereunder shall survive the
recording of any document and the final payment hereunder, and some provisions
shall survive termination or expiration of this Agreement for a reasonable time
or for the specified time if necessary to carry out their reasonably intended
effect.
7.21 TIME. Time is of the essence of this Agreement, and any breach of a
time covenant or condition hereunder shall be deemed a material breach of this
Agreement. However, if any date or time referred to herein shall fall on
Saturday, Sunday, or a legal holiday, the date or time shall be extended to the
next regular business day.
7.22 WAIVER. No waiver shall be binding unless in writing and signed by
the party making the waiver. No waiver of enforcement or breach of, or
acceptance of performance after breach or partial performance under, any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver of
any other provisions, whether or not similar, nor shall any waiver constitute a
continuing waiver. Any request for a waiver must be accompanied by a full and
complete disclosure of all material facts and motivations upon which the request
is based, or any waiver granted thereunder is null and void.
7.23 WORD USAGE. Unless the context clearly otherwise requires, (a) the
plural and singular numbers or the masculine, feminine and neuter genders shall
each be deemed to include the others; (b) "shall", "will", or "agrees" are
mandatory, and "may" is permissive; (c) "or" is not exclusive; and (d)
"including" or "such as" is not limiting.
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8: SIGNATURES: The individuals applying their signatures to this Agreement
warrant that they are signing in a representative capacity for a person or
entity whose name is set forth immediately above their signature, and that they
have been expressly authorized to sign the Agreement on behalf of such person or
entity.
CLUB: MANAGER:
EPIC VACATION CLUB, a EPIC RESORTS MANAGEMENT, LLC,
Delaware nonprofit corporation a Delaware limited liability
company
By /s/ Thomas F. Flatley By /s /Thomas F. Flatley
---------------------------------- -----------------------------------
Thomas F. Flatley, President Thomas F. Flatley, Manager
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ESCROW AGREEMENT
EPIC VACATION CLUB
This Escrow Agreement is dated for reference purposes December 1, 1998 by
EPIC RESORTS, LLC, a Delaware limited liability company, on behalf of itself and
its subsidiaries and affiliates (collectively and individually "Declarant");
EPIC VACATION CLUB, a Delaware nonprofit corporation ("Club"); and INTERCITY
ESCROW SERVICES, a California corporation, ("Escrow Holder").
1: ASSERTIONS. This Agreement is made with reference to the following facts
and objectives, each of which is a material provision of this Agreement:
1.1 SERVICES. Escrow Holder agrees to provide escrow services to
Declarant and Buyers of Memberships in Club.
1.2 SCOPE. Declarant, Escrow Holder and Declarant's sales agent(s) are
bound by this Escrow Agreement, and each Buyer shall implement the Closing
Conditions in its behalf by signing the Club "Owner Individual Escrow
Instructions" substantially in the form attached hereto as Exhibit A.
1.3 DECLARANT. Declarant acquires Units in Resort Properties which it
leases or transfers to Club for use in the Vacation Ownership Plan.
1.4 CLUB. Club holds and manages the Units for the benefit of its
Owner/Members. Membership in Club includes voting rights to elect directors and
to vote directly on major Club decisions.
1.5 VACATION OWNERSHIP PLAN. Under the Club Vacation Ownership Plan
established by recorded Declarations Declarant has the exclusive right to market
and sell all Memberships in Club and to receive all the proceeds from Membership
sales.
1.6 DECLARATION. Declarant and Club have recorded or will record a
"Declaration of Vacation Ownership Plan (Epic Vacation Club)" ("Declaration")
with respect to each Resort.
1.7 ESCROW ACCOUNT. The Funds associated with the purchase of Memberships
must be placed in an approved escrow account for protection of purchasers until
certain events occur as described below, providing for the release of those
Funds to Declarant ("closing"; see Section 4.2), or the return of those funds
and documents to the purchaser ("no closing"; see Section 4.3).
1.8 TABLE OF CONTENTS.
<TABLE>
<CAPTION>
<S> <C>
1: ASSERTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Scope. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
<PAGE>
1.3 Declarant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.4 Club . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.5 Vacation Ownership Plan. . . . . . . . . . . . . . . . . . . . . . . . . .1
1.6 Declaration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.7 Escrow Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.8 Table of Contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
2: DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.1 Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.2 Close and Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.3 Closing Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.4 Contract Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.5 Declarant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.6 Declaration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.7 Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.8 Sales Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
3: HANDLING FUNDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
3.1 Deposit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
3.2 Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
3.3 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
3.4 Credit Cards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
4: CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
4.1 Closing Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
4.2 Closing Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
4.3 Release of Funds without a Closing . . . . . . . . . . . . . . . . . . . .5
4.4 Release of Buyer's Funds . . . . . . . . . . . . . . . . . . . . . . . . .6
5: GENERAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
5.1 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
5.2 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
5.3 Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
5.4 Copies of Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . .6
5.5 Cancellation Charge. . . . . . . . . . . . . . . . . . . . . . . . . . . .6
5.6 Expiration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
5.7 Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
6: SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
EXHIBITS
A Owner Individual Escrow Instructions
B Declarant's Certification
C Compensation to Escrow Company
</TABLE>
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2: DEFINITIONS. Unless the context otherwise specifies or requires, the terms
used in this Agreement shall have the meanings set forth in the recorded
Declaration.
2.1 "BUYER" means each person shown as a Buyer, Owner, Member or Purchaser
in a Sales Contract.
2.2 "CLOSE" and "CLOSING" refer to completing the sale of and authorizing
issuance of Memberships to a Buyer, and disbursing the Funds therefrom to
Declarant.
2.3 "CLOSING COSTS" means all costs and expenses of closing a sale, for
example, if applicable: (a) Escrow Holder's fees; (b) postage and handling fees;
and/or (c) filing fees.
2.4 "CONTRACT DOCUMENTS" means, for each Buyer, (a) the Buyer's Sales
Contract and "Owner Individual Escrow Instructions", substantially in the form
of Exhibit A attached hereto, and (b) any written changes to any or all of those
documents if the changes have been signed by the person whose duties are
changed.
2.5 "DECLARANT" means EPIC RESORTS, LLC, a Delaware limited liability
company, or any subsidiary or affiliate of Declarant.
2.5(a) SUBSIDIARY of Declarant is a company of which the Voting
Power is owned, directly or indirectly, and in the aggregate, more than fifty
percent (50%) by Declarant.
2.5(b) AFFILIATE of Declarant is a company which directly or
indirectly controls, is controlled by, or is under common control of, Declarant.
2.6 "DECLARATION" means the recorded "Declaration of Vacation Ownership
Plan (Epic Vacation Club)," which creates the Vacation Ownership Plan and makes
the respective Resort subject thereto, and establishes the number of Points
allocated to each Resort.
2.7 "FUNDS" means any money, creditor charge card vouchers, and negotiable
instruments received before closing from or on behalf of any Buyer or potential
Buyer.
2.8 "SALES CONTRACT" means a "Vacation Owner Agreement" by which a Buyer
purchases a Membership in Club, and which may be revised from time to time by
Declarant and Club, provided it is not inconsistent with the Declaration and
Governing Documents.
3: HANDLING FUNDS.
3.1 DEPOSIT. All Funds received before Closing from or on behalf of
Buyers or prospective Buyers in connection with the purchase of Memberships must
be promptly placed in an escrow account with Escrow Holder. Escrow Holder shall
promptly deposit all funds in a federally insured account with a federal or
state chartered financial institution.
3.2 ESCROW. Escrow Holder will accept and hold any Funds from or for the
Buyer. The Escrow Holder will handle and deliver such Funds as instructed by
the person who provided
3
<PAGE>
them and this Escrow Agreement. Escrow Holder has no responsibility for
independently verifying any provisions of any document, except as
specifically required herein.
3.3 AFFILIATES. Escrow Holder, Declarant and Club may enter into
Affiliation Escrow Agreements with licensed escrow companies in states other
than California, if necessary to facilitate closings of sales in such states
and/or if required for compliance with timeshare or real estate sales laws,
regulations and regulatory policies.
3.4 CREDIT CARDS. Payments to Declarant by credit card will be promptly
deposited in Declarant's or Declarant's Broker's Trust Account. A check will
then be drawn upon such Trust Account payable to Escrow Company for the amount
of credit card payments for transactions being transmitted to Escrow Company.
Escrow Company does not process credit card payments.
4: CLOSING.
4.1 CLOSING CONDITIONS. Closing of the escrow for the sale of Memberships
shall not occur, and the Buyer's Funds and any Contract Documents in the
possession of Escrow Holder shall not be delivered by the Escrow Holder
according to paragraph 4.2, until after all of the following have occurred:
4.1(a) CANCELLATION PERIOD. The "cancellation period" or
rescission rights period, prescribed by the state(s) having jurisdiction, has
expired.
4.1(b) NOTICE OF NO CANCELLATION. The Escrow Holder has received a
sworn Certification from Declarant, substantially in the form of Exhibit B
attached hereto, signed by its duly authorized representative, that no
cancellation notice was received during the cancellation period from the Buyer
whose funds are being released, or has been received after expiration of such
period but postmarked on a date within the cancellation period.
4.1(c) DECLARATION. Escrow Holder shall have independently
verified that a Declaration has been recorded and remains in effect against
every Epic Vacation Club Resort for which Memberships are being sold.
4.1(d) TITLE INSURANCE. Escrow Holder shall have received copies
of (i) a recorded Sublease, Lease, or Deed showing title to the leasehold or fee
of a Unit in the Club, and (ii) a Policy of Title Insurance insuring title to
each Unit or Resort-in-Club for the purchase price at the time of acquisition.
Escrow Holder must be satisfied that appropriate blanket lien protections
(subordination, release and/or nondisturbance covenants) are fully in place, and
that the statutory period for recordation of all mechanic's lien claims has
expired or the policy of title insurance includes an endorsement insuring the
Club against mechanic's liens.
4.1(e) RECEIPT. Declarant certifies to Escrow Holder that the
Receipt for Public Report, Disclosure Statement and/or other disclosure
document(s) required by the state(s) having jurisdiction, has been signed by
each Buyer listed on Declarant's Certification when such Certification is
delivered to Escrow Company, and each Receipt was dated with the date that such
disclosure document(s) were received by the Buyer.
4
<PAGE>
4.1(f) OWNER INSTRUCTIONS. Declarant has provided Escrow Holder
with Owner Escrow Instructions signed by the Buyer, substantially in the form
attached hereto as Exhibit A.
4.1(g) FUNDS. Declarant has delivered to Escrow Holder all Funds
received from a Buyer, which shall be in negotiable form and payable, endorsed
or assigned to Escrow Holder.
4.1(h) POINTS AVAILABLE. Escrow Holder shall have determined that
there are sufficient Points available in the Plan for the sales currently being
closed. Escrow Holder may rely on recorded Declarations for the allocations of
Points to respective Resorts and Units as the Resorts and Units are transferred
to the Club and dedicated to the Plan, and rely on recorded transfers of Units
to verify ownership in the Club.
4.1(i) PRECLOSING. No escrows may close initially, for specified
Home Resorts in jurisdictions which have a preclosing sales requirement, until
Memberships comprised of the required Points can close at the same time.
4.1(j) FURNISHINGS. Escrow Holder shall have received a copy of
evidence of lien free conveyance to Club and installation of Unit furnishings
for each Club Unit. Escrow Holder may rely on certification from Club with
evidence of the transfer attached.
4.2 CLOSING PROCEDURES. To close each sale, Escrow Holder will:
4.2(a) Deliver any closing statement, which may be in the form of
Exhibit One to Exhibit B attached hereto, and any other documents to, and do
anything else reasonably required by, Declarant;
4.2(b) Confirm availability of Funds deposited;
4.2(c) Pay or deliver to Declarant all sums of money received by it
under each sale, not to exceed sums actually received and collected upon by
Escrow Holder, in a time, place and manner reasonably specified by Declarant in
writing.
4.3 RELEASE OF FUNDS WITHOUT A CLOSING.
4.3(a) NOTICE OF CANCELLATION. If a Buyer gives a valid Notice of
Cancellation of the Sales Contract, under any applicable law, Declarant shall
promptly notify Escrow Company, and all of the Buyer's Funds shall be returned
directly to the Buyer within 15 days after the Notice of Cancellation is
received. The Sales Contract shall be marked "canceled" and the original
returned to the Buyer.
4.3(b) TERMINATION OF CONTRACT. If a Buyer or Declarant properly
terminates a Sales Contract pursuant to its terms, or if Declarant or a
prospective Buyer terminates a reservation agreement, all of the Buyer's Funds
shall be delivered in accordance with the Contract or reservation agreement.
The Sales Contract or reservation agreement shall be marked "canceled" and the
original returned to the Buyer.
5
<PAGE>
4.3(c) BUYER DEFAULT. If a Buyer defaults in the performance of
the Buyer's obligations under the Sales Contract, all the Buyer's Funds and
Sales Contracts shall be delivered in accordance with the Sales Contract and the
Owner Individual Escrow Instructions, substantially as attached hereto as
Exhibit A.
4.3(d) SWORN STATEMENTS. If Declarant fails to provide to Escrow
Holder, within six (6) months after expiration of the cancellation period, any
of those items described in paragraphs 4.1(b), (d), (e), (f), and (g) above,
then all of the Buyer's Funds and Sales Contracts (marked "canceled") shall be
returned to the Buyer within 15 days.
4.3(e) 1 YEAR. If an escrow does not close within one year of the
date Buyer signs its Sales Contract, all funds deposited by a non-defaulting
Buyer shall be promptly refunded upon demand by Buyer.
4.4 RELEASE OF BUYER'S FUNDS. This Escrow Agreement explicitly prohibits
the release of Buyer's Funds from escrow to or for the benefit of Declarant or
Sales Agent or anyone else (except by way of refunds to the Buyer) in any
circumstances other than those set forth in this Article 4.
