Marci For WorldMark

III. SETTLEMENT TERMS

6. As consideration for dismissal of the Action and release of claims as provided for in the Mutual Releases set forth in paragraphs 49-51, below, the Parties have agreed to and shall adopt and fully implement the following provisions.

A. Appointment of “Nonaffiliated” Member to the WorldMark Board

7. A Director Defendant will resign from the Board so the vacancy created by this resignation can be filled by appointment to the Board of a “nonaffiliated” Member. If an order approving Settlement is obtained sufficiently in advance to permit it, the Director Defendant resignation and Board appointment to fill this vacancy shall be effectuated before the 2010 election. For purposes of this Settlement Agreement, “nonaffiliated,” when used to describe a Member, WorldMark director, or candidate for the Board, means an Member, director, or candidate who:

a) is not now and never has been employed by Wyndham or any related entity;

b) is unrelated to any of the Director Defendants; and

c) shall not be offered or promised employment or financial or other consideration by Wyndham or any related entity, or by WorldMark or any of the Director Defendants, at any time before or during his or her service on WorldMark’s Board (except as permitted under §§ 4.1(c)(ii) and 4.5(h) of WorldMark’s By-Laws). For purposes of this Settlement Agreement, “affiliated” refers to a Member, WorldMark director, or candidate for the Board who fails to meet one or more of the conditions set forth in subparagraphs (a)-(c) above.

8. The appointment occasioned by the resignation described in paragraph 7 will be for the normal term for which a WorldMark director currently serves, and the person so appointed need not stand for election at the 2010 annual meeting of Members. Immediately after the appointment, the Board will consist of three affiliated directors and two “nonaffiliated” directors.

9. The Board will use the following advisory criteria to help it identify qualified candidates for appointment to fill the vacancy created by this Settlement Agreement:

a) Whether the person is current on all financial obligations to WorldMark;

b) Whether the person has been a Member and user of WorldMark’s facilities and services for at least three years;

c) Whether the person has experience with Wyndham exchange programs or other timeshare products;

d) Whether the person has prior business experience or experience serving on a nonprofit or corporate board;

e) Value the person would add to the Board based on his or her professional, educational, or personal expertise and experiences; and

f) Whether the person has flexibility to attend quarterly meetings.

10. As an initial pool of candidates to fill the vacancy created by this Agreement, the Board will consider all nonaffiliated Members who have run for election to the Board or participated on the Advisory or Nominations Committees for any of the past three years (2007-2009). The Board also will consider all other nonaffiliated Members who seek to be considered for the appointment, including those who express an interest in writing pursuant to paragraph 11, below.

11. The Settlement Notice sent to Members under this Settlement Agreement shall advise Members of the Board vacancy created by the resignation described in paragraphs 7 and 8 of this Agreement; list the advisory criteria that will guide the Board’s identification of qualified nonaffiliated Members to fill the vacancy; and provide a deadline by which a Member may submit a one-page letter of interest to be considered for appointment.

12. Nothing in this Settlement Agreement shall limit or be deemed to limit the Board’s authority to select the candidate who, in the Board’s considered business judgment, would best serve WorldMark’s interests, except as specifically set forth in paragraphs 7 through 10, above.

B. Maintenance of Nonaffiliated Member Appointment Through 2013 Election

13. Director Defendants, collectively and each of them, shall take no action to reduce the number of nonaffiliated directors (as opposed to taking action to remove from the Board a specific person who is a nonaffiliated Member and replace the person with another nonaffiliated Member) through at least the 2013 Board election.

14. Beginning with the 2014 Board election, no specific composition of WorldMark’s Board will be required. The Board shall continue to exercise its considered business judgment to vote for or select for appointment the candidates, whether nonaffiliated or affiliated, who would best serve the interests of WorldMark and its members.

C. Grounds for Removal of Affiliated or Nonaffiliated Directors

15. Removal of appointed or elected directors, whether affiliated or nonaffiliated, is governed by WorldMark’s Bylaws.

D. Listing of Board Candidates and Required Disclosures

16. If the Approval Order is obtained sufficiently in advance to permit it, beginning with the 2010 election all candidates seeking election to the Board will be listed on ballots and candidacy statements in alphabetical order by last name and, as is current practice, incumbents will be identified as incumbents.

