BUNDLING MERGER UPDATE WHAT IS BUNDLING BUNDLING REFERS

BUNDLING (MERGER) UPDATE

WHAT IS “BUNDLING” § “BUNDLING” REFERS TO THE RECREATIONAL FACILITIES WITHIN A COMMUNITY BEING OWNED AND OPERATED BY THEPOA § A MERGER IS THE LEGAL PROCESS OF COMBINING TWO ASSOCIATIONS INTO ONE. IN OUR CASE, QUAIL RIDGE COUNTRY CLUB INC. WOULD MERGE WITHQUAIL RIDGE PROPERTY OWNERS INC. . § THE NEW ENTITY WILL OPERATE AS ONE WITH A COMBINEDBOARD TO BE ESTABLISHED AS PART OF THE MERGER. § QUAIL RIDGE CONDOMINIUM ASSOCIATION WOULD CONTINUE TO EXIST FOR LOCAL AREA GOVERNANCE

HISTORY Q QUAIL RIDGE WAS ORIGINALLY DESIGNED AS AMANDATORY MEMBERSHIP CLUB AND COMMUNITY WITH TWO SEPARATE ENTITIES C ( LUB AND POA) Q ONCE THE CLUB AND COMMUNITY WAS TURNED OVER TO THE MEMBERS BY THE DEVELOPER, THE RESIDENTIAL UNIT OWNERS BECAME THE OWNERS OF QUAIL RIDGE Q THE UNIT OWNERS DELEGATED THE MANAGEMENT OF THE ENTITIES TOBOARDS OF THESE SEPARATE, INDEPENDENT CORPORATIONS

HISTORY Q IN 1991 THEBOARDS REALIZED THAT THE DIVIDED GOVERNANCE AND MANAGEMENT RESULTED IN CONFLICT AND CREATED THECOORDINATING COMMITTEE AND A SINGLE MANAGEMENT TEAMTHROUGH JOINT ORGANIZATIONAL ORDER #1 Q IN 1998, BOTHBOARDS ADOPTED JOINT ORGANIZATIONAL ORDER #3 FURTHER OUTLINING AND DEFINING THE ROLE OF THECOORDINATING COMMITTEE Q EFFECTIVELY THE COORDINATING COMMITTEE WHICH CONSISTS OF THE FOUR OFFICERS FROM EACH ENTITY MANAGE THE COMMUNITY FOR AT LEAST SIX MONTHS OUT OF EACH YEAR WE OPERATE LIKE A BUNDLED COMMUNITY WITHOUT ANY OF THE BENEFITS!

“WHY” MERGE THE CLUB AND POA? QMODERNIZE OUR MEMBERSHIP CATEGORIES QIMPROVE AND SIMPLIFY OUR GOVERNANCE MODEL QSTREAMLINE OUR OPERATIONS AND REPORTING STRUCTURE QCONSOLIDATE OUR CAPITAL NEEDS QPOTENTIAL ECONOMIC BENEFITS ASSOCIATED WITH A MERGER

PROPOSED NEW MEMBERSHIP CATEGORIES (CURRENT SOCIAL MEMBERS ARE GRANDFATHERED) PRIMARY § DUES: = APPROX. 70% OF FULL § LIMITED TO AN INITIAL CAP § SPLIT BETWEEN CURRENT MEMBERS DOWNGRADING AND SOCIAL MEMBERS UPGRADING OR NEW MEMBERS. § CAP MAY BE ADJUSTED BY BOARD POLICY § REPLACES CURRENT SOCIAL MEMBERSHIP INTERMEDIATE § DUES: = APPROX. 85% OF FULL § LIMITED TO AN INITIAL CAP § SPLIT BETWEEN CURRENT MEMBERS DOWNGRADING AND SOCIAL MEMBERS UPGRADING OR NEW MEMBERS. § CAP MAY BE ADJUSTED BY BOARD POLICY § 40 ROUNDS OF GOLF PER YEAR (PER HOUSEHOLD) § INCLUDES FITNESS & TENNIS § TOURNAMENT PLAY NOT ALLOWED § UNLIMITED “OFF SEASON” GOLF AT 50% OF THE PUBLISHED GUEST FEE § FULL GOLF PRIVILEGES § UNLIMITED ROUNDS OF GOLF § ADVANCED TEE TIMES § INCLUDES FITNESS & TENNIS PRIVILEGES § PRIORITY SIGN UP FOR ALL TOURNAMENTS § LIMITED GOLF PRIVILEGES § 20 ROUNDS OF GOLF PER YEAR (PER HOUSEHOLD) PRIVILEGES Full PRIVILEGES § INCLUDES TOURNAMENT PLAY § UNLIMITED “OFF SEASON” GOLF AT 50% OF THE PUBLISHED GUEST FEE