5: GENERAL MATTERS.
5.1 NOTICE. Any notice from Declarant or Escrow Holder to the Buyer must
be given in writing. If more than one person is listed as the Buyer on Owner
Escrow Instructions, the notice may be given to or received from any one of
them. If the Buyer is a corporation or partnership, the notice may be delivered
or mailed to any officer or partner of the Buyer. Notices must be personally
delivered or mailed by certified or registered mail, postage prepaid, addressed
to the person at the address shown for each on the Buyer's Escrow Instructions.
Any party may change its address by sending written notice of the new address to
the other. All notices are considered given when they are deposited in the U.S.
mail, first class postage prepaid, or when personally delivered to the
recipient.
5.2 INTEREST. Any interest earned on Funds placed with the Escrow Holder
will belong to Declarant.
5.3 INDEMNITY. Declarant agrees to indemnify Escrow Holder for losses it
suffers as a result of performing its duties, except for losses due to Escrow
Holder's negligence or misconduct.
5.4 COPIES OF DOCUMENTS. Declarant will provide Escrow Holder with and/or
pay for copies of title reports, recorded Declarations, blanket liens,
nondisturbance agreements and any other documents required by Escrow Holder to
verify statements made under paragraph 4.1 of this Agreement.
5.5 CANCELLATION CHARGE. Upon a cancellation, Declarant must notify
Escrow Holder within ten (10) days of the date of deciding upon or receiving
notice of cancellation whether to deduct from the Buyer's Funds a reasonable
charge for materials received by the Buyer and not returned, and the amount of
such charge. This charge will not exceed $25.00. If deducted the
6
<PAGE>
charge will be remitted to Declarant. This can only be done in jurisdictions
where allowed, and if provided for in the Sales Contract.
5.6 EXPIRATION. This Agreement shall expire upon 30 days written notice
from one party to all other parties.
5.7 EXHIBITS. The following Exhibits are attached hereto and incorporated
herein by this reference:
A - Owner Individual Escrow Instructions
B - Declarant's Certification
C - Compensation to Escrow Company
6: SIGNATURES. The individuals applying their signatures to this Agreement
warrant that they are signing in a representative capacity for an entity whose
name is set forth immediately above their signature, and that they have been
expressly authorized to sign the Agreement on behalf of such entity.
This Agreement shall be effective upon the date of the latest signature below.
ESCROW HOLDER: DECLARANT:
Dated December 3, 1998 Dated December 1, 1998
INTERCITY ESCROW SERVICES, EPIC RESORTS, LLC, a Delaware
a California corporation limited liability company
License No. 963-5063
By /s/ Brian Hurley By /s/ Thomas F. Flatley
--------------------------------- ----------------------------------
Brian Hurley, President Thomas F. Flatley, Manager
16 Crow Canyon Ct., Ste. 200 1150 First Avenue, Suite 900
San Ramon, California 94583 King of Prussia, PA 19406
CLUB:
Dated December 1, 1998
EPIC VACATION CLUB, a
Delaware nonprofit corporation
By /s/Thomas F. Flatley
Thomas F. Flatley, President
1150 First Avenue, Suite 900
King of Prussia, PA 19406
7
<PAGE>
EXHIBIT A
TO ESCROW AGREEMENT
OWNER INDIVIDUAL
ESCROW INSTRUCTIONS
EXHIBIT A
TO ESCROW AGREEMENT
<PAGE>
OWNER INDIVIDUAL ESCROW INSTRUCTIONS
EPIC VACATION CLUB
Date _______________ Owner Number _____________ Home Resort ____________________
Points _____________ Term: Perpetual / //or _____ Years / /
To: INTERCITY ESCROW SERVICES, a California corporation ("Escrow Holder").
These Escrow Instructions are entered into by and among Club, Developer and
Owner in connection with (a) the Escrow Agreement dated December 1, 1998, by
and among Club, Developer and Escrow Holder, the material parts of which are
included below, and (b) the Vacation Owner Agreement of the same date, by and
among Club, Developer and Owner. Unless the context otherwise requires,
capitalized words herein shall have the meanings set forth in the
"Declaration of Vacation Ownership Plan (Epic Vacation Club - Palm Springs
Marquis Villas)" recorded __________, 1998, as document no. __________,
Riverside County Recorder, California.
1: CLOSING PROCEDURES. To close each sale, Escrow Holder will (a) DELIVER any
closing statement and any other documents to, and do anything else reasonably
required by Developer; (b) CONFIRM availability of Funds deposited; and (c) PAY
to Developer all the sums of money received by it in connection with this sale,
not to exceed sums actually received and collected upon by Escrow Holder.
2: CLOSING CONDITIONS. Close of escrow for the sale of a Membership shall not
occur, the Membership shall not be issued and Owner's Funds shall not be
released by Escrow Holder (collectively "Close of Escrow"), until after all of
the following have occurred:
2.1 PERIOD. The "rescission period" has expired, which will be midnight
of the third calendar day after Owner sips the Vacation Owner Agreement.
2.2 NO NOTICE. Escrow Holder has determined that no notice of rescission
has been received from Owner within the rescission period or after expiration of
such period and postmarked on a date within the rescission period.
2.3 DECLARATION. Escrow Holder shall have independently verified that a
Club Vacation Ownership Plan Declaration has been recorded and remains in effect
against every Club Resort for which Memberships are being sold.
2.4 RESORT TITLE INSURANCE. Escrow Holder shall have received a copy of a
policy of title insurance insuring fee title to each Resort in Developer,
subject to a sublease to the Club from Developer for a term of at least as long
as the term of the Memberships being sold, and Escrow Holder must be satisfied
that appropriate blanket lien protections (subordination, nondisturbance, and
release covenants) are fully in place.
2.5 POINTS. Escrow Holder shall have determined that there are sufficient
Points available in the Vacation Ownership Plan and at the Home Resort for this
sale, as allocated to the
<PAGE>
Home Resort by a recorded Declaration, and as confirmed by Club ownership or
leasehold of completed Units in adequate numbers.
2.6 MECHANIC'S LIENS. The statutory period for recordation of all
mechanic's lien claims against the Home Resort has expired or the Club is
provided a policy of title insurance with an endorsement insuring the Club
against mechanic's liens.
2.7 PRECLOSING. No escrows may close initially until Memberships
comprised of at least _________ Points can close at the same time.
2.8 FURNISHINGS. Escrow Holder shall have received a copy of evidence of
lien - free conveyance to Club and installation of Unit furnishings for each
Club Unit.
3: EXPIRATION. If this escrow does not close within one year of the date of
this Agreement, all Funds depositedby a non-defaulting Owner shall be promptly
refunded upon demand by Owner.
4: TITLE. Unless otherwise specified below, the Membership will be held as
sole and separate property by an individual Owner, and in joint tenancy by two
or more Owners. Title to the Membership shall be vested in Owner as its name
appears next to its signature, and as (check one): joint tenants ( ); community
property ( ); tenants in common ( ); sole and separate property ( );
partnership ( ); trust ( ); corporation( ); other ( ) (describe).
OWNER: Date:
-------------------
- --------------------------------------- ------------------------------------
Signature Signature
- --------------------------------------- ------------------------------------
Name(s) Address
- ------------------------------------------------------------------------------
City State Zip Phone
DEVELOPER & CLUB: ESCROW HOLDER (Received and
Date: Acknowledged) Date:
---------------------------------- ----------------
EPIC RESORTS - PALM SPRINGS INTERCITY ESCROW SERVICES, a
MARQUIS VILLAS, LLC, and California corporation
EPIC VACATION CLUB Escrow Lic. No. 963-5063
By By
------------------------------------ ---------------------------------
, Authorized Agent Brian Hurley, President
1150 First Avenue, Suite 900 16 Crow Canyon Court, Suite 200
King of Prussia, PA 19406 San Ramon, California 94583
Phone: (610) 992-0100 Phone: (925) 831-8555
2
<PAGE>
DECLARANT'S CERTIFICATION
EPIC RESORTS, LLC, a Delaware limited liability company ("Declarant")
hereby certifies as to the purchases of Memberships by any Buyers whose names
appear on the list attached hereto as Exhibit One that no cancellation notice
was received from the Buyer during the cancellation period shown in such
Buyer's Owner Individual Escrow Instructions, or has been received after
expiration of such cancellation period and postmarked on a date within the
cancellation period. If a Buyer's Funds have been deposited with Escrow
Holder and such Buyer has duly canceled, such is also certified on Exhibit
One.
Executed under penalty of perjury at __________, on ____________, 19__.
EPIC RESORTS, LLC, a Delaware limited
liability company
By
-------------------------------
, Authorized Agent
Signed and sworn to before me _________________, 19__.
------------------------------------
Notary Public
[seal]
EXHIBIT B
TO ESCROW AGREEMENT
<PAGE>
COMPENSATION TO ESCROW COMPANY
FEE SCHEDULE - EPIC VACATION CLUB
--------------------------------------------------------
MONTHLY ADMINISTRATIVE FEE
--------------------------------------------------------
INCLUDES GENERAL PROGRAM ADMINISTRATION
AND OVERSIGHT, ONGOING MONITORING OF
PROPERTY OWNERSHIP / VESTING AND LIEN
STATUS, MAINTENANCE OF CREDIT / INTERVAL $600.00
BALANCES, PROVISION OF WEEKLY CREDIT /
INTERVAL SUMMARIES, AND MONTHLY REPORT
OF OPEN ESCROWS.
--------------------------------------------------------
SALE ESCROW FEE
--------------------------------------------------------
NUMBER OF ESCROWS PER WEEKLY CLOSING Fee Per
BATCH Closed
Escrow
-------
1 TO 50 $ 35.00
51 TO 100 30.00
OVER 100 25.00
--------------------------------------------------------
MISCELLANEOUS FEES & CHARGES
--------------------------------------------------------
CANCELLATION FEE (PER ESCROW) $ 20.00
RETURNED ITEM FEE (PER CHECK) 10.00
WIRE TRANSFER FEE (PER WIRE) 15.00
--------------------------------------------------------
EXHIBIT C
TO ESCROW AGREEMENT
<PAGE>
SUBLEASE
This Sublease is dated for reference purposes December, 1998, between
[Epic Resorts LLC resort subsidiary] RESORTS - PALM SPRINGS MARQUIS VILLAS,
LLC, a Delaware limited liability company ("Sublessor") and EPIC VACATION
CLUB, a Delaware nonprofit corporation, as Sublessee ("Club").
1: ASSERTIONS. This Sublease is made with reference to the following facts
and objectives, each of which is a material provision of this Sublease:
1.1 MASTER LEASE. Sublessor is the owner of a leasehold estate under that
certain Business Lease No. PSL-235 ("Master Lease") by and between STEVEN ALLEN
RICE ("Master Lessor") and WESTERN VENTURES, INC., a Nevada Corporation, and
approved by the Area Director, Bureau of Indian Affairs, Department of Interior,
on July 25, 1980. Said Master Lease was recorded August 9, 1983 as Document No.
160117, Official Records, Riverside County, California, and was subsequently
assigned to Sublessor. This Sublease and the interest of the parties hereto and
any successor in interest of Club are subject to all of the covenants,
conditions, and restrictions set forth in the Master Lease and amendments
thereto, and to the rights and interest of the Master Lessor. The Master Lease
is hereby incorporated as a part of this Sublease as though fully set forth
herein. Sublessor desires to sublease the Premises to Club in connection with
the Club Vacation Ownership Plan.
1.2 CLUB desires to sublease the Premises from Sublessor upon the terms
and conditions stated in this Sublease for the purpose of operating a vacation
club under the Club Vacation Ownership Plan.
1.3 DECLARATION. The Vacation Ownership Plan is established by that
certain "Declaration of Vacation Ownership Plan (Epic Vacation Club -- Palm
Springs Marquis Villas)" ("Declaration") dated the same date as this Sublease
with Sublessor as the Declarant and Club as the Co-Declarant. The Declaration
shall be recorded in the County immediately following recordation of a
Memorandum of this Sublease. This Sublease should be read and applied only in
connection with the Declaration and is not effective without recordation of the
Declaration. In any inconsistency the Declaration shall prevail.
1.4 CONTENTS OF SUBLEASE.
<TABLE>
<CAPTION>
ARTICLE/SECTION TITLE PAGE
<S> <C>
1: ASSERTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 Master Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Club . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.3 Declaration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.4 Contents of Sublease . . . . . . . . . . . . . . . . . . . . . . . . . . .1
<PAGE>
ARTICLE/SECTION TITLE PAGE
2: PREMISES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.1 Description. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.2 Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
3: TERM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
4: RENT AND PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
4.1 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
4.2 Taxes and Assessments. . . . . . . . . . . . . . . . . . . . . . . . . . .3
5: USE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
5.1 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . .4
5.2 Waste; Nuisance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
5.3 Continuous Operation . . . . . . . . . . . . . . . . . . . . . . . . . . .4
5.4 Competition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
6: INDEMNITY AND EXCULPATION; INSURANCE. . . . . . . . . . . . . . . . . . . . . .4
6.1 Exculpation of Sublessor . . . . . . . . . . . . . . . . . . . . . . . . .4
6.2 Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
6.3 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
6.4 Fire Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
6.5 Casualty Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
6.6 Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
6.7 Sublessor's Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . .5
6.8 Replacement Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
6.9 Release. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
6.10 Waiver of Subrogation. . . . . . . . . . . . . . . . . . . . . . . . . . .5
6.11 Insurance Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . .6
7: DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
7.1 Club Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
7.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
7.3 Sublessor's Default. . . . . . . . . . . . . . . . . . . . . . . . . . . .7
7.4 Master Lease Default . . . . . . . . . . . . . . . . . . . . . . . . . . .8
7.5 Acquisition of Property. . . . . . . . . . . . . . . . . . . . . . . . . .9
8: CLUB'S RIGHT OF FIRST REFUSAL . . . . . . . . . . . . . . . . . . . . . . . . 10
Exclusions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
9: WAIVER OF SUBLESSOR'S LIEN. . . . . . . . . . . . . . . . . . . . . . . . . . 10
9.1 Removal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
9.2 Restoration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
10: SURRENDER OF PREMISES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
10.1 Removals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
10.2 Sublessor's Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2
<PAGE>
10.3 Failure to Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . 11
11: GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
11.1 Agency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
11.2 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
11.3 Assignment or Subletting. . . . . . . . . . . . . . . . . . . . . . . . 11
11.4 Attorney's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
11.5 Estoppel Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . 12
11.6 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
11.7 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
11.8 Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
11.9 Reasonableness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
11.10 Recording Memorandum. . . . . . . . . . . . . . . . . . . . . . . . . . 12
11.11 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
11.12 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
11.13 Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
11.14 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
11.15 Word Usage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
12: SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
EXHIBIT
A DESCRIPTION OF PREMISES
</TABLE>
- --------------------------------------------------------------------------------
2: PREMISES. Sublessor hereby Subleases to Club the Premises.