17. If the Approval Order is obtained sufficiently in advance to permit it, beginning with the 2010 election each candidate seeking election to the Board shall be required to disclose, to the Board and on their candidacy statements, the following:

a) any past or present affiliation with Wyndham;

b) whether the candidate is a competitor of Wyndham or any related entity; and

c) whether the candidate has advertised to trade, rent, or sell or has traded, rented, or sold Wyndham timeshare products or WorldMark vacation credits, vacations, or housekeeping tokens for profit or to generate income.

If the Board learns that a candidate has failed to comply with the foregoing disclosure requirements, that person may be disqualified from participating in the election.

18. No later than 90 days after entry of the Approval Order, the listing, identification, and disclosure requirements identified in paragraphs 16 and 17 of this Settlement Agreement shall be added to the written procedures adopted by the Board, under the authority of WorldMark’s Bylaws, governing the candidacy, nomination, and election of persons to the Board.

E. Voting Practices And Proxy Assignments

19. If the Approval Order is obtained sufficiently in advance to permit it, beginning with the 2010 election the following language shall be deleted from proxy instructions or proxy documents used for Board elections: “I acknowledge and agree that the Board of WorldMark will be appointed my proxy if I did not designate an individual owner to act as my proxy.” Thereafter, no proxy instructions or proxy document used for a Board election or other matter determined by the collective vote of the Members shall contain language to the effect that the Board, a WorldMark director, or any other person will be appointed or deemed the proxy holder for a Member if the Member returns a blank proxy document that does not exercise the Member’s vote or designate a valid proxy holder.

20. If the Approval Order is obtained sufficiently in advance to permit it, beginning with the 2010 election and thereafter, a proxy document returned by a Member that does not exercise the Member’s vote and additionally does not designate a valid proxy holder shall not be counted as a vote in the election.

F. Role of Outside Counsel For The Board

21. The Settlement Notice sent to Members under this Settlement Agreement shall contain a statement, substantially in the form attached hereto as Exhibit A, advising Members of the role of outside counsel retained by the Board.

22. No later than 90 days after entry of the Approval Order, a statement describing the role of outside counsel for the Board substantially in the form attached hereto as Exhibit A shall be posted on the official WorldMark by Wyndham website.

G. Periodic Review of the Management Agreement

23. No later than 90 days after entry of the Approval Order, the Board shall create a subcommittee composed of one nonaffiliated director, another director (affiliated or nonaffiliated), and the Board’s outside counsel, which will be assigned the task of reviewing the Management Agreement and recommending to the Board changes, amendments, or alterations, if any.

24. The Board shall consider the subcommittee’s recommendations with respect to the Management Agreement at a regularly-scheduled Board meeting. The Board shall, based on its collective business judgment, articulate any reasons for disagreeing with the recommendations of the subcommittee. The Board, collectively or through designated delegate(s), shall raise with Wyndham those subcommittee recommendations it determines to pursue. Any outcome resulting from a discussion between WorldMark, the Board, and Wyndham regarding the Management Agreement, or any proposal to change, amend, or modify the Management Agreement, shall be negotiated between the parties to that agreement.

25. A subcommittee of the Board as described in paragraph 23 shall undertake its review of the Management Agreement every three years, beginning as soon as practicable after its creation.

After three cycles of subcommittee review (e.g., 2019), the Board may, by unanimous vote, agree to a different timeline for review of the Management Agreement.

H. Notice to WorldMark of Resort Development

26. Director Defendants represent that when resorts are being considered or developed, the developer (Wyndham) has reported these matters to the Board during executive session.

27. When the developer makes such reports, the Board’s regularly-prepared meeting minutes shall reflect that the Board discussed with Wyndham in executive session matters pertaining to future resort development. Confidentiality concerning the particular resorts being developed or considered for development shall be maintained as long as necessary to ensure or protect Wyndham’s competitive position with respect to potential or future real estate transactions or resort development.

I. Member-to-Member Communications; Election Website

28. To facilitate Member communication concerning WorldMark elections and Annual Owner Meetings while preserving the privacy of Member contact information and the WorldMark Membership Register as a corporate asset, Director Defendants shall obtain the cooperation and participation of WorldMark to create, launch, and maintain an independent website (e.g., www.worldmarkelections2010.com) that will operate during each Election Cycle (“Election Website”). For purposes of this Settlement Agreement, “Election Cycle” means the period each year from the time voting materials are sent to Members, i.e., September, through the conclusion of the Annual Owner Meeting.

