TENANTS’ ASSOCIATION PELICAN RESORT CLUB

Minutes of the 2006 Annual General Meeting
December 5 and 6, 2006
St. Maarten, Netherlands Antilles

The Annual General Meeting (AGM) of the Tenants’ Association Pelican Resort Club (TAPRC) was held at the Pelican Resort, St. Maarten, Netherlands Antilles on Tuesday and Wednesday, December 5 and 6, 2006.  All Board Members were present with the exception of Fran Williams, Treasurer.  Also in attendance were representatives of the Royal Resorts Group, the accounting firm of Ernst & Young, and the Antillean and U.S. counsel.

I.                    Registration of names of owners and distribution of voting cards to qualified members of the TAPRC.

Elvia Aventurin, a staff member at Pelican Resort Club (PRC), registered owners and distributed the voting cards to qualified members.

Call to order

At 9:15 a.m., TAPRC’s Chairman, Jeff Pray, called the meeting to order.  He proceeded to welcome everyone.

II.                  Appointment of Chairman and Secretary of the meeting and introductions.

At the head table as introduced by the Chairman, Jeff Pray, were: Ms. Judy Young; Mr. Tom Hoshall; Mr. Jerry Luke; an acknowledgement that the Treasurer, Fran Williams, is not present; Mr. Frank Roozen, Antillean counsel; Mr. Len Matsunaga, U.S. counsel; and Mr. Richard Corso, representative of Royal Resorts Group.

Richard Corso, Royal Resorts COO, introduced the members of the Royal Resorts Group: Luis Cabrera, Resort General Manager; Rodrigo Gamboa, the Corporate Coordinator – Caribbean Division; Estela Villanueva, Comptroller; Elvia Aventurin, Executive Secretary; and Melissa Sassin from ISCO.

III.                Certification of proxies and quorum.

The meeting of Tuesday, December 5, 2006 for the Owners was terminated, due to a lack of quorum.  According to the Articles of Association, the AGM meeting held on the second day, Wednesday, December 6, 2006 does not require a quorum.  Any number of owners in attendance can be used to call the meeting to order.

Patrick Aberson of Ernst & Young was present to tally the votes.  The Chairman extended the opportunity of voting to those who had not done so prior to close of the meeting.

IV.                Minutes from December 6 and 7, 2005 – Annual General Meeting of Owners

• Proposal 1 – Approval of Minutes of 2005 Annual General Meeting of Owners.

The Chairman, Jeff Pray, proposed to accept the Minutes of the 2005 Annual General Meeting of Owners. Bruce Nowlan (B306) moved to accept the Minutes as presented. The motion was seconded by Bob Shaw (M510). Motion carried.

V.                  Board of Directors Report 2006

• Proposal 2 - To approve, ratify and confirm, and vote to discharge the Board of Directors in connection with, the Board of Directors Report for 2006.

The Chairman proposed to accept the Board of Directors Report for 2006.  Bill Harmon (B454) moved that the Report be accepted.  The motion was seconded by Bob Shaw (M510). Motion carried.

VI.                Proposed Budget and Cash Flow Statements for the year ended December 31, 2007

• Proposal 3 – To approve, ratify and confirm, and vote to discharge the Board of Directors in connection with, the Proposed Budget and Cash Flow Statements for the year ended December 31, 2007.

The Chairman called on the finance committee for a presentation and discussion of the budget. 

Norman Dodson, finance committee member, presented the report. A recap of his report is as follows:
The finance committee has made its annual review of reports prepared by Ernst and Young, our external auditors. We find these reports to be acceptable and there are improvements over the prior years. These audited financial statements are available to anyone that would care to review them. Please contact the manager’s office to make an appointment and the accounting office will be happy to review them with you. Probably of more interest is the most current activity. As of October 2006, the income from operations from the resort is US$1.523M. When compared with Oct 2005 at US$429,000, it was approximately a million-dollar increase. Mr. Dodson concluded that this was largely attributed to the activities of the Board and the policies they have put in place, and to Royal Resorts and their staff for carrying out those policies. We are on the right track and the finance committee thinks Resort management should be commended for their progress.

Mr. Jeff Pray: informed owners that monthly financial information can be found in the Owners section on the Pelican web site:  pelicanresort.com

The Chairman proposed to accept the Proposed Budget and Cash Flow Statements for the year ended December 31, 2007. Jerry Luke (B304) moved that the Proposed Budget and Cash Flow Statements be accepted. The motion was seconded by Bill Harmon (B454). Motion carried.

VII.              Management Report - Richard Corso reported for the Management Company. 
 

Richard introduced the Pelican Resort Club and Royal Resorts staff including - Luis Cabrera, Resort General Manager; Rodrigo Gamboa, the Corporate Coordinator – Caribbean Division; Estela Villanueva, Comptroller; and Elvia Aventurin, Executive Secretary.  He also introduced Melissa Sassin from ISCO and thanked her for being with us to assist with administrative duties.

Richard Corso thanked the owners for attending the meetings and encouraged them to continue
to do so.

1. There are some real challenges facing the Resort in the future. It has been a good year and things are getting better with the Pelican Resort and with the new Pelican Marina Residences. In the long term we have a sound financial plan. Operations will need eight to ten million dollars for work to be done at the Resort. There are plans for new drapes, bedspreads, etc. but this will take some time as we must prioritize hundreds of different projects.

