| Joe Colvin, President of the Board at Las Campanas, is very pleased to report that after 18 months of work by The Club at Las Campanas and by Cienda Partners, an important agreement has been reached to further our positive relationship and taken steps that will, over time, provide significant benefits to both The Club at Las Campanas and Cienda. The agreement, which modifies the Amendment to the Transfer Agreement executed on May 5, 2010, provides for a number of changes that will allow The Club at Las Campanas to enhance sales of Equity Golf (EG) memberships and increase membership growth, while retaining the majority of the funds from the sales of the memberships. At the time of turnover, the developer (Lloyd’s Bank) owned approximately 174 EG memberships that could be sold or assigned by the developer, typically in conjunction with the sale of property. For every four EG memberships sold by The Club, three of the proceeds from the sale went to the developer and the proceeds of the fourth membership sale went The Club. The proceeds from that fourth sale were then used to reduce the re-issue list by one and to reimburse the outgoing member. This arrangement has been referred to as the 3 for 1 membership provision. Cienda Partners later purchased the developer-owned property and EG memberships, retaining all the original provisions of the amended transfer agreement. The existence of the large inventory of Cienda EG memberships, coupled with the 3 for 1 provision, represented a real barrier which constrained the ability of members to sell their memberships, diminished the value The Club and members receive for memberships, limited The Club’s collection of funds from membership sales, and prevented us from raising the price of memberships to a more reasonable level. As a result, the new agreement waives the 3 for 1 provision for the initial 8-year term of the agreement. Cienda may issue EG memberships in connection with their real estate sales, and as before, The Club will get no proceeds from those but we will get new members and the associated monthly dues from the Cienda memberships. In addition, The Club may sell EG memberships and retain all proceeds from the sales. On September 1, 2014 The Club will raise the initiation fee of an EG membership from $30,000 to $40,000 and also will raise the fee of an Equity Social (ES) membership from $22,000 to $25,000. It is our expectation that we will do additional price increases in the future. Another important change is that as long as there is a reissue list for EG, The Club will take one half of its EG sales from the reissue list. Our hope is that the combination of this change to the EG reissue list and the increase in initiation fees will lead to much faster sales of reissue list memberships and will encourage those considering leaving to wait rather than resign. There are currently approximately two dozen memberships on the EG reissue list. The Club has also agreed that it will not issue new memberships from its own inventory when the total number of memberships is above 900 during the term of this agreement. We believe this scarcity, along with membership price increases will be a boon to all members. (We, by the way, would love to get to 900 members.) While Cienda has EG memberships, they do not have any Equity Social (ES) memberships. The Club has agreed to allow Cienda to issue ES memberships to their real estate buyers who prefer that. Cienda will then forfeit one EG membership for each ES membership it issues. Further, when Cienda makes a sale of real estate and the related membership is activated and membership dues start on the date of closing, The Club will make a one-time incentive payment to Cienda of $10,000 for EG and $5000 for ES. This has been a long and important journey which, I am confident, will be a very valuable ingredient in the continued and accelerated success of our Club. It is our hope and expectation that it will be a big positive for Cienda as well. This Second Amendment to the Transfer Agreement is available on the member website along with the original Transfer Agreement and the Amendment to the Transfer Agreement on the Governance page, Club Governing Documents tab. Joe Colvin President |