29. Members shall be notified in the Destinations and, to the extent permitted, Insider e-magazines before the Election Cycle of a date certain by which to submit a statement or correspondence concerning the upcoming election or Annual Owner Meeting that they wish to have posted for viewing by other Members on the Election Website. Members will be provided the slate of election candidates and any ballot proposals no later than twenty-one (21) days before the submission deadline.

30. To be eligible for posting on the Election Website, the statements or correspondence described in paragraph 28 must meet the following criteria:

a) Only one submission may be made per Member family;

b) Submissions may consist of no more than 250 words;

c) Submissions must be accurate with respect to WorldMark Bylaws, guidelines, and regulations;

d) Submissions must not be overtly slanderous or contain profanity or highly personal attacks, and

e) Submissions must be directly related to the election or Annual Owner Meeting business.

31. Any statement or correspondence described in paragraph 28 that does not satisfy one or more of the criteria listed in paragraph 30 (a) through (e) shall be declined for posting on the Election Website and returned to the submitting Member with a statement of the reason for its return. The Member shall have five (5) business days to correct the deficiency and resubmit the statement or correspondence. Where appropriate, WorldMark will engage independent counsel (such as current outside counsel, Paul Draper) to evaluate submissions for compliance with the criteria listed in paragraph 30 (a) through (e), and the decision of independent counsel regarding compliance or noncompliance will be binding on WorldMark and the submitting Member.

32. From 2010 through 2012, Director Defendants, WorldMark, and Wyndham will use the Election Website for election-related advocacy, subject to the same submission deadline and eligibility criteria governing statements and correspondence submitted by Members, as stated in paragraphs 28 through 31 of this Settlement Agreement. An exception during this time period applies, however, if an issue arises for which the Board believes, after having consulted with outside counsel, it has a fiduciary duty to advocate a position to Members. In that case, the Board and WorldMark retain their right to use WorldMark’s resources, including without limitation publications, Member contact information, and, to the extent permitted, WorldMark’s website and Member email addresses, to communicate with Members on such issues. Director Defendants, WorldMark, and Wyndham are not limited to the Election Website for election-related advocacy (subject to the exception noted above) after the 2012 election.

33. The Election Website and its web address (URL) will be announced to all Members inDestinations magazine and, to the extent permitted, the Insider e-magazine. Additionally, the September publication of Destinations and, as permitted, the September and October publications of the Insider e-magazine (if the order approving the Settlement is obtained sufficiently in advance to permit it in 2010) will contain a notice informing Members how to access the Election Website.

34. In addition to the Election Website described herein, the mailing house option provided by WorldMark Bylaws § 7.1(a) will remain available to Wyndham, WorldMark, the Board, and individual Members for direct mail communication with other Members, according to its terms.

35. This Settlement Agreement imposes no limitations on the Board’s or WorldMark’s use of WorldMark’s corporate resources to provide Members with content-neutral election-related communications, such as election notices and “get out the vote” reminders.

J. Confidentiality of Voting Records

36. Consistent with current practice, Director Defendants, the Board, and persons acting on WorldMark’s behalf shall not contact the election administrator during the Election Cycle to learn the voting records of specific Members or early voting results.

K. Permissible Contacts With Election Administrator

37. Director Defendants, the Board, and persons acting on WorldMark’s behalf may communicate with the election administrator to determine if a quorum requirement has been satisfied, and may interact with the election administrator as needed to assist in the administration of elections or the tabulation of election results.

L. Dismissal of Plaintiffs’ Complaint in Intervention in State Case

38. Within five (5) days of entry of the Approval Order, Plaintiffs will file with the Superior Court of California for the County of Sacramento a notice of dismissal of their complaint in intervention, with prejudice, as against WorldMark, only, in the State Case. If applicable, Plaintiffs will file related notices with any appellate court in which the State Case is then pending. Plaintiffs will not seek to enforce the existing order of the Superior Court or any subsequent order issued in the State Case, whether by the Superior Court, Court of Appeal, or Supreme Court. Further, Plaintiffs will not seek from WorldMark attorney fees, expenses, costs, or reimbursements of any kind for any proceeding involving or related to the State Case, other than as provided herein.