2.1 DESCRIPTION. The Premises and Property are described on Exhibit A
attached hereto.
2.2 ACCEPTANCE. Signing and acknowledging the Declaration and this
Sublease constitutes acceptance of the Premises by Club and acknowledgment that
the Premises are in good condition.
3: TERM. The Term of this Sublease shall commence on ___________, 1998 and
shall expire July 25, 2045. Sublessor and Club hereby waive termination upon
destruction of the Premises.
4: RENT AND PAYMENTS.
4.1 RENT. Consideration to Sublessor for this Sublease is set forth in
Section 1.5 of the Declaration. Sublessee shall be responsible for the rent due
under the Master Lease.
4.2 TAXES AND ASSESSMENTS. Taxes and assessments levied by local
government authorities having the power to tax shall be paid by Club.
5: USE. The use, and responsibilities for maintenance and operation, of the
Premises are governed and limited by the Declaration. However, the Club shall
have the final decision on
3
<PAGE>
issues of operating or maintaining shared facilities, subject to Section 11.7
below. Club hereby waives any rights and benefits under California Civil
Code Sections 1941 and 1942.
5.1 COMPLIANCE WITH LAWS. Club shall comply with all laws concerning the
Premises or Club's use of the Premises, including, without limitation, the
obligation at Club's cost to alter, maintain, or restore the Premises in
compliance and conformity with all laws relating to the condition, use, or
occupancy of the Premises. Except that Club shall not be obligated to comply
with any law that requires alterations, maintenance, or restoration to the
Premises unless the alterations, maintenance, or restoration are required as a
result of Club's particular and specific use of the Premises at the time.
Sublessor shall make any alterations, maintenance, or restoration to the
Premises required by such laws that Club is not obligated to make.
5.2 WASTE; NUISANCE. Club shall not use the Premises in any manner that
will constitute waste, nuisance, or unreasonable annoyance (including, without
limitation, the use of loudspeakers or sound or light apparatus that can be
heard or seen outside the Premises) to owners or occupants of adjacent
properties. Club shall not do anything on the Premises that will cause damage
to the Premises.
5.3 CONTINUOUS OPERATION. Club shall continuously use the Premises only
and exclusively for the uses specified in the Declaration.
5.4 COMPETITION. Club shall not own, operate or become financially
interested in other properties in connection with a vacation club resort or
hospitality business without the express written consent of Sublessor. The
proceeds from any such prohibited business venture by Club shall constitute
additional rent to Sublessor.
6: INDEMNITY AND EXCULPATION; INSURANCE.
6.1 EXCULPATION OF SUBLESSOR. Club waives all claims against Sublessor
for damage to person or property arising for any reason, except that Sublessor
shall be liable to Club for damage to Club directly resulting from the acts or
omissions, if there was a duty to act, of Sublessor or its authorized
representatives.
6.2 INDEMNITY. Club shall hold Sublessor harmless from, and indemnify
Sublessor for, all damages arising out of any damage to any person or property
occurring in, on, or about the Premises, to the extent such damage is not
proximately caused by Sublessor or its authorized representatives.
6.3 INSURANCE. Club at its cost shall maintain public liability and
property damage insurance as required in its Bylaws, insuring against all
liability of Club and its authorized representatives arising out of and in
connection with Club's use or occupancy of the Premises.
6.3(a) INDEMNITY. All public liability insurance and property
damage insurance shall insure performance by Club of the indemnity obligation in
Section 6.2. Sublessor and Sublessor's lenders shall be named as additional
insureds, and the policy shall contain cross-liability endorsements.
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6.3(b) INCREASES. Not more frequently than each three (3) years,
if, in the opinion of Sublessor's lender or of the insurance broker retained by
Sublessor, the amount of public liability and/or property damage insurance
coverage at that time is not adequate, Club shall increase the insurance
coverage as required by either Sublessor's lender or Sublessor's insurance
broker.
6.4 FIRE INSURANCE. Club at its own cost shall maintain on all its
personal property, fixtures, and real property improvements Subleased to it in,
on, or about the Premises, a policy of standard fire and extended coverage
insurance, with vandalism and malicious mischief endorsements, to the extent of
at least 100% of their actual full replacement value. The proceeds from any
such policy shall be used by Club as directed in the Declaration. Both parties
shall be named as insureds.
6.5 CASUALTY INSURANCE. Club at its cost shall maintain on the Premises
full coverage plate glass insurance, and earthquake and flood insurance in
amounts reasonably adequate and affordable, if available. Both parties shall be
named as insureds.
6.6 PREMIUMS. Club shall pay the premiums for maintaining the insurance
required by this Article 6. Club shall reimburse Sublessor, within 10 days
after receiving written demand, for insurance premiums paid by Sublessor for the
purpose of maintaining the insurance required from Club under this Article 6.
6.7 SUBLESSOR'S INSURANCE. Sublessor shall bear the proportionate cost
under all of the policies named above attributable to the portion of the
Property reserved by Sublessor and not Subleased to Club or over which Sublessor
has exclusive use, based on the relative portions of square feet occupied by
each party.
6.8 REPLACEMENT VALUE. The "full replacement value" of buildings and
other improvements to be insured under this Article 6 shall be determined by the
company issuing the insurance policy at the time the policy is initially
obtained. Not more frequently than once every three (3) years, either party
shall have the right to notify the other party that it elects to have the
replacement value redetermined by an insurance company. The redetermination
shall be made promptly and in accordance with the rules and practices of the
Board of Fire Underwriters, or a like board recognized and generally accepted by
the insurance company, and each party shall be promptly notified of the results
by the company. The insurance policy shall be adjusted according to the
redetermination.
6.9 RELEASE. The parties release each other, and their respective
authorized representatives, from any claims for damage to any person or to the
Premises and to the fixtures and personal property in or on the Premises that
are caused by or result from risks insured against under any insurance policies
carried by the parties and in force at the time of any such damage.
6.10 WAIVER OF SUBROGATION. Each party shall cause each insurance policy
obtained by it to provide that the insurance company waives all right of
recovery by way of subrogation against either party in connection with any
damage covered by any policy. Neither party shall be liable to the other for
any damage caused by fire or any of the risks insured against under any
insurance policy required by this Sublease. If any insurance policy cannot be
obtained with a waiver of subrogation, or is obtainable only by the payment of
an additional premium charge
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above that charged by insurance companies issuing policies without waiver of
subrogation, the party undertaking to obtain the insurance shall notify the
other party of this fact. The other party shall have a period of 10 days
after receiving the notice either to place the insurance with a company that
is reasonably satisfactory to the other party and that will carry the
insurance with a waiver of subrogation, or to agree to pay the additional
premium if such a policy is obtainable at additional cost. If the insurance
cannot be obtained or the party in whose favor a waiver of subrogation is
desired refuses to pay the additional premium charged, the other party is
relieved of the obligation to obtain a waiver of subrogation rights with
respect to the particular insurance involved.
6.11 INSURANCE CONDITIONS. All the insurance required under this Sublease
shall:
6.11(a) RATING. Be issued by insurance companies authorized to do
business in the State of California, with a financial rating of at least an A +
3A status as rated in the most recent edition of Best's Insurance Reports;
6.11(b) PRIMARY. Be issued as a primary policy;
6.11(c) NOTICE. Contain an endorsement requiring 30 days' written
notice from the insurance company to both parties and Sublessor's lender before
cancellation or change in the coverage, scope, or amount of any policy; and
6.11(d) DEPOSIT. Be evidenced by a policy, or by a certificate of
the policy, together with evidence of payment of premiums, and be deposited with
the other party at the commencement of the term, and on renewal of the policy
not less than 20 days before expiration of the term of the policy.
7: DEFAULT.
7.1 CLUB DEFAULT. The occurrence of any of the following constitutes a
default by Club:
7.1(a) RENT. Failure to pay rent or any other amount payable by
Club hereunder within ten (10) days following the due date thereof.
7.1(b) INTERFERENCE IN MARKETING. Any material interference by
Club in the marketing and sale of Memberships or Club's refusal to admit Members
sold by Sublessor, if such interference or failure continues for 5 days after
written notice has been given to Club.
7.1(c) ABANDONMENT of the Premises, which shall be assumed if Club
does not operate the Premises for 10 consecutive days.
7.1(d) BREACH. Substantial failure to perform any other material
provision of this Sublease if the failure to perform is not cured within 30 days
after notice has been given to Club. If the default cannot reasonably be cured
within 30 days, Club shall not be in default if Club begins to cure the default
within the 30-day period and diligently and in good faith continues to cure the
default.
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Notices given under this Section 7.1 shall specify the alleged default
and the applicable Sublease provisions, and shall require that Club comply with
this Sublease within the applicable period of time or quit the Premises. Such
notice shall not be deemed a forfeiture or a termination of this Sublease unless
Sublessor so elects in the notice. The purpose of the notice requirements set
forth in this Section 7.1 is to extend the notice requirements of the unlawful
detainer statutes of California.
7.2 REMEDIES. Sublessor shall have the following remedies if Club commits
a default. These remedies are not exclusive; they are cumulative and in
addition to any remedies now or later allowed by law.
7.2(a) RIGHT TO POSSESSION. Sublessor may continue this Sublease
in full force and effect, and the Sublease will continue in effect as long as
Sublessor does not terminate Club's right to possession, and Sublessor shall
have the right to continue to sell Memberships in Club pertaining to the
Premises. During the period Club is in default, Sublessor can sell Club
Memberships to the extent there are Home Resort Memberships available at the
Premises and in any event continue to advertise the Premises as available to
Members who purchase Home Resort Memberships at other resorts. If Club refuses
to accept such Members, or to allow Members from other resorts in the Club
system to make reservations at the Premises, Sublessor can elect to terminate
this Sublease, exclude the Club from the Premises and form another club which
can issue Home Resort Memberships at the Premises for the account of Sublessor.
7.2(b) TERMINATION OF RIGHT TO POSSESSION. Sublessor can terminate
Club's right to possession of the Premises at any time, by any lawful means, in
which case the Sublease shall immediately terminate and the Club shall
immediately surrender the Premises. No act by Sublessor other than giving
notice to Club shall terminate this Sublease under this Article 7. Acts of
maintenance, efforts to sell Memberships designating the Premises as the Home
Resort, or the appointment of a receiver on Sublessor's initiative to protect
Sublessor's interest under this Sublease shall not constitute a termination of
Club's right to possession.
7.2(c) RECEIVER. If Club is in default of this Sublease, Sublessor
shall have the right to have a receiver appointed to administer the financial
affairs of the Club in regard to the Premises. Neither the filing of a petition
for the appointment of a receiver nor the appointment itself shall constitute an
election by Sublessor to terminate this Sublease.
7.2(d) CURE. Sublessor, at any time after Club commits a default,
can cure the default at Club's cost. If Sublessor at any time, by reason of
Club's default, pays any sum or does any act that requires the payment of any
money, the sum paid by Sublessor shall be due immediately from Club to Sublessor
at the time the money is paid. If repaid at a later date such money shall bear
interest, at the maximum rate permitted by law to be charged, from the date the
money is paid by Sublessor until Sublessor is reimbursed by Club. Such
repayment, together with interest on it, shall constitute additional rent.
7.3 SUBLESSOR'S DEFAULT. Sublessor shall be in default of this Sublease
if it fails or refuses to perform any of its material obligations under this
Sublease if the failure to perform is not cured within 30 days after notice of
the default has been given by Club to Sublessor, or if a requested payment is
not made within the time specified for payment.
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7.3(a) CURE. If Sublessor's default cannot reasonably be cured
within 30 days, Sublessor shall not be in default if Sublessor commences to cure
the default within the 30-day period and diligently and in good faith continues
to cure the default. Club, at any time following 30 days after giving written
notice to Sublessor to cure Sublessor's default, may cure such default of
Sublessor.
7.3(b) COST. If Club, by reason of Sublessor's default, pays any
sum or does any act that requires the payment of any money, the money paid by
Club shall be due immediately from Sublessor to Club and if paid at a later date
shall bear interest at the maximum rate an individual is permitted by law to
charge from the date the money is paid by Club until Club is reimbursed by
Sublessor.
7.4 MASTER LEASE DEFAULT. The parties shall have the following rights and
obligations in the event of any default by the Sublessor herein under the Master
Lease:
7.4(a) NOTICE. In the event of any default whereby Master Lessor
may terminate the Master Lease, Master Lessor shall give written notice of the
default to Club. Said notice shall be deemed given thirty (30) days after
mailing thereof to Club, and shall grant Club a reasonable time, which shall be
no longer than sixty (60) days after said notice is deemed given, to cure or to
undertake to cure the default. Notwithstanding the foregoing, this paragraph
shall not be deemed in any way to create an obligation on the part of the Club
to cure or undertake to cure the default unless such Master Lease has been
terminated by Master Lessor, nor shall the foregoing in any way be deemed to
abrogate any of Club's obligations to Master Lessor under the Master Lease.
