2013 Operating Units Bundling (Merger) Update

2013 Operating Units What is “bundling” “Bundling” refers to the recreational facilities within a community being owned and operated by the POA A Merger is the legal process of combining two Associations into one. In our case, Quail Ridge Country Club Inc. would merge with Quail Ridge Property Owners Inc.. The new entity will operate as one with a combined Board to be established as part of the merger. Quail Ridge Condominium Association would continue to exist for Local Area Governance

History Quail Ridge was originally designed as a Mandatory Membership club and community with two separate entities (Club and POA) Once the Club and Community was turned over to the members by the developer, the residential unit owners became the owners of Quail Ridge The unit owners delegated the management of the entities to Boards of these separate, independent corporations

We operate like a Bundled community without any of the benefits! History In 1991 the Boards realized that the divided governance and management resulted in conflict and created the Coordinating committee and a single management team Through Joint Organizational order #1 In 1998, both Boards adopted Joint Organizational order #3 further outlining and defining the role of the Coordinating committee 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? 2013 Operating Units “Why” Merge the Club and POA? Modernize our membership categories Improve and simplify our Governance Model Streamline our operations and reporting structure Consolidate our Capital needs Potential 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 20 rounds of golf per year (per household) Includes Fitness & Tennis privileges Tournament play not allowed Unlimited “off season” golf at 50% of the published guest fee 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 Limited golf privileges 40 rounds of golf per year (per household) Includes Fitness & Tennis privileges Includes Tournament play Unlimited “off season” golf at 50% of the published guest fee Full FULL GOLF PRIVILEGES UNLIMITED ROUNDS OF GOLF ADVANCED TEE TIMES INCLUDES FITNESS & TENNIS PRIVILEGES PRIORITY SIGN UP FOR ALL TOURNAMENTS

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

Proposed Membership Options Upgrading Current Social Members may upgrade without payment of an additional initiation fee on a one time only basis at the program inception. All other categories may upgrade at any time from one category to another subject to availability and payment of applicable fees. 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 At the inception, current Members may downgrade one or two classes based on availability Upon successful completion of a Merger vote, Members will receive an “Expression of Interest” form to indicate their category of choice by June 30th 2019 Priority for downgrades will be based on the owners original joining date After the initial cap is full, all downgrades will be based upon availability. The Board will have the ability to modify caps based on the economic needs of the club and market conditions  

Membership Options Legacy   Legacy A child 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. Parents remaining in the home can retain Non Golf related recreational amenity use privileges

Simplify our Governance Model Our current structure is as follows: Coordinating Committee POA Board POA Executive Committee Condo Board Club Board Club Executive committee Two finance committees One POA committees (ARB) Six Club Committees (Activities, Fitness, Golf, Green, House, Tennis) Nine Joint Committees (Bundling, Bylaws, Conduct, Governmental Affairs, Insurance, Landscaping, Membership & Marketing, Long Range, Community Safety

Simplify our Governance Model Governance model after a merger? Quail Ridge Board Quail Ridge Executive Committee Quail Ridge Finance Committee Seven Quail Ridge Committees (Fitness & Tennis, Golf &Green, House & Activities, Bylaws, Conduct, Membership & Marketing, Long Range) Condominium Association Board (21 local areas) One Condo Board Committee (ARB) Two Joint Committees (Insurance & Safety, Landscaping)

Condominium board changes The major changes included are: The elimination of at large members The Board will be called “Governors” instead of “Directors” in recognition of their position The board will be comprised of the twenty one (21) local area governors The condominium board will elect their independent officers at their organizational meeting following the annual meeting

Condominium board changes The major changes included are: The president of the Condominium board will have a seat on the POA/Club board The new Bylaws includes term limits of six years for each Area Governor The architectural review committee will report to this board (with the exception of POA owned property and amenities) The 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 Eliminates the Coordinating Committee (12 meetings per year) Merges the Club Board with the POA Board (eliminates 6 meetings per year) Creates one Executive Committee (eliminates 6 meetings per year) Merges the Finance Committees (eliminates 6 meetings per year) Merges several Committees (Golf & Greens, House & Activities, Insurance & Safety etc.) eliminating up to 24 meetings per year

Streamlining our Operating and Reporting Structure Creates a single consolidated financial reporting structure for month and year end Elimination of one audit and related tax returns Consolidation of Checking accounts and elimination of dual checks from both entities to one vendor Improves our billing and collection process

Consolidate our Capital needs Currently all new property owners are required to pay two forms of Initiation fees (Club and POA) Both entities also budget separately for their annual Capital needs We anticipate moving to a single price Initiation fee that would include the Club and POA The merged entity will be able to plan effectively for our entire community from one source of funds This will create a balanced approach to planning capital for the recreational amenities and infrastructure needs

economic benefits associated with a merger 2013 Operating Units 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 facilities are 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

2013 Operating Units Remaining Steps HOST TOWN HALL MEETINGS FOR OPEN DISCUSSION 3/16/2019 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 CALLED SPECIAL MEETING FOR MONDAY APRIL 8TH, 2019 WE ARE HERE

2013 Operating Units Transition Period Coordinating Committee will be Replaced by the Transition Committee effective April 8th The Transition Committee will meet over the summer in the same way the Coordinating Committee has The Transition Committee becomes the Transition Board October 1, 2019 until the annual meeting 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 A Nominating Committee will be elected to prepare a slate of Candidates for all Board positions

2013 Operating Units Marketing – Bundling Microsite QRBUNDLING.COM

2013 Operating Units Marketing – Bundling Microsite QRBUNDLING.COM

2013 Operating Units Proxy and quorum importance B 442, 2/3 yes D 2/3 yes EA, 300, 50% + 1 (151) 474, 2/3 yes

2013 Operating Units Merging the Club and POA Questions ?