IV. NOTICE AND RELATED PROVISIONS

39. Subject to Court approval, notice of settlement shall be provided to WorldMark Members as described below:

a) The Notice of Settlement, in substantially the form attached hereto as Exhibit B-1 shall be mailed to all WorldMark Members via bulk rate postage within ten (10) business days of entry of the Notice Order.

b) The Notice of Settlement, in substantially the form attached hereto as Exhibit B-1, shall be posted in a clear and prominent fashion on WorldMark’s website in a location accessible to Members only (www.worldmarktheclub.com) within five (5) business days of entry of the Notice Order. On WorldMark’s home page Members will be instructed how to access the Notice of Settlement and be linked to the sign-in page. The Notice of Settlement shall remain on WorldMark’s website through the date of the Approval Hearing.

c) The Notice of Settlement, in substantially the form attached hereto as Exhibit B-1, shall be posted in a clear and prominent fashion on Plaintiffs’ Counsels’ firm websites, www.GirardGibbs.com and www.ghlawoffice.com, within five (5) business days of entry of the Notice Order. The Notice of Settlement shall remain on the law firm websites through the date of the Approval Hearing.

d) To the extent permitted, the first publication of Insider e-magazine after a Notice Order is issued will contain a notation advising Members that Notice of Settlement may be found on WorldMark’s website and providing the web address for the Notice.

40. All costs associated with mailed notice shall be paid 50% by Plaintiffs and 50% by Continental on behalf of Director Defendants. Each Party shall bear separately any costs associated with posting settlement notice on its website(s).

41. Proof of Notice. No later than five (5) days before the Approval Hearing, Director Defendants’ and Plaintiffs’ Counsel shall file with the Court a sworn declaration, with a copy to all Parties, attesting that the Notice of Settlement was disseminated to Members in a manner consistent with the Court’s Notice Order.

V. SETTLEMENT PAYMENT

42. Plaintiffs and Director Defendants, with the consent of Continental subject to its reservation of rights, agree to a monetary sum (defined above as the Monetary Settlement Amount) of One Million Eight Hundred Thousand Dollars and No Cents ($1,800,000) in settlement of Plaintiffs’ Counsel’s claim of attorneys’ fees, expenses, and costs incurred by Plaintiffs in the Action or State Case, subject to Court Approval. In no event shall Director Defendants or their insurer, Continental, be required to pay Plaintiffs or Plaintiffs’ Counsel any monetary amount in settlement greater than $1,800,000.

43. Within twenty-one (21) days of the Court’s entry of the Approval Order, Director Defendants, through Continental, shall pay the Monetary Settlement Amount, by check payable as directed by Plaintiffs’ Counsel, to be held in trust by Plaintiffs’ Counsel until such time as the Approval Order is no longer subject to reversal, vacation, or modification in any way and is no longer subject to appellate review, at which time the Monetary Settlement Amount may be released to Plaintiffs’ Counsel. In the event the Approval Order is appealed and reversed, and such reversal becomes final (i.e., all appeals and avenues of review are exhausted), the full amount of the Monetary Settlement Amount shall be remitted to Continental within twenty-one (21) days of such reversal becoming final.

VI. APPROVAL HEARING

44. The Parties shall, as soon as practicable, jointly apply to the Court for entry of the Notice Order and a scheduled date and time for the Approval Hearing. At the Approval Hearing, the Parties will move for final approval of the settlement set forth in this Agreement and entry of Approval Order.

45. As part of the application described in paragraph 44, the Parties will ask the Court to enter an order requiring any Member who wishes to be heard at the Approval Hearing or to have his/her comment or objection considered by the Court, to file with the Court a written notice of comment or objection and, if applicable, notice of the Member’s intent to appear at the Approval Hearing, and to provide copies of same to Plaintiffs’ Counsel and Director Defendants’ Counsel, at least ten (10) days before the Approval Hearing.

46. Subject to Court approval, the Parties agree that any Member who does not provide a notice of intent to appear or written objection or comment in compliance with the deadlines set forth in paragraph 45 and the Settlement Notice Order, will be deemed to have waived any objections and opposition to the fairness, adequacy, and reasonableness of the Settlement and shall not be permitted to object, present argument, or comment at the Approval Hearing.

47. The agreed-upon procedures and requirements for filing written comment or objection and written notice of intent to appear in connection with the Approval Hearing are intended to ensure the efficient administration of justice and orderly presentation of any Member’s comment or objection to the Settlement Agreement, in accordance with the due process rights of all Members.

48. If settlement is approved as agreed to by the Parties, the Parties will move jointly for entry of the Approval Order.