Club may conclusively presume that any written notification from Master Lessor
or the Bureau of Indian Affairs is valid, notwithstanding any claim by the
Sublessor hereof contesting the validity of any such default claimed or asserted
by the Master Lessor in writing to Club.
7.4(b) TERMINATION BY CLUB. Club agrees not to terminate this
Sublease by reason of any default committed by the Sublessor under the Master
Lease so long as the Master Lessor shall, within thirty (30) days after written
notice of such default is deemed given to the Club, commence and diligently
prosecute any and all of its legal and equitable remedies, other than
termination, which are available to it under the Master Lease. "Non-curable
defaults" shall mean those Master Lease defaults by the Sublessor which cannot
be cured by the mere payment of money prior to termination thereof.
7.4(c) CREDIT TO CLUB. In the event of any curable monetary
default for which Club makes any payment or cures any monetary defaults owing by
the Sublesssor to the Master Lessor, Sublessor shall credit Club for any such
payments as though payment had been made directly to the Sublessor under this
Sublease.
7.4(d) SUCCESSION. Should Master Lessor assert that the Master
Lease has been tenninated by any default, and shall so notify Club in writing,
the Master Lessor shall automatically, without the execution of further
instruments by Master Lessor or by the Club, succeed to the interest of the
Sublessor under this Sublease for the remaining term (including any extensions
or renewals thereof) upon the same terms and conditions and with the same force
and effect as if Master Lessor were the Sublessor under this Sublease, and Club
hereby agrees to attorn to the Master Lessor as its Landlord, such attornment to
be effective and self operative
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immediately upon Master Lessor succeeding to the interest of the Sublessor
under this Sublease. The rights and obligation of the Club and the Master
Lessor upon such attornment shall, to the extent of the then remaining
balance of the term of this Sublease (including any renewals or extensions
thereof), be the same as now set forth in this Sublease, including all the
terms, covenants and agreements herein to the effect that the Master Lessor
shall be bound to the Sublease under all of the terms of the Sublease which
are binding on Sublessor hereunder, and Club shall have the same remedies
against the Master Lessor for the breach of any agreement, covenant, or
condition contained in this Sublease that Club might have under the Sublease
against Sublessor. However, Master Lessor shall not be liable for any act or
omission of the Sublessor under this Sublease, or be subject to any offsets
or defenses which the Club might have against the Sublessor, or be charged
with any rent which Club paid to Sublessor under this Sublease for more than
the last month in which the Master Lessor has given notice to Club that
Master Lessor has succeeded to the interest of the Sublessor. In no event
shall Club be liable to Master Lessor for any default of the Sublessor or for
any act or omission of Sublessor nor shall Club be subject to or liable for
any claim, offset, or defense which Master Lessor may at any time have
against Sublessor under said Master Lease or be bound at any time to pay any
rent or perform any covenant owing to Master Lessor under or on account of
the Master Lease.
7.4(e) RENT. Club shall not be obligated to pay rent to the Master
Lessor unless and until Club receives written notice from Master Lessor that
Master Lessor has succeeded to the interest of Sublessor under this Sublease.
7.4(f) NOTIFICATION. Club may conclusively presume that any
written notification from Master Lessor or the Bureau of Indian Affairs is
valid, notwithstanding any claim by Sublessor contesting the validity of any
such default claimed or asserted by the Master Lessor in writing to Club.
7.4(g) AMENDMENT. Master Lessor shall not be bound by any
amendments or modifications to this Sublease, and Club shall not be bound by any
amendments or modifications to the Master Lease, which are made subsequent to
the execution of this Sublease, unless such amendments or modifications have
been previously approved by Master Lessor or Club, respectively, in writing.
7.5 ACQUISITION OF PROPERTY. If sublessor or any other person (an
"Acquiring Party") acquires the Premises or any portion thereof or interest
therein through foreclosure, deed in lieu of foreclosure, termination of lease
or other means by, through or under this Sublease ("Property Transfer Events"):
7.5(a) NONDISTURBANCE. The Acquiring Party shall not disturb or
impair the use rights, interests and recreation benefits, with respect to the
Premises so acquired, of Club Members who are not in default under their
purchase obligations and their obligations to the Club pertaining to the
Premises or any portion thereof, as described in the Declaration and the
Governing Documents, including, without limitation, Club Members who timely cure
defaults which arise before or after a Property Transfer Event. Without
limiting the foregoing, the term "Club Members" shall mean and include those
persons or entities who acquired Memberships in any way, including for example
and without limitation, parties who purchased Memberships (a) directly from the
Club or the Declarant, (b) from a holder of a Membership Contract evidencing the
obligation of a purchaser of a Membership to pay the balance of the purchase
price for that
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Membership (a "Membership Contract" who acquired title to the Membership
through foreclosure, conveyance in lieu of foreclosure, or other means
pursuant to rights of the holder under the Membership Contract ("Membership
Transfer Event"), (c) in a Membership Transfer Event, or (d) from any other
purchaser who acquired title in a Membership Transfer Event.
7.5(b) Not Lost to Use. The property so acquired shall not be
considered "lost to use" for purposes of 'Section 4.4(c) of the Declaration.
7.5(c) TENANCY. The Acquiring Party shall honor all obligations of
Club as tenant under any valid and existing lease for the Premises to the same
extent as if the Club were still the tenant.
7.5(d) REPLACEMENT PROCEEDS. Condemnation and/or damage insurance
proceeds shall be divided between the Acquiring Party and the Club as provided
in the Declaration notwithstanding anything in this Agreement or any Security
Document to the contrary, as though the Acquiring Party were the Declarant with
respect to the Premises.
7.5(e) SUBORDINATION. The interest of the Acquiring Party will
be subject and subordinate to the "Declaration of Vacation Ownership Plan
(Epic Resorts - _____________)" dated ________________, _____ and recorded
______________, _____ in Volume ___ at Page _____, Document No. ____,
Official Records, __________ County, ________ ("Declaration").
8: CLUB'S RIGHT OF FIRST REFUSAL. If Sublessor determines to sublease the
remainder of the Property, or any part thereof, to someone other than Club,
Sublessor shall notify Club of the terms on which Sublessor will be willing to
sublease. If Club, within 30 days after receipt of Sublessor's notice, notifies
Sublessor in writing of Club's agreement to sublease the Property or such part
of the Property on the terms stated in Sublessor's notice, Sublessor shall
sublease the Property or such part of the Property to Club on the terms stated
in the notice. If Club does not indicate its agreement within said 30 days,
Sublessor thereafter shall have the right to sublease the Property or such part
of the Property to a third party on the same terms stated in the notice. If
Sublessor does not sublease the Property or such part of the Property within 90
days, any further transaction shall be deemed a new determination by Sublessor
to sublease the Property or such part of the Property, and the process under
this Article 8 shall begin anew.
EXCLUSIONS. Club's right of first refusal shall not apply to a transfer
among any of those persons who constitute Sublessor or principals of Sublessor
and the blood relatives of any of those persons, either outright or in trust, or
to a legal entity wherein the majority in financial or beneficial interest is
held by all or some of those persons who constitute Sublessor or principals in
Sublessor.
9: WAIVER OF SUBLESSOR'S LIEN. Sublessor shall, within five (5) days after
written demand from Club, execute and deliver any document required by any
supplier, lessor or lender in connection with the installation in the Premises
of Club's personal property or Club's fixtures, in which document Sublessor
waives any rights it may have or acquire with respect to that property, if the
supplier, lessor or lender agrees in writing that:
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9.1 REMOVAL. It will remove that property from the Premises before the
expiration of this Sublease or within 30 days after termination of this
Sublease, and if it does not so remove the property, it shall have waived any
rights it may have had to the property; and
9.2 RESTORATION. It will make whatever restoration to the Premises is
necessary after the removal to restore the Premises to its original condition,
reasonable wear and tear excepted.
10: SURRENDER OF PREMISES.
10.1 REMOVALS. On expiration or 10 days after termination of this
Sublease, Club shall surrender to Sublessor the Premises and all fixtures,
improvements and alterations in good condition (except for reasonable wear and
tear), except for property or alterations that Club has the right to remove or
is obligated to remove. Club shall perform all restoration necessary to restore
the Premises to its original condition after such removals, reasonable wear and
tear excepted.
10.2 SUBLESSOR'S REMEDIES. Sublessor can elect to retain or dispose of in
any manner any alterations or Club's personal property that Club does not remove
from the Premises on expiration or termination of the Sublease as allowed or
required by this Sublease, by giving at least 10 days' notice to Club. Title to
any such alterations or Club's personal property that Sublessor elects to retain
or dispose of on expiration of the 10-day period shall vest in Sublessor. Club
waives all claims against Sublessor for any damage to Club resulting from
Sublessor's retention or disposition of any such alterations or Club's personal
property. Club shall be liable to Sublessor for Sublessor's costs for storing,
removing, and disposing of any alterations or Club's personal property.
10.3 FAILURE TO SURRENDER. If Club falls to surrender the Premises to
Sublessor on expiration or 10 days after termination of this Sublease as
required by this Article 10, Club shall hold Sublessor harmless from all damages
resulting from Club's failure to surrender the Premises, including, without
limitation, claims made by a succeeding tenant or purchaser.
11: GENERAL PROVISIONS
11.1 AGENCY. Nothing in this Sublease shall be construed as constituting a
partnership between, or joint venture by, the parties hereto, or constitute
either party the agent of the other.
11.2 AMENDMENT. No supplement, modification or amendment of this Sublease
shall be established by course of dealing or by any method except in a writing
signed by each of the parties.
11.3 ASSIGNMENT OR SUBLETTING. Club shall not voluntarily assign or
encumber its interest in this Sublease or in the Premises, or sublease all or
any part of the Premises, or allow any other person or entity (except Club's
Members and authorized representatives and users) to occupy or use all or any
part of the Premises, without Sublessor's reasonable consent. Any assignment,
encumbrance, or sublease without Sublessor's consent shall be voidable and, at
Sublessor's election, shall constitute default. No consent under this Section
shall constitute a further waiver of the provisions of this Section.
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### MISSING TEXT ###
11.4 ATTORNEY'S FEES.
11.5 ESTOPPEL CERTIFICATE.
11.6 FURTHER ASSURANCES.
11.7 ARBITRATION.
11.8 NOTICE.
11.9 REASONABLENESS.
11.10 RECORDING MEMORANDUM.
11.11 RECORDS.
11.12 SEVERABILITY.
11.13 TIME.
11.14 WAIVER.
11.15 WORD USAGE.
12: SIGNATURES. The individuals applying their signatures to this Sublease
warrant that they are signing in a representative capacity for a person or
entity whose name is set forth immediately above the signature, and that they
have been expressly authorized to sign this Sublease on behalf of such person or
entity.
Signed on the date first above written.
SUBLESSOR: CLUB:
EPIC RESORTS - PALM SPRINGS EPIC VACATION CLUB, a Delaware
MARQUIS VILLAS, LLC, a Delaware nonprofit corporation
limited liability company
By By
------------------------------- -------------------------------------
Thomas F. Flatley, Manger Thomas F. Flatley, President
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State of )
) ss.
County of )
On _____________, 1998 before me __________________, a Notary Public,
personally appeared THOMAS F. FLATLEY,
[Check one]:
[ ] personally known to me
[ ] proved to me on the basis of satisfactory evidence
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity, and
that by his signature on the instrument the person, or the entity upon behalf of
which the person acted, executed the instrument.
WITNESS my hand and official seal.
Signature
-------------------------------
[Seal]
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EXHIBIT A
DESCRIPTION OF PREMISES
Condominiums 107, 109, 110, 111 and 112, inclusive, as set forth on that
certain plan entitled "Condominium Plan for Tract 16544" ("Plan") consisting of
five (5) sheets recorded on December 17, 1984 as Instrument number 275194, and
re-recorded on March 20, 1985, as Instrument number 57082, Riverside County
Records, located on:
Lot 1 and Lots A and B of "Tract No. 16544" shown on the map filed July 24,
1984 in Book 143 of Tract Maps, Pages 39-40, Riverside County Records,
California.
EXHIBIT A
TO SUBLEASE
<PAGE>
VACATION PLAN AGREEMENT
EPIC VACATION CLUB
This VACATION PLAN AGREEMENT ("Agreement") is dated for reference
purposes _________, 1998 by and between EPIC RESORTS, LLC, a Delaware Limited
Liability Company on behalf of itself and its affiliates and subsidiaries
(collectively "Declarant"), and EPIC VACATION CLUB, a Delaware Nonprofit
Corporation ("Club").
1: ASSERTIONS. Each of the following constitutes a material provision of this
Agreement.
1.1 DECLARANT. Declarant has acquired and will acquire, directly or
through its affiliates and subsidiaries, by purchase agreement, deed, or lease,
an equitable, legal or leasehold interest in dwelling "Units" and appurtenances
thereto ("Property") in condominiums, planned developments, apartments, or
resort hotels or in the form of motor homes, houseboats or recreational
vehicles, which will be subjected to a Declaration of Vacation Ownership Plan
("Declaration"). Declarant proposes to transfer or direct transfer of such
Property to Club.
1.2 CLUB. Club is an association of its Members and the owner or lessee
of the various Property to be available to its Members for resort and
recreational use under the Governing Documents.
1.3 MEMBERSHIPS. Memberships in Club, measured in Points, will be issued
initially and sold by Declarant to the general public based on the number of
days Property is available for use. A Membership is in perpetuity or has a
prescribed term of years, and constitutes a vacation easement, which means a
right to use and occupy Units available through Club from time to time, and
furnishings and amenities thereof, according to the Reservation Rules, and an
easement to use, enjoy and occupy recreational facilities according to the
Reservation Rules (individually and collectively "Resorts").