MEMBERSHIP LIFE CYCLE Full Member Intermediate New Members Cap TBD Social Members Will be Grandfathered Primary New Members Cap TBD Intermediate Downgrades Cap TBD Primary Downgrades Cap TBD

Proposed Membership Options Upgrading q CURRENT SOCIAL MEMBERS MAY UPGRADE WITHOUT PAYMENT OF AN ADDITIONAL INITIATION FEE ON A ONE TIME ONLY BASIS AT THE PROGRAM INCEPTION. Q ALL OTHER CATEGORIES MAY UPGRADE AT ANY TIME FROM ONE CATEGORY TO ANOTHER SUBJECT TO AVAILABILITY AND PAYMENT OF APPLICABLE FEES. Q DUES WILL BE PRORATED FOR THE YEAR OF ANY UPGRADE AND ALL SUBSEQUENT YEARS WILL BE BILLED AT THE NEW CATEGORY RATE

Proposed Membership Options Downgrading q AT THE INCEPTION, CURRENTMEMBERS MAY DOWNGRADE ONE OR TWO CLASSES BASED ON AVAILABILITY Q UPON SUCCESSFUL COMPLETION OF AMERGER VOTE, MEMBERS WILL RECEIVE AN “EXPRESSION OF INTEREST” FORM TO INDICATE THEIR CATEGORY OF CHOICE BYJUNE 30 TH 2019 Q PRIORITY FOR DOWNGRADES WILL BE BASED ON THE OWNERS ORIGINAL JOINING DATE Q AFTER THE INITIAL CAP IS FULL, ALL DOWNGRADES WILL BE BASED UPON AVAILABILITY. Q THE BOARD WILL HAVE THE ABILITY TO MODIFY CAPS BASED ON THE ECONOMIC NEEDS OF THE CLUB AND MARKET CONDITIONS

Membership Options Legacy q A c. HILD OF A MEMBER CAN ASSUME THEIR PARENTS' MEMBERSHIP UPON PAYMENT OF 50% OF THE CURRENT INITIATION FEE AND SUCCESSFUL COMPLETION OF THE MEMBERSHIP APPROVAL PROCESS. Q PARENTS REMAINING IN THE HOME CAN RETAINNON GOLF RELATED RECREATIONAL AMENITY USE PRIVILEGES

SIMPLIFY OUR GOVERNANCE MODEL OUR CURRENT STRUCTURE IS AS FOLLOWS: QCOORDINATING COMMITTEE QPOA BOARD QPOA EXECUTIVE COMMITTEE QCONDO BOARD QCLUB EXECUTIVE COMMITTEE QTWO FINANCE COMMITTEES QONE POA COMMITTEES ( ARB) QSIX CLUB COMMITTEES (ACTIVITIES, FITNESS, GOLF, GREEN, HOUSE, TENNIS) QNINE JOINT COMMITTEES (BUNDLING, BYLAWS, CONDUCT, GOVERNMENTAL AFFAIRS, INSURANCE, LANDSCAPING, MEMBERSHIP &MARKETING, LONG RANGE, COMMUNITY SAFETY

SIMPLIFY OUR GOVERNANCE MODEL AFTER A MERGER? QQUAIL RIDGE BOARD QQUAIL RIDGE EXECUTIVE COMMITTEE QQUAIL RIDGE FINANCE COMMITTEE QSEVEN QUAIL RIDGE COMMITTEES (FITNESS &TENNIS, GOLF &GREEN, HOUSE & ACTIVITIES, BYLAWS, CONDUCT, MEMBERSHIP &MARKETING, LONG RANGE) QCONDOMINIUM ASSOCIATION BOARD (21 LOCAL AREAS) QONE CONDO BOARD COMMITTEE (ARB) QTWO JOINT COMMITTEES (INSURANCE &SAFETY, LANDSCAPING)

CONDOMINIUM BOARD CHANGES THE MAJOR CHANGES INCLUDED ARE: QTHE ELIMINATION OF AT LARGE MEMBERS QTHE BOARD WILL BE CALLED “GOVERNORS” INSTEAD OF “DIRECTORS” IN RECOGNITION OF THEIR POSITION QTHE BOARD WILL BE COMPRISED OF THE TWENTY ONE (21) LOCAL AREA GOVERNORS QTHE CONDOMINIUM BOARD WILL ELECT THEIR INDEPENDENT OFFICERS AT THEIR ORGANIZATIONAL MEETING FOLLOWING THE ANNUAL MEETING

