LUSSO Collection
Resignation and Redemption

Members within The LUSSO Collection were required to stay within the club for a minimum of 18 months before they were eligible for redemption. A primary component of the LUSSO Collection offering was the 100% redemption policy where members received the full amount of their deposit if they elected to leave the club.

Members were redeemed on a "three in, one out" basis, where three new members were needed to join the club before one member from the club's resignation list would be repaid and redeemed. Once the club reached it's full capacity, members would be redeemed on a "one in, one out" basis.

A component of the LUSSO offering and the financial security of members' deposits was DepositTrust®. According to the destination club, "One important feature of the Club's commitment to the financial security of membership deposits is DepositTrust®. The Club commits that all of its real estate interests will be held by subsidiary LLCs owned 100 percent by the Club and pledges all of its ownership in these LLCs to a Trust set up to benefit the Members. This provides Members a secured position. The Trust also provides that the Members themselves may assume control of the Trust if they so desire. In addition each Member's Membership Agreement contains a commitment that 85 percent of member deposits are either used for Club Property purposes or held in cash."

"We have capitalized the Club and carefully assembled our business plan to minimize the risk of any membership deposit loss at any time, even if a "worst case scenario" were to occur and the Club was unable to continue to sell memberships. We have built in limitations with our investors such that no distributions will be paid to any investors until the Club has demonstrated a strong track record of membership sales and is operating at above a break-even level of cash flow (comparing all cash needs to the sum of Annual Dues being received from Members)."

"When you combine DepositTrust®, the Club's business model, and the contractual commitment to financial security and disclosure—including a semi-annual financial report to Members showing, among other things, the extent to which the Club's net assets cover the Club's liability to repay member deposits and the uses to which we have put the membership deposits that we have received—you have the best financial assurance package in the destination club industry."

When LUSSO made their official launch in June of 2006, the club offered members the potential to receive a portion of the increased value of their membership deposit. The club stated, "The LUSSO Collection believes members should reap the potential rewards of this position by giving members a 100% refund of their original deposit, and additionally receiving a 50% share of any increase in the original membership deposit during the period they were a member."

When redeeming an exiting member, LUSSO would average the sale price of the last several new memberships to determine the value owed to the resigning member.