1.4 DEFINITIONS. Unless the context otherwise requires, the
Definitions set forth in the DECLARATION OF VACATION OWNERSHIP PLAN (EPIC
VACATION CLUB - __________) as may be amended from time to time
("Declaration"), are hereby adopted as the definitions herein. The
Declaration was recorded _____________, 19___, in Microfilm Volume ____, Page
_____, Official Records, _______________, _____. A substantially similar
Declaration shall be recorded in each county, and shall describe each Resort,
where the Club owns or leases real property subject to the Vacation Ownership
Plan. The provisions of recorded Declarations shall have priority over this
Agreement, and inconsistent provisions among various Declarations shall be
resolved in favor of the most restrictive provision on the Club or Declarant
and/or the most favorable provision for protecting the Members.
1.5 GOVERNING DOCUMENTS. The Vacation Ownership Plan is governed by and
subject to the recorded Declaration for each Property, the Articles, Bylaws and
Rules of the Club, and the disclosure documents issued or approved by the
various jurisdictions in which Memberships are sold. The relationship between
the Declarant and the Club is governed by this
<PAGE>
Agreement, the Management Agreement dated December 1, 1998, and the
Reimbursement Agreement dated December , 1998.
1.6 CONTENTS.
<TABLE>
<CAPTION>
<S> <C>
1: ASSERTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 Declarant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Club . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.3 Memberships. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.4 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.5 Governing Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.6 Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2: PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.1 Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.2 Future Phases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.3 Club . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.4 Right of Entry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
3: CONSIDERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
3.1 Declaration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
3.2 Exclusive Marketing Rights . . . . . . . . . . . . . . . . . . . . . . . .4
3.3 Proceeds of Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
3.4 Bonus Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
3.5 Membership Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . .4
4: SECURITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
5: ACQUISITION OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
5.1 Nondisturbance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
5.2 Not Lost to Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
5.3 Tenancy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
5.4 Replacement Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . .5
5.5 Subordination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
6: GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
6.1 Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
6.2 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
6.3 Arbitration of Disputes. . . . . . . . . . . . . . . . . . . . . . . . . .6
6.4 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
6.5 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
6.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
6.7 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
6.8 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
6.9 Hold Harmless and Indemnity. . . . . . . . . . . . . . . . . . . . . . . .6
6.10 Law Applicable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
6.11 Legal Effects. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2
<PAGE>
6.12 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
6.13 Parties In Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . .7
6.14 Reasonableness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
6.15 Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
6.16 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
6.17 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
6.18 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
6.19 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
6.20 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
6.21 Word Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
6.22 Retention of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . .8
7: SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
EXHIBIT A - Addendum to Security Doc.
</TABLE>
- --------------------------------------------------------------------------------
2: PROPERTY. The Property in the Vacation Ownership Plan consists of
unencumbered real or personal Property owned or leased by the Club, and (a) as
to real property, which is specifically covered by a recorded Declaration of
Vacation Ownership Plan (Epic Vacation Club - ), or (b) as to personal
property, which is covered by a filed notice substantially similar to or
incorporating by reference a recorded Declaration.
2.1 TRANSFER. Each Property purchased, contracted for or leased by
Declarant shall be entirely transferred to Club by Grant or Warranty Deed or
Lease or Assignment of Lease, either directly from Declarant's seller or lessor
or from Declarant, pursuant to the Vacation Ownership Plan, subject only to the
Declaration, the Master Governing Documents, and the consideration owed to
Declarant as described below.
2.2 FUTURE PHASES. Declarant shall have the exclusive right to add an
unlimited amount of additional Property to the Vacation Plan under Article 9 of
the Declaration. But nothing contained in this Agreement or in any other
instrument shall obligate Declarant to acquire and transfer or direct transfer
to Club future additions of Property. With each transfer of Property to Club,
this Agreement shall be deemed amended to include such Property, and the
security for Club's obligations under this Agreement shall be provided or
amended as required by Section 4 below.
2.3 CLUB. Club shall have no right to encumber, transfer, pledge,
hypothecate or assign legal or equitable title or a leasehold interest in the
Property or any portion thereof during the term of this Agreement, without the
prior reasonable written consent of Declarant. Club shall not commit or allow
to be committed any waste upon the Property.
2.4 RIGHT OF ENTRY. Club hereby grants Declarant an easement to enter
upon the Property or any portion thereof for the purpose of inspection,
furnishing, improvement and/or sales and marketing subject to the limitations
set forth in Sections 4.6 and 7 of the Declaration.
3
<PAGE>
3: CONSIDERATION. Club and its Members and successors shall be obligated to
Declarant, as consideration for transfer of the Property, as follows:
3.1 DECLARATION. Club agrees to join in the Declaration, as legal owner
or ultimate lessee of the Property.
3.2 EXCLUSIVE MARKETING RIGHTS. Declarant is hereby granted an Exclusive
Right to Sell Memberships in Club and the exclusive right to the proceeds from
the sales of Memberships allocated to each Property. Declarant shall have the
right and power to sell or arrange for the sale of Memberships subject to
licensing and land sales regulation requirements of jurisdictions in which
Memberships are to be sold. All sales, marketing, licensing and regulatory
compliance shall be performed solely at the expense of Declarant while and to
the extent Declarant is entitled to the proceeds of sale. The exclusive right
to sell granted to Declarant relating to sales of Memberships on behalf of Club
does not affect or limit the rights of Members or other holders of Memberships
that are in good standing to transfer or resell their Memberships as allowed in
the Governing Documents or any other agreements between Members, Declarant and
Club.
3.3 PROCEEDS OF SALE. Declarant shall be entitled to the entire gross
proceeds from the sales of Memberships, subject only to such impounds or other
security arrangements as are required or reasonably necessary to secure payment
of installments of rent or purchase price under a lease or purchase agreement,
promissory note and/or deed of trust (any of which must include suitable
nondisturbance covenants) from Declarant or Club to its seller or lessor. The
proceeds from the sale of Memberships foreclosed upon by Club because of a
default by a Member under an obligation to Club shall accrue to Declarant's
benefit but shall first be subject to such amounts as are owed to Club pursuant
to such Memberships, and Declarant shall bear the costs of sale. Club
acknowledges the validity of the security interests in the Memberships which are
granted to Declarant in Membership Contracts entered into by Declarant with
purchasers of Memberships from Club or from Declarant.
3.4 BONUS USE. Net proceeds from Bonus Use fees shall accrue to the
benefit of Club. The Bonus Use fee must bear a reasonable relationship to the
actual cost of the use, and shall in no event exceed an amount equal to seven
percent (7%) of the then current price of Points required for concurrent
occupancy.
3.5 MEMBERSHIP CONTRACTS. As long as there is an unpaid balance of the
purchase price for a Membership owing under a contract evidencing the obligation
of the purchaser of a Membership to pay such purchase price ("Membership
Contract"), Club will not exercise any authority it may have under that
Membership Contract or the Governing Documents to either terminate the contract
or relieve any person of the person's obligations under the contract without the
consent of Declarant and, if applicable, the assignee of Declarant's rights
under the Membership Contract, provided that such consent shall not be
unreasonably withheld or conditioned upon any payment from the Club.
4: SECURITY. This Agreement shall be secured by a recorded mortgage, deed of
trust, memorandum of lease, or assignment of lease ("Security Document") which
shall contain a nondisturbance clause, a subordination clause and other clauses,
all substantially as set forth on Exhibit A attached hereto, and which shall be
recorded immediately following recordation of (a)
4
<PAGE>
the Deed or Lease evidencing the transfer to the Club, and (b) the
Declaration. Any security interest for the payment of the purchase price
obtained by Club upon the sale of Memberships shall be assigned to Declarant.
The Security Document at each Property shall run in favor of Declarant or a
subsidiary or affiliate of Declarant, as defined in the Declaration.
5: ACQUISITION OF PROPERTY. If Declarant or any other person ("Acquiring
Party") acquires the Property or any portion thereof or interest therein through
foreclosure, deed in lieu of foreclosure or any other means, by, through or
under this Agreement or any Security Document ("Property Transfer Events"):
5.1 NONDISTURBANCE. The Acquiring Party shall not disturb or impair the
use rights, interests and recreation benefits, with respect to the Property so
acquired, of Club Members who are not in default under their purchase
obligations and their obligations to the Club pertaining to the Property or any
portion thereof, as described in the Declaration and the Governing Documents
including, without limitation, Club Members who timely cure defaults which arise
before or after a Property Transfer Event. Without limiting the foregoing, the
term "Club Members" shall mean and include those persons or entities who
acquired Memberships in any way, including for example and without limitation,
parties who purchased Memberships (a) directly from the Club or the Declarant,
(b) from a holder of a Membership Contract who acquired title to the Membership
through foreclosure, conveyance in lieu of foreclosure, or other means pursuant
to rights of the holder under the Membership Contract ("Membership Transfer
Event"), (c) in a Membership Transfer Event, or (d) from any other purchaser who
acquired title in a Membership Transfer Event.
5.2 NOT LOST TO USE. The Property so acquired shall not be considered
"lost to use" for purposes of Section 4.4(c) of the Declaration.
5.3 TENANCY. The Acquiring Party shall honor all obligations of Club as
tenant under any valid and existing lease for the Property to the same extent as
if the Club were still the tenant.
5.4 REPLACEMENT PROCEEDS. Condemnation and/or damage insurance proceeds
shall be divided between the Acquiring Party and the Club as provided in the
Declaration notwithstanding anything in this Agreement or any Security Document
to the contrary, as though the Acquiring Party were the Declarant with respect
to the Property.
5.5 SUBORDINATION. The interest of the Acquiring Party will be subject
and subordinate to the Declaration.
6: GENERAL PROVISIONS.
6.1 AGENCY. Nothing in this Agreement shall constitute a partnership
between, or joint venture by, the parties hereto, or constitute either party the
employee of the other.
6.2 AMENDMENT. No supplement, modification or amendment of this Agreement
shall be established by course of dealing or by any method except in a writing
executed by each of the parties.
5
<PAGE>
6.3 ARBITRATION OF DISPUTES. Any controversy or claim arising out of or
relating to this Agreement, or the making, performance, or interpretation
thereof, shall be settled by arbitration under Club Bylaw 9.6.
6.4 ASSIGNMENT. This Agreement is personal between or among the parties,
and neither party may sell, assign, transfer, or hypothecate any rights or
interests created under this Agreement without the express written consent of
the other party, except Declarant can assign its role as Declarant under the
Vacation Plan, whether partially or entirely.
6.5 ATTORNEYS' FEES. Should any action or proceeding be commenced between
the parties hereto concerning this Agreement or their rights and duties
hereunder, the party prevailing in such action or proceeding shall be entitled
to reasonable attorneys' fees and costs in such action or proceeding which shall
be determined by the court or arbitrator.
6.6 ENTIRE AGREEMENT. This Agreement and all documents executed
contemporaneously herewith and/or specifically referred to herein, such as the
Governing Documents, constitute the complete, exclusive and final expression of
the agreement between the parties pertaining to the subject matter contained in
it; it supersedes all prior and contemporaneous agreements, representations, and
understandings of the parties; and it may not be contradicted by evidence of any
prior or contemporaneous agreement. No extrinsic evidence whatsoever may be
introduced in any proceeding concerning the terms of this Agreement.
6.7 FURTHER ASSURANCES. The parties hereto agree to perform any further
acts and to execute and deliver any further documents which may be necessary or
appropriate to carry out the purposes of this Agreement.
6.8 HEADINGS. The paragraph or section headings or titles in this
Agreement are for convenience and reference only and do not in any way modify,
interpret, or construe the intent of the parties or affect any of the provisions
of this Agreement.
6.9 HOLD HARMLESS AND INDEMNITY. Each of the parties agrees to hold the
other party harmless and indemnify the other party from and against any and all
loss, cost, damage or liability which the other party may incur or sustain as a
result of any action by such party or any breach by such party of any warranty
or representation contained in this Agreement, or for any misrepresentation or
material omission in the representations herein, or for any violation of any
applicable law, ordinance or regulation, whether by neglect or willful act and
whether by a party or its agents, contractors, or employees. Such
indemnification shall include, among other costs, attorneys' fees and costs of
appeal, settlement or defense, and the obligation to undertake or assume the
defense of any claim.
6.10 LAW APPLICABLE. This Agreement and its interpretation, construction,
and enforcement, shall be governed by the laws of the State of Delaware, except
the enforcement of the security interest against a Resort shall be governed by
the laws of the state where the Resort is located.
6.11 LEGAL EFFECTS. No representation, warranty or recommendation is made
by any party or his respective agent or attorney regarding the legal sufficiency
or effect or tax
6
<PAGE>
consequences of any transaction contemplated under this Agreement to any
individual or specific entity, and each party acknowledges it has been
advised to submit this Agreement to independent legal counsel before signing
it. There shall be no presumption in favor of or against any party with
regard to which party arranged for initial drafting of this Agreement.
6.12 NOTICES. Any notice required or desired to be given hereunder shall
be deemed given if personally delivered, or ninety-six (96) hours after mailing
(first class postage prepaid, return receipt requested), to the parties at the
following addresses, or at such other addresses as may be given by proper
notice:
6.12(a) DECLARANT: EPIC RESORTS, LLC, a Delaware limited liability
company, 1150 First Avenue, Suite 900, King of Prussia, PA, 19406; Facsimile
Transmission No. 610-992-1590.
WITH A COPY TO: JOHN ROGERS BURK, A LAW CORPORATION, 2140
Professional Drive, Suite 120, Roseville, California 95661; Facsimile
Transmission No. 916-784-7075.
6.12(b) CLUB: EPIC VACATION CLUB, a Delaware nonprofit corporation,
1150 First Avenue, Suite 900, King of Prussia, PA, 19406; Facsimile Transmission
No. 610-992-1590.