CONDOMINIUM BOARD CHANGES THE MAJOR CHANGES INCLUDED ARE: QTHE PRESIDENT OF THE CONDOMINIUM BOARD WILL HAVE A SEAT ON THE POA/CLUB BOARD QTHE NEW BYLAWS INCLUDES TERM LIMITS OF SIX YEARS FOR EACH AREA GOVERNOR QTHE ARCHITECTURAL REVIEW COMMITTEE WILL REPORT TO THIS BOARD (WITH THE EXCEPTION OFPOA OWNED PROPERTY AND AMENITIES) QTHE LANDSCAPING AND INSURANCE &COMMUNITY SAFETY COMMITTEE WILL ACT AS JOINT COMMITTEES TO THE MERGED POA/CLUB BOARD AND THE CONDOMINIUM BOARD

STREAMLINING OUR OPERATING AND REPORTING STRUCTURE QELIMINATES THE COORDINATING COMMITTEE (12 MEETINGS PER YEAR) QMERGES THE CLUB BOARD WITH THE POA BOARD (ELIMINATES 6 MEETINGS PER YEAR) QCREATES ONE EXECUTIVE COMMITTEE (ELIMINATES 6 MEETINGS PER YEAR) QMERGES THE FINANCE COMMITTEES (ELIMINATES 6 MEETINGS PER YEAR) QMERGES SEVERAL COMMITTEES (GOLF &GREENS, HOUSE & ACTIVITIES, INSURANCE &SAFETY ETC. ) ELIMINATING UP TO 24 MEETINGS PER YEAR

STREAMLINING OUR OPERATING AND REPORTING STRUCTURE QCREATES A SINGLE CONSOLIDATED FINANCIAL REPORTING STRUCTURE FOR MONTH AND YEAR END QELIMINATION OF ONE AUDIT AND RELATED TAX RETURNS QCONSOLIDATION OF CHECKING ACCOUNTS AND ELIMINATION OF DUAL CHECKS FROM BOTH ENTITIES TO ONE VENDOR QIMPROVES OUR BILLING AND COLLECTION PROCESS

CONSOLIDATE OUR CAPITAL NEEDS Q CURRENTLY ALL NEW PROPERTY OWNERS ARE REQUIRED TO PAY TWO FORMS OF INITIATION FEES (CLUB AND POA) Q BOTH ENTITIES ALSO BUDGET SEPARATELY FOR THEIR ANNUALCAPITAL NEEDS Q WE ANTICIPATE MOVING TO A SINGLE PRICE INITIATION FEE THAT WOULD INCLUDE THE CLUB AND POA Q THE MERGED ENTITY WILL BE ABLE TO PLAN EFFECTIVELY FOR OUR ENTIRE COMMUNITY FROM ONE SOURCE OF FUNDS Q THIS WILL CREATE A BALANCED APPROACH TO PLANNING CAPITAL FOR THE RECREATIONAL AMENITIES AND INFRASTRUCTURE NEEDS

ECONOMIC BENEFITS ASSOCIATED WITH A MERGER § THE POTENTIAL TAX BENEFIT IS THAT ALL MEMBERS CURRENTLY PAY SALES TAX ON ALL OF THEIR CLUB DUES. § IN A MERGED COMMUNITY WHERE THE CLUB FACILITIESARE OWNED BY THE POA, UNIT OWNERS ARE EXEMPT FROM SALES TAX ON THE LOWEST LEVEL OF MEMBERSHIP REQUIRED IN THE RECREATIONAL AMENITIES § THE RESPECTIVE BOARDS FORECAST SAVINGS AND HAVE REDIRECTED THE RELATED FUNDS TO MEMBERSHIP PLAN IMPLEMENTATION, DEBT REDUCTION OR FUTURE CAPITAL NEEDS IN THE FINANCIAL MODELING

REMAINING STEPS WE ARE HERE FAQ’S PUBLISHED ON OUR WEBSITE QRBUNDLING. COM RECEIVED AUP FROM RSM, PENDING TAA FROM THE STATE PROXY PACKAGE MAILED TO MEMBERSHIP 3/11/19 HOST TOWN HALL MEETINGS FOR OPEN DISCUSSION 3/16/2019 CALLED SPECIAL MEETING FOR MONDAY APRIL 8 TH, 2019

TRANSITION PERIOD COORDINATING COMMITTEE WILL BE REPLACED BY THE TRANSITION COMMITTEE EFFECTIVE APRIL 8 TH THE TRANSITION COMMITTEE WILL THE TRANSITION COMMITTEE MEET OVER THE SUMMER IN THE SAME WAY THE COORDINATING COMMITTEE HAS BECOMES THE TRANSITION BOARD OCTOBER 1, 2019 UNTIL THE ANNUAL MEETING A NOMINATING COMMITTEE WILL BE ELECTED TO PREPARE A SLATE OF CANDIDATES FOR ALL BOARD POSITIONS AT THE ANNUAL MEETING A NEW BOARD OF DIRECTORS WILL BE ELECTED BY THE MEMBERS AT THE ORGANIZING MEETING FOLLOWING THE ANNUAL MEETING, THE OFFICERS WILL BE ELECTED BY THE BOARD