VII. MUTUAL RELEASE, DISMISSAL OF ACTION AND STATE CASE, AND JURISDICTION OF COURT

49. By this Settlement and Agreement, Plaintiffs, WorldMark, all past, present and future WorldMark Members, and Plaintiffs’ Counsel (“Plaintiff Releasing Parties”), release WorldMark and all of its predecessors and successors, past present, and future officers, directors, employees, attorneys, representatives, and agents, and the Released Parties and each of them, from any and all claims or causes of action, known or unknown, that were or could have been asserted by Plaintiffs or any Member against Director Defendants, either directly as personal claims or derivatively on behalf of WorldMark, based on California or other state law or federal statute, ordinance, regulation, common law, or other source of law, arising out of or relating in any way to the Action or the State Case, or any of the transactions, facts, disclosures, acts, matters or occurrences, statements, representations or omissions, or failures to act that were alleged in the complaints filed in the Action, and the complaint in intervention filed in the State Case (“Released Claims”). Nothing in this Settlement Agreement shall release Wyndham from the class claims for breach of contract, breach of implied covenant of good faith and fair dealing, violation of the UCL, violation of VOTA, and declaratory relief asserted against Wyndham, and any claims or causes of action Plaintiffs have asserted against Wyndham, either individually or on behalf of the class that Plaintiffs represent, including any claims, counterclaims, or cross-claims asserted in the complaint in intervention filed by Plaintiffs against Wyndham, if any, in the State Case. Nothing in this Settlement Agreement releases any party from any claims, counterclaims, or cross-claims Respondent Miller has or may have arising from his demand for the WorldMark membership register and email addresses of WorldMark members, as is presently being litigated in the State Case. Released Claims do not include any liabilities, claims, rights, suits, or causes of action either Party may assert to enforce the terms of this Agreement.

50. Without assuming whether the Release given by this Settlement Agreement is a general release, Plaintiffs and Members shall be deemed to have expressly waived and, by operation of the Approval Order, waived to the fullest extent permitted by law the provisions, rights, and benefits of Section 1542 of the California Civil Code, which provides as follows:

A general release does not extend to claims which the creditor does not know or suspect exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor. The Plaintiff Releasing Parties recognize that, even if they later discover facts in addition to or different from those which they now know or believe to be true, they nevertheless agree that, upon entry of the Approval Order, Plaintiff Releasing Parties fully, finally, and forever release any and all Released Claims. The Parties acknowledge that the foregoing waiver and release was bargained for and is a material element of the Settlement Agreement.

51. By this Settlement and the following Release, Director Defendants release Plaintiffs and Plaintiffs’ Counsel from any and all claims or causes of action that were, or could have been,  asserted by Director Defendants pertaining to the Action and the State Case (“Director Defendants’ Released Claims”). Director Defendants recognize that, even if they later discover facts in addition to or different from those which they now know or believe to be true, Director Defendants nevertheless agree that, upon entry of the Approval Order, Director Defendants fully, finally and forever settle and release any and all of the Director Defendants’ Released Claims. Director Defendants’ Released Claims do not include any liabilities, claims, rights, suits, or causes of action Director Defendants may have against Continental, Wyndham, or any person or entity that is not expressly a party to this Settlement Agreement. Director Defendants’ Released Claims do not include any claims, counterclaims, or crossclaims Wyndham may have, if any, in the State Case, or any claims, counterclaims, or cross-claims WorldMark may have with respect to Respondents Wyndham and Miller arising from Miller’s demand for the WorldMark membership register and email addresses of WorldMark members, as is being litigated in the State Case. Director Defendants’ Released Claims do not include any liabilities, claims, rights, suits, or causes of action either Party may assert to enforce the terms of this Agreement. The Parties acknowledge that the foregoing waiver and release was bargained for and is a material element of the Settlement Agreement.

52. The administration and consummation of the Settlement as embodied in this Settlement Agreement shall be under the authority of this Court. The Court shall retain jurisdiction to protect, preserve, and implement the Settlement Agreement, including but not limited to, the Release. The Court expressly retains jurisdiction to enter such further orders as may be necessary or appropriate in administering and implementing the terms and provisions of the Settlement Agreement.

VIII. REPRESENTATIONS, WARRANTIES, AND COVENANTS

53. Plaintiffs’ Counsel, who are signatories hereof, represent and warrant that they have the authority, on behalf of Plaintiffs, to execute, deliver, and perform this Settlement Agreement and to consummate all of the transactions contemplated hereby. This Settlement Agreement has been duly and validly executed and delivered by Plaintiffs’ Counsel and Plaintiffs and constitutes their legal, valid, and binding obligation.