6.13 PARTIES IN INTEREST. Unless specifically otherwise provided herein,
(a) nothing in this Agreement, whether express or implied, is intended to confer
any rights or remedies under or by reason of this Agreement on any persons other
than the parties hereto; (b) nothing in this Agreement is intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement; and (c) nothing herein shall give any third person any right of
subrogation or action over or against any party to this Agreement.
6.14 REASONABLENESS. The parties recognize that this Agreement contains
conditions, covenants, and time limitations that are reasonably required for the
protection of the business of the parties or a particular party. If any
limitation, covenant or condition shall be deemed to be unreasonable and
unenforceable by a court or arbitrator of competent jurisdiction, then this
Agreement shall thereupon be deemed to be amended to provide for modification of
such limitation, covenant and/or condition to such extent as the court or
arbitrator shall find to be reasonable.
6.15 RECORDS. Each party shall maintain books and records containing all
transactions in furtherance of this Agreement. Such books and records shall be
maintained in accordance with usual accounting methods. Either party shall have
the right, during normal business hours and upon reasonable notice, to examine
the books and records of the other party relating to this Agreement.
6.16 SEVERABILITY. If any provision of this Agreement is held to be
unenforceable, invalid or illegal by any arbitrator or court of competent
jurisdiction, such shall not affect the remainder of this Agreement.
7
<PAGE>
6.17 SUCCESSORS. Subject to the paragraph regarding Assignment, this
Agreement shall be binding upon and benefit the heirs, legal representatives,
successors, and assigns of the parties, whether under this Agreement or by
acquiring an interest in the Project.
6.18 SURVIVAL. All covenants and warranties hereunder shall survive the
recording of any document and the final payment hereunder, and some provisions
shall survive termination or expiration of this Agreement for a reasonable time
or for the specified time if necessary to carry out their reasonably intended
effect.
6.19 TIME. Time is of the essence of this Agreement, and any breach of a
time covenant or condition hereunder shall be deemed a material breach of this
Agreement or failure of condition. However, if any date or time referred to
herein shall fall on Saturday, Sunday, or a legal holiday, the date or time
shall be extended to the next regular business day.
6.20 WAIVER. No waiver of enforcement or breach of any of the provisions
of this Agreement shall be deemed, or shall constitute, a waiver of any other
provisions, whether or not similar, nor shall any waiver constitute a continuing
waiver. No waiver shall be binding unless executed in writing by the person
making the waiver.
6.21 WORD USAGE. Unless the context clearly otherwise requires, (a) the
plural and singular numbers or the masculine, feminine and neuter genders shall
each be deemed to include the others; (b) "shall", "will", or "agrees" are
mandatory, and "may" is permissive; (c) "or" is not exclusive; and (d)
"including" or "such as" is not limiting.
6.22 RETENTION OF AGREEMENT. Signed copies of this Agreement shall be
retained by each party for three (3) years from date of termination hereof.
7: SIGNATURES. The individuals applying their signatures to this Agreement
warrant that they are signing in a representative capacity for a person or
entity whose name is set forth immediately above their signature, and that they
have been expressly authorized to sign the Agreement on behalf of such person or
entity.
Dated: , 1998 Dated: , 1998
--------- ---------
DECLARANT: CLUB:
EPIC RESORTS, LLC, a EPIC VACATION CLUB, a
Delaware limited liability company Delaware nonprofit corporation
By By
----------------------------- ----------------------------------
Thomas F. Flatley, Manager Thomas F. Flatley, President
8
<PAGE>
[1] trustor; mortgagor; lessee; sublessee
[2] beneficiary; mortgagee; lessor; sublessor
ADDENDUM TO SECURITY DOCUMENT
This Security is given by [1] to secure [1]'s obligations to [2] under
that certain "Epic Vacation Club Vacation Plan Agreement" dated ___________,
1998 by and between [1] as "Club" and [2] as "Declarant," and as the same may
be amended. Said Agreement provides, among other things, that Declarant (a)
has an exclusive right to sell Memberships in Club on behalf of Club, and (b)
shall receive the entire gross proceeds from Declarant's sales of Memberships
in Club.
ACQUISITION OF PROPERTY. If Declarant or any other person (an "Acquiring
Party") acquires the Property or any portion thereof or interest therein through
foreclosure, deed in lieu of foreclosure, termination of lease or other means
by, through or under this Security Document ("Property Transfer Events"):
1. NONDISTURBANCE. The Acquiring Party shall not disturb or impair
the use rights, interests and recreation benefits, with respect to the
Property so acquired, of Club Members who are not in default under their
purchase obligations and their obligations to the Club pertaining to the
Property or any portion thereof, as described in the Declaration and the
Governing Documents, including, without limitation, Club Members who timely
cure defaults which arise before or after a Property Transfer Event. Without
limiting the foregoing, the term "Club Members" shall mean and include those
persons or entities who acquired Memberships in any way, including for
example and without limitation, parties who purchased Memberships (a)
directly from the Club or the Declarant, (b) from a holder of a Membership
Contract evidencing the obligation of a purchaser of a Membership to pay the
balance of the purchase price for that Membership (a "Membership Contract")
who acquired title to the Membership through foreclosure, conveyance in lieu
of foreclosure, or other means pursuant to rights of the holder under the
Membership Contract ("Membership Transfer Event"), (c) in a Membership
Transfer Event, or (d) from any other purchaser who acquired title in a
Membership Transfer Event.
2. NOT LOST TO USE. The Property so acquired shall not be considered
"lost to use" for purposes of Section 4.4(c) of the Declaration.
3. TENANCY. The Acquiring Party shall honor all obligations of Club as
tenant under any valid and existing lease for the Property to the same extent as
if the Club were still the tenant.
4. REPLACEMENT PROCEEDS. Condemnation and/or damage insurance proceeds
shall be divided between the Acquiring Party and the Club as provided in the
Declaration notwithstanding anything in this Agreement or any Security Document
to the contrary, as though the Acquiring Party were the Declarant with respect
to the Property.
EXHIBIT A TO
VACATION PLAN AGREEMENT
<PAGE>
5. SUBORDINATION. The interest of the Acquiring Party will be subject
and subordinate to the "Declaration of Vacation Ownership Plan (Epic Resorts
- - __________)" dated __________, 19__ and recorded __________, 19___ in
Volume ______ at Page ____, Document No. __________, Official Records,
____________ County, ______________ ("Declaration").
Dated: , 19 . Dated: , 19 .
--------- --- -------- ---
DECLARANT: CLUB:
EPIC RESORTS, LLC a EPIC VACATION CLUB, a
Delaware limited liability company Delaware nonprofit corporation
By By
------------------------------ ------------------------------------
Thomas F. Flatley, President Thomas F. Flatley, Secretary
State of ____________ )
) ss.
County of ___________ )
On ______________ before me ___________, a Notary Public, personally
appeared THOMAS F. FLATLEY,
[Check one]:
[ ] personally known to me
[ ] proved to me on the basis of satisfactory evidence
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacities,
and that by his signature on the instrument the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
Signature
------------------------------
[seal]
EXHIBIT A TO
VACATION PLAN AGREEMENT
10
<PAGE>
SECURITY AGREEMENT
VACATION OWNER AGREEMENT
EPIC VACATION CLUB
(CALIFORNIA)
DATE ________ OWNER NUMBER _______________ HOME RESORT _______________
POINTS _______ TERM: Perpetual / //or ____ Years / /
EPIC VACATION CLUB, a Deleware nonprofit corporation ("Club"), and
[resort subsidiary], a Delaware limited liability company ("Developer"),
agree to sell to the undersigned Owner a Vacation Ownership Interest
consisting of a Membership in Club, and Owner agrees to purchase and hold
such Membership according to this Agreement. Unless the context otherwise
requires, capitalized words herein shall have the meanings set forth in the
"Declaration of Vacation Ownership Plan (Epic Vacation Club - Palm Springs
Marquis Villas)" recorded __________, 1998, as document no. ________,
Riverside County Recorder, California.
1: BENEFITS AND NATURE OF OWNERSHIP.
1.1 OWNERSHIP. As an Owner of a Membership, Owner is a Member of Club and
is entitled (a) to reserve the use of Units, (b) to vote for Association
Directors, (c) to vote on major Club decisions, and (d) through the Club, to
participate in the corporate ownership and management of the real estate and
other assets of Club.
1.2 PARTICIPATION IN CLUB. The Articles and Bylaws of Club provide for
(a) meetings and votes by Owners; (b) election and meetings of, and limitations
on, powers of Directors; (c) assessment of annual and special assessments; (d)
enforcement and discipline procedures; (e) appointment of officers and their
duties; and (f) insurance.
1.3 DURATION. Ownership shall be forever for a Perpetual Membership,
or for a Term of years, as indicated at the top of this page. Except the
"Home Resort" designation may expire _______________, 20___, if the Home
Resort is under a lease, but this does not affect your ownership, except to
the extent your use may be diluted if a Resort is lost.
1.4 TRANSFERABILITY. Memberships may be transferred at any time during
their term and without limitation on the number of transfers, by sale, gift,
inheritance, dissolution of marriage, or by any operation of law, subject to the
following: (a) ACCELERATION of the unpaid cash price at the option of the holder
of any outstanding purchase payment obligation; (b) FEE. A transfer fee of $125
has been paid to Club; (c) PAYMENTS. All payments or charges due Club or
Developer are current; (d) BASIC MEMBERSHIP. The Points transferred and the
Points retained, if any, must be sufficient so the transferee and the
transferor, if still a Member, each hold at least a Basic Membership at the then
current requirement; (e) QUALIFICATIONS. The transferee must satisfy all
qualifications of an Owner and Club's reasonable credit requirements; (f) FIRST
RIGHT OF REFUSAL. Unless Developer exercises its right of first refusal under
Bylaw 3.5(e), neither
<PAGE>
Developer nor Club will repurchase Memberships or assist in locating a buyer.
If a couple which holds jointly a Membership becomes divorced or separated,
they must indicate to Club in writing within 60 days after separation which
joint holder will continue to hold the Membership. Failure to so designate
will cause suspension of the benefits of the Membership until the designation
is made. In the meantime, the first valid reservation by a joint owner will
be honored.
1.5 NUMBER AND QUALITY OF RESORTS. Owner shall have access to all
existing and future Resorts and Units owned or operated by or associated with
Club, wherever located. The location and specific nature of Resorts and
Units shall be subject to change by Club, but Club is obligated to continue
to provide or arrange for Resorts and Units comparable in quality to those
available at the date of this Agreement, and sufficient Units in reasonably
accessible locations to provide Reservations for all, issued and outstanding
Points.
1.6 RULES PROTECTING OWNERS. Rules may be adopted and amended from
time to time by Club for the benefit of Owners and the management of the
Resorts, whether general rules or applicable to a specific location only,
which may govern Owner usage of Resort Units in the following subjects, among
others: (a) reservations; (b) number of occupants; (c) guest policies; (d)
fees; (e) rental of Units by Club to non-owners when not in use by Owners;
(f) charges for use of specific facilities; (g) personal conduct and
behavior; (h) check-in and check-out times; (i) care and maintenance of Units
and facilities; (j) conditions for Bonus Use. A copy of the current Club
Rules is provided with this Agreement.
1.7 POINTS. The measure of benefits and the extent of obligations of
Ownership are determined by the number of Points purchased, shown at the top of
page 1.
1.7(a) USE. Points may be used annually, up to the amount
purchased, for all nights and all seasons and at all Resorts, subject to space
availability, the number of Points required for occupancy ("Point Use value"),
and requirements and limitations on advance notice. Point Use value is based on
factors such as the season, location, Unit size and type, and days of the week.
1.7(b) ISSUANCE. Points are renewed annually throughout the term
of the Membership at the beginning of each Use Year in the amount purchased by
Owner. Unused Points may be carried forward for use only in the following
calendar year, and Points from the following Use Year may be borrowed for use in
the current Use Year, both upon satisfaction of the requirements set forth in
the Rules.
1.7(c) ADDITIONAL POINTS. Owner may purchase additional Points
from Developer in minimum amounts set by Developer from time to time, at any
time after the date of this Agreement, if (i) the Points are available at
Owner's Home Resort; (ii) Owner is not in default under this Agreement or under
the Governing Documents; and (iii) the then current price is paid.
1.8 BONUS USE. Perpetual Owners may purchase additional reserved time,
referred to as Bonus Use. Bonus Use is subject to space availability and Club
Rules, which may be changed.
2
<PAGE>
1.9 LIABILITY LIMITATIONS. Owner agrees that Owner and Owner's family
(dependents living with Owner) and guests assume all risks of loss or damage to
persons or property in using the Resorts, except this limitation of liability
shall not apply in cases of negligence of the Club or Developer. Owner will
maintain liability and property damage insurance in connection with any motor
vehicle(s) brought to the Resorts in amounts customarily carried on such
vehicles(s). Liability for breach of any warranty under this Agreement shall
not exceed the amounts Owner has paid under this Agreement.
2: CLUB CHARGES. Club remedies are described in the Governing Documents. The
Club has a security interest in the Membership under the Governing Documents, to
assure payment of the following:
2.1 ANNUAL ASSESSMENTS. The annual assessment for this Membership is
currently $_________, based on the annual assessments currently established by
Club. The annual assessment shall be paid in advance on an annual basis and
shall be due January 1 each year. Such assessment shall be used first for
maintenance and operation ofResort Units, then for other expenses authorized in
the Governing Documents. Annual assessments may be increased subject to the
Governing Documents.
2.2 SPECIAL ASSESSMENTS. Club may levy special assessments subject to the
Governing Documents. Owner is also responsible for any tax that might be
assessed on its purchase or occupancy by a civil taxing authority.
2.3 EXTRA USE CHARGES. Owner must pay separately for extra benefits,
including but not limited to, if available, food, storage, extra maid service,
purchase of goods and use of equipment, furnishings or facilities not normally
provided as part of the Unit or Resort facilities, and exchange program services
if available.