2.  Communication and understanding are top priorities for 2007.  Already available in the Owner’s Section of the Pelican website are all the historical audited financial statements back to 1997.  All owners are encouraged to review this information and ask questions or make comments and suggestions.  We will continue to expand this vehicle of information dissemination.

3. Construction of the Marina Residences is on schedule and on budget. Pelican owners received a 30% introductory discount on purchases of the new project, and are still receiving a 15% discount. 

4. The Pelican Board represents approximately 17,000 owners and communication with the owners is the key for the future. The Management Company will improve communications. The Projected Income Statement for the Marina Project through 2020 is on the www.pelicanresort.com web site and answers many of the questions being asked here today. We will continue to keep the web site up to date for both the Pelican Resort Club and the new Pelican Marina Residences.

VIII.            Legal Update.

Frank Roozen, Antillean Counsel: Mr. Roozen is happy to say that his report is much shorter this year. A number of disputes have been eliminated. Since 1997, there have been lawsuits filed against the Resort and that situation has lingered against the Resort for years. There is no litigation pending now.

Len Matsunaga, US Counsel: One last reminder with respect to the voting cards and the proxies - please make sure if you haven’t done so to immediately turn them in. 

Joe Costa, former Board Member, registered a challenge that the FIP votes were not from a Member in good standing from 2002 to 2006 as the AMF was not paid on all units. The Board, legal counsel and the management company will review this challenge.

IX.                Election of Directors.
 

Patrick Aberson of Ernst & Young (Curacao) tallied the proxies and announced the following results for the proposals:

Total valid votes: 5,626 – 288 less than 2005.

X.                  Other Business and Vote.

PCIP:

Jerry Luke explained that the PCIP (Pelican Capital Improvement Program) was established to raise additional capital to address various deficiencies that we had. Some of the improvements paid for by the PCIP have been:

- Repair of 32 units that were damaged from repeated hurricanes
            - Hot water system for both B buildings
            - Railing systems, hurricane shutters
            - Laundry building, a major investment that reduces our operating costs

The current balance of investors is US3.6M and the current balance of amount invested into Cap Expenses (repairs and upgrades) is US4.1M. Two of the projects that we have on the table right now are:
           
            - Replace some out-of-service elevators
            - B building outdoor corridors

Judy Besta from the Pelican Sales Office explained the new interest rates for new investments in the PCIP:

-                      A minimum of US$5K will pay 5.5% per annum
-  A minimum of US$10K will pay 8% per annum
-  A minimum of US$25K will pay 9% per annum
-  A minimum of US$50K will pay 10% per annum
-  Anything significantly over US$50K is negotiable

A three-year promissory note is issued to the investor and is signed by a Board member. 

Ms. Besta offered to meet with owners with questions after the meeting.

FIP Units: 

There were questions from the floor concerning the FIP units.

Questions from:  Christine Schlunz M213, D16 and F22

How many units of the 934 forced re-sales were Friendly Island units?  (Approximately 558)

Are the maintenance fees unpaid on those FIP forced resale units? (Yes)

Do we bill on these 934 forced resale units?  (Yes)

Does Royal Resorts get the 10% of the billed maintenance fees?  (Yes)

Royal gets 10% of those billed forced re-sales even though the maintenance is not paid. (Yes)

Questions from: Bill Torrance B166

How many units in the forced re-sales were sold?  (Approximately 200)

Questions from: Kathy Segal B364, B263

If there are 934 FIP units that are forced re-sales, are you saying Royal Resorts hasn’t paid the maintenance on these units, and if so why not?  (Royal/FIP own the rights to the votes; they are voting them here today) 

Norman Dodson, former Chairman: I believe this evolved from the point in time FIP came in and bought the 4004 units. Part of the deal that was negotiated at that time was for FIP to retain the voting rights. They eventually sold those units but when they sold those units they maintained the voting rights. That was part of the inducement for them to make the investment in those 4004 units. 

Marina Residences Model Villa:

The Board responded to questions about how long the Model Villa would be in use. The Model Villa is a temporary building and will be torn down when the Marina Project is sold out.

            Security:

Jeff Pray: There is a need to increase the security at the Resort. A project to add more security cameras to the property is being investigated. The cost could be US$350,000. This will not only enhance the security at the Resort but because of the wiring required for the system, the Resort will have the added benefit of wireless Internet access. One suggestion, made at the meeting, to cover the cost of this project would be a one-time line item on the AMF bill for 2008 of approximately US$24.00.

The new Finance Committee for 2007:

The Chairman asked for nominations from the floor for the Finance Committee. The following were nominated: Norman Dodson, Chris Schlunz and Dave Stevenson. Bob Ryan was thankful but declined the nomination. The motion to have the Finance Committee accepted was given by Susan Peterson (B308), seconded by Bob Ryan (M520).

Moment of silence: 

Just before the meeting adjourned, Bob Shaw, former Chairman, asked that we have a moment of silence to remember Jim Patterson, former Board Member, who passed away recently.

XI.                Adjournment.

The Chairman thanked everyone for being present.  Owner Rosemary Ryan (M520) moved to adjourn the AGM meeting.  Seconded by Paul Murray (M558) and the motion carried.

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