54. Director Defendants, through their undersigned attorney(s), represent and warrant that they have the authority to execute, deliver, and perform this Settlement Agreement and to consummate all of the transactions contemplated hereby. The execution, delivery, and performance by Director Defendants of this Settlement Agreement and their consummation of the actions contemplated hereby have been duly authorized by all necessary corporate action on the part of WorldMark. This Settlement Agreement has been duly and validly executed and delivered by Director Defendants’ Counsel and Director Defendants and constitutes their legal, valid and binding obligation.

IX. OTHER PROVISIONS

55. This Settlement Agreement may not be used in evidence and shall not at any time be construed or deemed to be an admission or concession by Director Defendants with respect to any alleged wrongdoing, fault, or omission of any kind whatsoever, regardless of whether this Settlement Agreement results in entry of the Approval Order as contemplated herein. Director Defendants specifically deny all of the allegations made by Plaintiffs in connection with the Action and the State Case.

56. This Settlement Agreement is entered into only for purposes of Settlement. In the event the Approval Order is not entered or the Approval Order is subsequently reversed on appeal, this Settlement Agreement, including any releases or dismissals hereunder, is canceled, and no term or condition of this Settlement Agreement (except the provision of paragraph 43 requiring return of the Monetary Settlement Amount payment to Continental), or any draft thereof, of the discussion, negotiation, documentation, or other part or aspect of the Parties’ settlement discussions, shall have any effect, nor shall any such matter be admissible in evidence for any purpose, or used for any purposes whatsoever, in the Action or State Case, and all Parties shall be restored to their prior rights and positions as if the Settlement Agreement had not been entered into.

57. The Parties agree that the settlement consideration and other terms of the settlement set forth in this Agreement were negotiated at arm’s length in good faith by the Parties, and reflect a settlement that was reached voluntarily after consultation with experienced legal counsel.

58. This Agreement may not be modified or amended, nor may any of its provisions be waived, except by a writing signed on behalf of all Parties or their successors-in-interest.

59. The headings herein are used for the purpose of convenience only and are not meant to have legal effect.

60. The administration and consummation of the settlement set forth in this Agreement will be under the authority of this Court, and the Court will retain jurisdiction for, among other things, entering orders concerning enforcement of this Agreement.

61. The waiver by one Party of any breach of this Agreement by any other Party will not be deemed a waiver of any other prior or subsequent breach of this Agreement.

62. This Agreement and its exhibits constitute the entire agreement among the Parties concerning the settlement of the Action, and no representations, warranties, or inducements have been made by any Party concerning this Agreement and its exhibits other than those contained and memorialized in such documents. This Agreement supersedes all prior understandings, communications, and agreements with respect to the subject of this Agreement.

63. This Agreement may be executed in one or more counterparts. All executed counterparts and each of them will be deemed to be one and the same instrument, provided that the Parties’ respective counsel exchange among themselves all signed counterparts.

64. This Agreement will be binding on, and inure to the benefit of, the successors and assigns of the Parties.

65. The construction, interpretation, operation, effect, and validity of this Agreement, and all documents necessary to effectuate it, will be governed by the internal laws of the State of California without giving effect to any choice or conflict of law provision, or rule that would cause the application of the laws of any other jurisdiction.

66. Except as otherwise provided in this Settlement Agreement, each party to this Settlement Agreement shall bear his, her, or its own costs of the litigation.

67. The Parties to this Settlement Agreement reserve the right, by agreement and subject to Court approval, to grant any reasonable extension of time that might be necessary to carry out the provisions of this Settlement Agreement, as well as to correct any inadvertent, non-substantive mistakes or typographical errors contained in any of the Settlement papers.

68. Proper notice shall be given to Plaintiffs and Director Defendants of all applications for Court approval or Court orders required under this Settlement Agreement.

69. The determination of the terms of, and the drafting of, this Settlement Agreement has been by mutual agreement after negotiation, with consideration by and participation of all Parties and their counsel. Since this Settlement Agreement was drafted with the participation of all Parties   and their counsel, the presumption that ambiguities shall be construed against the drafter does not apply. The Parties were represented by competent and effective counsel throughout the course of settlement negotiations and in the drafting and execution of this Settlement Agreement, and there is no disparity in bargaining power between the Parties to this Settlement Agreement.