2.4 DAMAGES. Owner must pay any cost of repair or replacement for any
damage caused by Owner, Owner's family, or guests.
3: CONTRACT STANDARDS.
3.1 CREDIT. Owner must satisfy Club's and Developer's reasonable credit
requirements.
3.2 EVENTS OF DEFAULT. Each of the following constitutes an "Event of
Default" by Owner if not cured (a) within 15 days from apayment due date, (b) 30
days after giving of written notice from Club or Developer as to a breach by
omission or inaction, other than for payment, or (c) upon continued active
breach or violation after receipt of written notice or warning thereof, which
notices or warning shall include the details of the default and how the default
may be remedied, if at all, within a specified reasonable time, (whichever of
the foregoing is most applicable): (i) Not paying a purchase price installment,
the annual assessment or installment thereof or any other charge of Club or
Developer when due; (ii) Transfer of the Membership, whether voluntarily or
involuntarily, except as specifically allowed herein; (iii) Misrepresentation or
omission of a material fact in connection with this Agreement or the extension
of credit hereunder; or (iv) Material breach of a provision of this Agreement or
of the Governing Documents.
3
<PAGE>
3.3 SECURITY INTEREST. To secure compliance with Owner's obligations to
Developer and Club under this Agreement, including but limited to, the
obligation to make payments on the purchase price and or interest, late charges,
and other charges and expenses, Owner hereby grants to Developer and Club a
security interest in the Membership and any proceeds therefrom, which Membership
was purchased under this Agreement. This security interest constitutes a lien
on the Membership and any proceeds therefrom. If required by Developer, Owner
shall sign and deliver to Developer a UCC-1 Financing Statement in form and
substance satisfactory to Developer to be filed in the Office of the Secretary
of State of Owner's state of residence, to perfect Developer's security interest
in the Membership.
3.4 REMEDIES. No waiver by Developer or Club, or the holder of this
Agreement, of any default or breach by Owner shall operate as a waiver of the
same or any other default or breach by Owner or any other member in the future.
Owner shall reimburse Developer or Club, or its assignee, on demand, for all
costs and expenses in connection with the enforcement of its rights under this
Agreement. Such reimbursement obligations shall bear interest from the date of
demand at the Annual Percentage Rate set forth in Section 4.3. Each Owner
signing this Agreement hereby appoints each other Owner signing this Agreement
his or her agent for dealing with the holder of this Agreement for any purpose.
Upon the occurrence of an Event of Default under an obligation to Developer,
Developer or its assignee may choose one or more of the following remedies: (i)
DECLARE the entire unpaid balance of the Cash Price immediately due, unless
prohibited by law; and/or (ii)(A) FORECLOSE the lien created by the grant of the
security interest and sell or retain the Membership in satisfaction of Owner's
obligations hereunder, or exercise any other right under the Uniform Commercial
Code, Division 9; or (B) TERMINATE the Membership, and if terminated retain all
amounts previously paid by Owner, as compensation for damages incurred in
proceeding under this Agreement (Developer and Owner agree that in such case it
would be impractical or extremely difficult to fix the actual damage.); or (C)
SUE for the unpaid balance due hereunder, but not if (ii)(A) or (ii)(B) above is
obtained; and/or (iii) SUSPEND Membership rights, including occupancy of
Resorts; and/or (iv) PURSUE any other remedy allowed by law.
3.5 ADDITIONAL CREDITOR. The right to receive payment of the Purchase
Price under this Agreement belongs to Developer but could be assigned to another
creditor.
3.6 HOLDER IN DUE COURSE NOTICE. ANY HOLDER OF THIS CONSUMER CREDIT
CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR (OWNER) COULD
ASSERT AGAINST THE SELLER OF GOODS OR SERVICES OBTAINED PURSUANT HERETO OR WITH
THE PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE DEBTOR (OWNER) SHALL NOT EXCEED
AMOUNTS PAID BY THE DEBTOR (OWNER) HEREUNDER.
3.7 GENERAL PROVISIONS. (a) NOTICE. Any written notice required or
desired to be given hereunder shall be deemed given when personally delivered or
seventy-two (72) hours following deposit in the U.S. Mail, first class postage
prepaid, return receipt requested, addressed to the address given herein, or
such subsequent address as is given by proper notice. (b) ENTIRE AGREEMENT.
This Agreement and any and all other documents executed or received at the same
time as this Agreement constitute the entire agreement between the parties
hereto. No representations or warranties, oral or written, other than the
representations set forth in said documents, have been relied upon by the
parties. (c) SUCCESSORS. Subject to the limitations on
4
<PAGE>
transfer in paragraph 1.4 above, this Agreement shall be binding upon and
benefit the heirs, executors, administrators and successors of each of the
parties. (d) SEVERABILITY. If any provision of this Agreement shall be
found to be invalid, the remaining provisions shall nevertheless remain in
fall force and effect. (e) SURVIVAL. This Agreement shall survive the
issuance of the Membership and shall survive the final payment toward the
purchase hereunder.
3.8 RESPONSIBILITY. Transfer or abandonment of the Membership does not
relieve Owner of Owner's obligations hereunder unless such transfer or
termination of this Agreement is agreed to by the Club and the holder of any
right to the unpaid purchase price under this Agreement.
4: PURCHASE PRICE AND PAYMENTS.
4.1 PRICE. Owner agrees to pay to Developer, or order, the Cash Price
shown in Section 4.4(a) for the Membership, together with Closing Costs shown in
Section 4.2 below.
4.2 CLOSING COSTS shall be $______ if the Amount Financed is zero; or
$_______ if there is an Amount Financed, which includes the UCC-1 filing fee.
4.3 CREDIT TERMS. If paying the Cash Price in installments, Owner agrees
to pay the Finance Charge (interest) stated below. Finance Charge shall accrue
from Close of Escrow. Payment shall be credited first to interest then due,
then to reimbursable costs, then to principal. Payments shall not begin prior
to thirty (30) days after Close of Escrow.
There is a SERVICING FEE of $5 monthly if there is an Amount Financed. The
credit terms are set forth in the following Disclosures, which are required by
the Federal Truth In Lending Act and State Law, and are each a material term of
this Agreement:
5
<PAGE>
- -----------------------------------------------------------------
DISCLOSURES REQUIRED BY FEDERAL TRUTH IN LENDING ACT
Creditor: EPIC RESORTS - PALM SPRINGS MARQUIS VILLAS, LLC
("Developer")
1150 First Avenue, Suite 900, King of Prussia, PA 19406
- ---------------------------------------------------------------------
ANNUAL FINANCE AMOUNT TOTAL OF TOTAL SALE
PERCENTAGE CHARGE FINANCED* PAYMENTS PRICE
RATE
The dollar The amount The amount The total
The cost of amount the of credit you will cost of
your credit credit provided to have paid your
as a yearly will cost you or on after you purchase on
rate. you. your behalf. have made credit,
all payments including
as scheduled. your
downpayment
of $_______
__________% $________ $__________ $________ $_________
- ---------------------------------------------------------------------
*The Amount Financed is itemized below.
Your Payment Schedule will be:
- ---------------------------------------------------------------------
Number of Amount(s) When Payments Due
Payments of Payment(s)
- ---------------------------------------------------------------------
Monthly, beginning , 19
----------- ---
- ---------------------------------------------------------------------
(a) INSURANCE: Credit life insurance and credit disability
insurance are not required to obtain credit.
(b) SECURITY: You are giving Developer and Club security
interests in the Membership being purchased.
(c) FILING FEE: $40 for filing the UCC-1 Financing Statement,
if there is an Amount Financed.
(d) LATE CHARGE: If a payment or amount is fifteen (15) days
or more late, you will be charged $15.00 to compensate
Developer for additional costs of carry and collection.
(e) VARIABLE RATE: The Annual Percentage Rate disclosed above
will automatically increase by one percent (which is the
maximum increase) if any one of the following occurs (i) you
discontinue participation in our preauthorized check (PAC)
plan, (ii) your financial institution is unable to participate,
or (iii) we discontinue your participation in PAC for
reasonable cause. The Annual Percentage Rate will not increase
above ____%. An increase in Annual Percentage Rate would
increase your monthly payment by not more than $_______.
(f) PREPAYMENT: Principal payments in any amount may be made
at any time. If you pay off early you will not have to pay a
penalty. Partial prepayment will not reduce later periodic
payments.
(g) OTHER PROVISIONS: See the other provisions of this
Agreement for additional information about Closing Costs,
nonpayment, default, and any required payment in full before
the scheduled date.
- ---------------------------------------------------------------------
4.4 ITEMIZATION OF AMOUNT FINANCED:
(a) Cash Price: $________
(b) Closing Costs: $________
(c) Total Cash Price (a+b): $________
(d) Downpayment: $________
$________ today
$________ due __/__/__
$________ due __/__/__
(e) Amount Financed (c-d) $________
6
<PAGE>
5: NOTICE TO BUYER (OWNER):
(A) BLANKS. DO NOT SIGN THIS AGREEMENT BEFORE YOU READ IT OR IF IT
CONTAINS ANY BLANK SPACES TO BE FILLED IN.
(B) COPY. YOU ARE ENTITLED TO A COMPLETELY FILLED-IN COPY OF THIS
AGREEMENT.
(C) PREPAYMENT. YOU CAN PREPAY THE FULL AMOUNT DUE UNDER THIS AGREEMENT
AT ANY TIME.
(D) PAYOFF. IF YOU DESIRE TO PAY OFF IN ADVANCE THE FULL AMOUNT DUE, THE
AMOUNT WHICH IS OUTSTANDING WILL BE FURNISHED UPON REQUEST.
(E) VALUE. YOU SHOULD PURCHASE A TIME SHARE MEMBERSHIP ONLY FOR
RECREATION AND SOCIAL USE AND NOT FOR APPRECIATION OR RESALE. NO
FINANCIAL PROFIT IS TO BE EXPECTED.
(F) RECEIPT. OWNER ACKNOWLEDGES THAT IT HAS READ AND UNDERSTANDS AN EXACT
COPY OF THIS AGREEMENT, AND ANY OTHER DOCUMENT(S) SIGNED WITH THIS
AGREEMENT, WITH ALL BLANKS FILLED IN, AND HAS RECEIVED A FULLY SIGNED
COPY.
OWNER: Date:
------------------------
- ------------------------------------ -----------------------------------
Signature Signature
- ------------------------------------ -----------------------------------
Name(s) Address
- ----------------------------------------------------------------------------
City State Zip Phone
DEVELOPER & CLUB:
Date:
------------------------------
EPIC RESORTS - PALM SPRINGS
MARQUIS VILLAS, LLC, and
EPIC VACATION CLUB
By
--------------------------------
,Authorized Agent
1150 First Avenue, Suite 900
King of Prussia, PA 19406
Phone: (610) 992-0100
<PAGE>
REIMBURSEMENT AGREEMENT
EPIC VACATION CLUB
THIS AGREEMENT is dated for reference purposes , 1998, by and
between EPIC RESORTS, LLC, a Delaware limited liability company ("Declarant"),
on behalf of itself and its affiliates and subsidiaries, and EPIC VACATION CLUB,
a Delaware nonprofit corporation ("Club").
1: ASSERTIONS. Each of the following assertions is a material provision of
this Agreement.
1.1 VACATION OWNERSHIP PLAN. Declarant has established a Vacation
Ownership Plan ("Plan") by recording or filing a "Declaration of Vacation
Ownership Plan (Epic Vacation Club - Palm Springs Marquis Villas)" dated
____________, 1998 ("Declaration") on _____________, 1998, as Instrument No.
________________, Official Records, Riverside County, California, against
various Condominium Units ("Property") and by leasing the Property to Club.
Declarant will lease Condominium Units to the Club immediately before
recordation or filing of the Declaration as to a particular Property.
1.2 PHASES. The Property may include an unlimited number of Units and/or
additional Property, whether fixed or mobile, to be added in additional Phases
by a Declaration of Annexation or additional Declaration as provided in the
Declaration.
1.3 CLUB. Club is a nonprofit corporation organized under the Corporation
Law of Delaware. The specific and primary purpose for which the Club has been
formed is to care for, own, lease, maintain, operate and manage the Property and
Improvements thereon which it owns, wherever located, which has been dedicated
to the Plan by a Declaration.
1.4 OPERATING FUNDS. Club has prepared an initial annual budget for
operation, maintenance, and reserves ("Budget"), a summary of which is attached
hereto as Exhibit A. Revenue to meet the Budget will be obtained from
Assessments collected from the Members of the Club. To the extent Assessments
from Members other than Declarant are not sufficient to meet the operation and
maintenance portions of the Budget, Declarant will, under certain terms and
conditions, reimburse the costs of operation and maintenance, in lieu of paying
the operation and maintenance portion of Assessments on Memberships not sold.
It is the purpose and intent of this Agreement to set forth the terms and
provisions of Declarant's agreement to reimburse.
1.5 DEFINITIONS. Unless the context otherwise requires, the Definitions
set forth in the Declaration, as may be amended from time to time, are hereby
adopted as the definitions herein. A substantially similar Declaration shall be
recorded in each county, and shall describe each Resort, where the Club owns or
leases real property subject to the Vacation Ownership Plan and Club
Memberships. The provisions of recorded Declarations shall have priority over
this Agreement, and inconsistent provisions among various Declarations shall be
resolved in favor of
<PAGE>
the most restrictive provision on the Club or Declarant and/or the most
favorable provision for protecting the Members.