70. This Settlement Agreement constitutes the entire, fully integrated agreement among the Parties and cancels and supersedes all prior written and unwritten agreements and understandings pertaining to the Settlement of the Action.

71. Plaintiffs’ Counsel and Director Defendants’ Counsel agree to cooperate fully with one another in seeking entry of the Notice Order, the Court’s approval of this Settlement Agreement and the Settlement set forth herein, and entry of the Approval Order, and to promptly agree on and execute all such other documentation as may be reasonably required to obtain the Court’s approval of the Settlement.

72. The Parties agree that any disputes regarding the meaning of the terms and conditions of this Settlement Agreement, the Parties’ rights and obligations under this Settlement Agreement, and/or any disagreement regarding the manner in which any issue or dispute arising under this Settlement Agreement should be resolved, shall be submitted to the Court for resolution.

73. All notices to the Parties or counsel required by this Settlement Agreement shall be made in writing and communicated by electronic and regular mail to the following addresses (unless one of the Parties subsequently designates one or more other designees):

Plaintiffs’ Counsel:

Jonathan K. Levine
Elizabeth C. Pritzker
GIRARD GIBBS LLP
601 California
Street, Suite 1400
San Francisco, California 94108
Telephone: (415)981-4800
Facsimile: (415)981-4846
jkl@girardgibbs.com
ecp@girardgibbs.com

James Helfrich
GERSH & HELFRICH, LLP
1860 Blake Street, Suite 300
Denver, Colorado 80202
jh@ghlawoffice.com

MY ANALYSIS AND COMMENTS

7. Removing one Director Defendant is a first step toward breaking the Developer control of WorldMark’s board.  But how does allowing that same controlled board (presumably including the Director that will be resigning) to hand-pick the replacement Director change anything?  Why not let the owners select the replacement Director at the already-scheduled upcoming election?  

8. This is unclear to me.  A "normal term" on the WorldMark Board is two years.  Does that mean that the appointed Director's term will be up for re-election in 2012?  Or will the appointed director complete the term of the resigning director, so if the resigning director's term is up for re-election in 2011 the appointed Director will be up for re-election next year?

11. The deadline announced in the settlement (posted here on the WorldMark the Club website) is July 30, 2010.  Today is July 28, and I have not yet received my Notice in the mail.  How many other potential appointees are there who do not frequent the Club website or the owner forums, have not yet received their mailed notice, and will miss the opportunity?

12. This paragraph confirms that the existing Board has no intention of ceding one ounce of control to the owners.

13. This clause prevents the three remaining Defendant Directors from re-loading the Board with Affiliated directors for three years after the lawsuit has been settled.  This would be significant if the Members were being allowed to select the replacement Director; as the existing Board is appointing that replacement, they will be assured that the replacement is someone they want on the Board anyway.

16. Alphabetical order is an improvement over previous years, in which Incumbents were all listed first.

17. This is an improvement.  The settlement does not require that the information be communicated to owners, but on this year's candidate info page on the Club website, these disclosures are part of the candidate information.  I hope this continues.  (It would have been nice if candidates had been informed that this information would be published; they may have chosen to phrase their responses differently had they known that it would be part of the election materials.)

19. This is a win for owners.  The language being removed has been very confusing to owners in recent elections!

20. Was this happening in the past?  Were blank election forms being treated as proxy assignments to the Board of Directors?  That may help explain the Board's huge jump in proxy numbers in the 2009 election.

21. I do not know the background of this selection, how it relates to the lawsuit, or why it is in the settlement.  That WorldMark's outside counsel should be unaffiliated with the Developer seems to be a given, but it is good to have it affirmed.

23. This could be a significant win for owners and the Club IF the non-affiliated director is strong enough to stand up against the establishment and make his/her voice heard in support of the best interest of the Club and owners.  If not, this could become a smoke screen through which Wyndham is able to push through changes to make the Management Agreement even more biased toward the management company.

25. UNANIMOUS vote is key.  (To this point, almost all Board votes have been unanimous.  Hopefully the result of this and other lawsuits will be that the Board does not move and act as one mind, but as individuals.)

26. This clause is a response to the complaint that up until now the Board has been “in the loop” on resort development only because they have been executives of the development company.   This should ensure that the Board is involved in the development process from the very beginning.  I understand the need to protect confidentiality while a resort is under consideration, but I hope that the minutes will be specific enough to allow owners to see in retrospect when certain resorts were first discussed. My suggestion would be that the Board and Developer assign numbers or code names for referring to the resorts, and when appropriate disclose in the minutes the real identity of "resort x".