1.6 TABLE OF CONTENTS.
<TABLE>
<CAPTION>
ARTICLE/SECTION TITLE PAGE
<S> <C>
1: ASSERTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 Vacation Ownership Plan. . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Phases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.3 Club . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.4 Operating Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.5 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.6 Table of Contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2: EFFECTIVE DATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
3: REIMBURSEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
3.1 Reimbursement Payment. . . . . . . . . . . . . . . . . . . . . . . . . . .3
3.2 Reimbursement Request. . . . . . . . . . . . . . . . . . . . . . . . . . .3
3.3 Net Costs Subject to Reimbursement . . . . . . . . . . . . . . . . . . . .3
3.4 Reimbursement Refund . . . . . . . . . . . . . . . . . . . . . . . . . . .4
4: RESERVES FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
5: FINANCIAL ASSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
5.1 Release. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
5.2 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
5.3 Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
6: ASSESSMENT COLLECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
7: ACCOUNTINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
7.1 Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
7.2 Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
7.3 Delinquencies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
7.4 Reserves Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
8: TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
9: GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
9.1 Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
9.2 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
9.3 Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
9.4 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
9.5 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
9.6 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2
<PAGE>
9.7 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
9.8 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
9.9 Parties In Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . .7
9.10 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
9.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
9.12 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
9.13 Word Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
9.14 Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
10: SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
11: ACKNOWLEDGMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
EXHIBIT
A Club Budget
</TABLE>
- --------------------------------------------------------------------------------
2: EFFECTIVE DATE. This Agreement shall become effective on the date of the
first closing of a sale of a Membership in the Plan, and shall continue until
terminated pursuant to the terms hereof.
3: REIMBURSEMENT. During the term of this Agreement, Declarant agrees to
reimburse the costs of operating and maintaining the Plan by paying to Club,
within ten (10) days of receipt of a Reimbursement Request from Club, all
amounts requested by such Reimbursement Request pursuant to the following terms
and conditions:
3.1 REIMBURSEMENT PAYMENT. During the term of this Agreement and whenever
Declarant is responsible for the financial administration of the Club,
commencing one (1) month after the effective date of this Agreement and monthly
thereafter (such monthly period and each successive monthly period shall each be
referred to herein as a "Reimbursement Period"), Declarant shall pay to the Club
the Net Costs Subject to Reimbursement accrued during the most recent
Reimbursement Period, accompanied by the monthly accounting as required
hereinafter. Such payment shall be made within ten (10) days of conclusion of
the applicable Reimbursement Period.
3.2 REIMBURSEMENT REQUEST. During the term of this Agreement and whenever
Declarant is NOT responsible for the financial administration of the Club,
commencing one (1) month after the effective date of this Agreement and monthly
thereafter Club shall deliver a written Reimbursement Request to Declarant
requesting payment to Club by Declarant of the Net Costs Subject to
Reimbursement accrued during the most recent Reimbursement Period. Each
Reimbursement Request shall be accompanied by the monthly accounting as required
hereinafter. Such payment shall be made within ten (10) days of receipt of the
Request therefor. If no such Request is timely received by Declarant, Declarant
shall promptly send to Club a request for a Reimbursement Request.
3.3 NET COSTS SUBJECT TO REIMBURSEMENT for which Club may receive
reimbursement hereunder shall include all amounts accrued by Club during the
most recent
3
<PAGE>
Reimbursement Period as costs of operating and maintaining the Plan LESS all
amounts received by Club during such Reimbursement Period as (i) regular or
special membership assessments, and (ii) income or receipts from any other
source.
3.3(a) EXAMPLES. Costs of operating and maintaining the Plan, for
which reimbursement may be received pursuant to this Section 3.3, shall include
the cost of all Club operations, maintenance, social and recreational programs,
bookkeeping, accounting and legal fees, and the amount of Club's monthly deposit
to the Club Reserves Fund made during the Reimbursement Period. Expenditures
for major maintenance or replacement for which funds are accumulated in the
Reserves Fund of Club shall not be included in the costs of operating and
maintaining the Plan for which reimbursement may be received.
3.3(b) ACCRUAL. For purposes of this Agreement, costs shall be
deemed "accrued" on the LATER of (i) the date the bill, invoice or statement
requesting payment is received by Club, or (ii) thirty (30) days prior to the
due date thereof. For purposes of employee wages and other monthly or
semi-monthly non-invoiced costs, such costs shall be deemed "accrued" on the
first day of the applicable pay period.
3.3(c) EXCESSIVE COSTS. Specific expenditures for operating and
maintaining the Plan which pertain to more than four (4) months in advance,
shall be paid by Club from surplus funds or the Reserves Fund. To the extent
withdrawn from the Reserves Fund, such amount shall be restored in equal monthly
amounts over the period to which it applies.
3.3(d) SPECIAL ASSESSMENTS. Declarant's obligation to reimburse
under this Agreement shall preclude the need for any special assessments by the
Club other than special assessments approved by the Board or Members for capital
expenditures or unrecoverable delinquent Member Assessments.
3.4 REIMBURSEMENT REFUND. At any time during the term of this Agreement,
if Club receives any amounts as payment of delinquent Assessments or fees, which
became delinquent during the time Declarant was reimbursing the operation and
maintenance of Club, all such amounts shall be immediately paid to Declarant.
It is the purpose and intent of this Paragraph to prevent any windfall in favor
of Club which may occur by Club's receipt of reimbursement payments, all or a
part of such reimbursement payments being attributable to and caused by
Assessments being delinquent, and the subsequent receipt of such Assessments by
Club.
4: RESERVES FUND. Club shall maintain a Reserves Fund in an interest-bearing
account at a state or federally insured bank or savings association. The
initial deposit to the Reserves Fund shall be made on the first business day of
January immediately following the first closing of the sale of a Membership, and
subsequent deposits shall be made thereafter on the first business day of each
calendar year. Declarant shall annually deposit to the Reserves Fund an amount
determined as follows:
Amount of Amount of **Average Number of unsold* Memberships
annual = annual Budget x (divided by)
deposit for Reserves -------------------------------------
**Average Total number of sold and
unsold* Memberships
4
<PAGE>
The amount for the first year shall be prorated for the portion of the year
after the first close of a sale.
- -------------------
* The number of "unsold Memberships" shall be determined by dividing (the number
of Points unsold) by (the average Points in each Membership held by a person
other than Club or Declarant), at the time the Reserve deposit is being
calculated.
** The "average" shall be based on the previous calendar year.
5: FINANCIAL ASSURANCE. Declarant shall provide "Financial Assurance" in
escrow with INTERCITY ESCROW SERVICES, a California corporation ("Escrow
Company"), in the form of an Irrevocable Letter of Credit, Bond or a cash
deposit, in an amount equal to 50% of the portion of the annual budget of the
Club. Such Financial Assurance shall be given to secure the undertaking of
Declarant to Club as set forth in this Agreement. On or before the effective
date of this Agreement Declarant shall deliver the Financial Assurance to Escrow
Company, along with an executed copy of this Agreement and irrevocable written
instructions to Escrow Company signed by Declarant and Club which shall provide:
5.1 RELEASE. Escrow Company shall not release or exonerate the Financial
Assurance until Escrow Company has received written notice from Club that
Declarant has faithfully performed all its obligations under this Agreement, and
Declarant has provided and deposited in escrow or trust Financial Assurance in
compliance with California Code of Regulations, Title 10, Section 2812.3;
5.2 ARBITRATION. If there is a dispute between Declarant and Club with
respect to the question of satisfaction of any condition for exoneration and
release of the Financial Assurance, the issue or issues shall, at the request of
either party, be submitted to binding arbitration under Club Bylaw 9.6; and
5.3 OTHER. Such other terms and provisions as may be mutually agreed upon
by Declarant and Club or required by law.
6: ASSESSMENT COLLECTION. Club agrees to make diligent and good faith efforts
to collect from all members all Assessments on a timely basis as such become due
and owing. Club further agrees to diligently take all actions and pursue such
procedures as are set forth in the Declaration, Bylaws, or Rules for enforcing
collection of delinquent Assessments.
7: ACCOUNTINGS. Club shall maintain records and books of account which it
shall make available and open for inspection by Declarant or its agents during
normal business hours upon twenty-four (24) hours written notice. Club shall
provide to Declarant, commencing one (1) month following the effective date of
this Agreement, and monthly thereafter, a report containing all of the following
and covering the period of time since the last previous report:
7.1 RECEIPTS. A schedule listing all receipts, including all Assessments,
fees and any other receipts.
5
<PAGE>
7.2 EXPENDITURES. A schedule listing all expenditures made by Club,
including the date incurred, amount, payee, and purpose thereof, together with
copies of all invoices therefor.
7.3 DELINQUENCIES. A list of members delinquent in the payment of
Assessments or fees, including names, membership number, amount delinquent and
period of delinquency.
7.4 RESERVES FUND statement, including receipts, disbursements, and
balance.
8: TERMINATION. This Agreement shall terminate thirty (30) days after receipt
by Club of written notice from Declarant of its intent to terminate this
Agreement. From and after termination, Declarant shall pay to Club, prorated as
of the date of termination, assessments as required by the Governing Documents.
9: GENERAL PROVISIONS.
9.1 AGENCY. Nothing in this Agreement shall constitute a partnership
between, or joint venture by, the parties hereto, or constitute either party the
agent or employee of the other.
9.2 AMENDMENT. No supplement, modification or amendment of this Agreement
shall be established by course of dealing or by any method except in a writing
executed by each of the parties, except Exhibit A, which may be modified solely
by Club from time to time pursuant to the Bylaws and Declaration.
9.3 ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement, or the making, performance, or interpretation thereof, shall be
settled by binding arbitration under Club Bylaw 9.6.
9.4 ATTORNEYS' FEES. Should any action or proceeding be commenced between
the parties hereto concerning this Agreement or their rights and duties
hereunder, the party prevailing in such action or proceeding shall be entitled
to reasonable attorneys' fees and costs in such action or proceeding, which
shall be determined by the court or arbitrator. Each party shall bear its own
costs, expenses, and attorney's fees incurred in negotiating, preparing, and
signing this Agreement.
9.5 ENTIRE AGREEMENT. This Agreement and all documents executed
contemporaneously herewith and/or specifically referred to herein, such as the
Governing Documents, constitute the complete, exclusive and final expression of
the agreement between the parties pertaining to the subject matter contained in
it; it supersedes all prior and contemporaneous agreements, representations, and
understandings of the parties; and it may not be contradicted by evidence of any
prior or contemporaneous agreement. No extrinsic evidence whatsoever may be
introduced in any proceeding concerning the terms of this Agreement.
9.6 FURTHER ASSURANCES. The parties hereto agree to perform any further
acts and to execute and deliver any further documents which may be necessary or
appropriate to carry out the purposes of this Agreement.
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9.7 HEADINGS. The paragraph or section headings or titles in this
Agreement are for convenience and reference only and do not in any way modify,
interpret, or construe the intent of the parties or affect any of the provisions
of this Agreement.
9.8 NOTICES. Any notice or communication required or desired to be given
hereunder shall be deemed given when personally delivered or properly sent by
facsimile transmission, or ninety-six (96) hours after mailing (first class
postage prepaid, return receipt requested), to the parties at the following
addresses, or at such other addresses as may be given by proper notice:
9.8(a) DECLARANT: EPIC RESORTS, LLC, 1150 First Avenue, Suite 900,
King of Prussia, PA 19406; Facsimile Transmission No. (610) 992-1590;
WITH A COPY TO: JOHN ROGERS BURK, A LAW CORPORATION, 2140 Professional
Drive, Suite 120, Roseville, California 95661; Facsimile Transmission No. (916)
784-7075;
9.8(b) CLUB: EPIC VACATION CLUB, 1150 First Avenue, Suite 900, King
of Prussia, PA 19406; Facsimile Transmission No. (610) 992-1590;
9.9 PARTIES IN INTEREST. Unless specifically otherwise provided herein,
(a) nothing in this Agreement, whether express or implied, is intended to confer
any rights or remedies under or by reason of this Agreement on any persons other
than the parties hereto; (b) nothing in this Agreement is intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement; and (c) nothing herein shall give any third person any right of
subrogation or action over or against any party to this Agreement.
9.10 REMEDIES. Club shall be entitled to exercise each and every remedy
available under this Agreement, the Declaration as recorded with respect to any
Unit, or by law, with respect to default by Declarant in any of its obligations
hereunder.
9.11 SEVERABILITY. If any provision of this Agreement is held to be
unenforceable, invalid or illegal by any arbitrator or court of competent
jurisdiction, such shall not affect the remainder of this Agreement.
9.12 SUCCESSORS. This Agreement shall be binding upon and benefit the
heirs, legal representatives, successors, and assigns of the parties.
9.13 WORD USAGE. Unless the context clearly otherwise requires, (a) the
plural and singular numbers or the masculine, feminine and neuter genders shall
each be deemed to include the others; (b) "shall", "will", or "agrees" are
mandatory, and "may" is permissive; (c) "or" is not exclusive; and (d)
"including" or "such as" is not limiting.
9.14 EXHIBITS. The following Exhibit is attached hereto and incorporated
herein by this reference:
A Club Budget
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10: SIGNATURES. The individuals signing this Agreement in a representative
capacity for a person or entity whose name is set forth immediately above their
signature, warrant that they have been expressly authorized to sign the
Agreement on behalf of such person or entity.
DECLARANT: CLUB:
EPIC RESORTS, LLC, a Delaware EPIC VACATION CLUB, a
limited liability company Delaware nonprofit corporation
By By
-------------------------------- ----------------------------------
Thomas F. Flatley, Manager Thomas F. Flatley, President
11: ACKNOWLEDGMENT.
State of __________ )
) ss.
County of _________ )
On _____________, 1998 before me ________________, a Notary Public,
personally appeared THOMAS F. FLATLEY,
[Check one]:
[ ] personally known to me
[ ] proved to me on the basis of satisfactory evidence
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity, and
that by his signature on the instrument the person, or the entity upon behalf
of which the person acted, executed the instrument.
WITNESS my hand and official seal.
Signature
-------------------------------
[Seal]
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EXHIBIT A
CLUB BUDGET, 19
---
EXHIBIT A
TO REIMBURSEMENT AGREEMENT