28. This is another "almost" section.  Allowing owners to post a 250 word statement accessible to other owners is an improvement.  If the review process is as impartial as described here, it will give owners one avenue to communicate.  Read on for my concerns about this section:

29. "...to the extent permitted"?  Permitted by whom?  Why would it not be permitted?

The deadline for submitting postings is not spelled out in the proposed settlement; the deadline for submissions for the 2010 election is August 6 (as announced on the Club website).  The election takes place at the end of October.  Owners do not have any opportunity to respond to anything that takes place in the approximately 10 weeks leading up to the election. 

The announcement that is currently on the Club website is VERY hard to find.  The link on the home page says "Share Your Thoughts on WorldMark’s 2010 Election. Share your thoughts on the 2010 election with other WorldMark Owners. Here's how."  That sounds like nothing more than another link to the all-but-dead Vacation Forum; there is no indication that it is something new. 

30 (c) The definition of “accurate with respect to WorldMark bylaws, guidelines, and regulations” could be problematic.  Accurate according to whose interpretation?  Paul Draper, the board’s outside counsel (paragraph 31).  The existence of this suit and other legal actions against the Board shows that not everyone interprets the documents as Paul Draper does.

31. I am glad to see a specific process for re-submission, rather than just rejecting the statement outright.

32. I suppose this is intended to say that the Board will use ONLY this website for election-related advocacy, but it does not specifically say it.

Wyndham, WorldMark, and the Board can still use any means available them to communicate with Owners on an election issue if they feel it is important.  Owners, on the other hand, still have ONLY this website, no matter how important the issue.  This perpetuates the existing communication problem -- Wyndham and the Board can communicate directly with owners whenever and however they choose, while owners can do so only by spending tens of thousands of dollars to go through a mail house as described in Paragraph 34.

33. Again .... whose "permission" is required and why?  On what grounds could it be refused?

34. This is not a reasonable option for owners.  The cost of using such a mailing house is a minimum (post card notice only) of about $0.35 per member.  With over 250,000 members, it would cost an owner nearly $100,000 to send a POSTCARD to each owner.  It appears we will have to pin our hopes on the State case referenced in paragraph 38 below for obtaining the true communication rights that were originally guaranteed under our Bylaws.

36. Previously, the Board had access to information on the vote count before casting its proxies!  We have been assured that this has not happened in the last few elections (since Philip Abdouch demanded the same right before casting his proxies).  As with the Outside Counsel clause, it is good to see it specifically detailed.

38. "The State Case" is WorldMark v. Miller. Robin Miller, an owner, demanded that WorldMark release to him the owner register as provided in our Bylaws so that he could communicate with owners regarding a proposal he wished to put on the ballot at an Annual Owner Meeting.  The Board refused, and asked the Court to prevent him from getting access.  The court sided with Miller and ordered that the membership list be released to him.  WM of course appealed, and the case is still ongoing.  The plaintiffs in THIS case intervened in THAT case because it had specific bearing on the "election manipulation" complaints in this case.  This clause would remove these plaintiffs and their attorneys from the Miller case, but would not otherwise affect that case; it will continue.

39 (a) As noted above, as of July 28 I have not received my notice in the mail.  I know about the proposed settlement because I follow owner websites such as www.wmowners.com.

(b) This notice is on the website as required. 

(c) The notice of settlement, as well the complete Settlement Agreement, are available on the attorney websites as required.

(d) Same question of permission -- whose permission?  On what grounds could it be refused?

40. Continental is the insurance company that carries the Directors & Officers ("D&O") Insurance for the WorldMark Board.  That insurance is covering the costs of defending the Directors.

45-46.  In other words, if you want to say anything, say it now.  As I said in my intro above, if we are not involved in the process, we cannot complain about the result.

49.  There has been a lot of public concern about these releases.  Any owner with questions has been urged to contact the attorneys, Gerard and Gibbs.  I did so and was assured that this release applies ONLY to the actions and the time period covered by the suit.  This does NOT release anyone from any future wrongdoing, whether that wrongdoing is the same action complained against in this suit or not. 

These Wyndham class claims are referring to the "other half" of the lawsuit that is still ongoing and is NOT covered under this proposed settlement.