Ch. 582 LAWS OF MARYLAND

and updated at each renewal under subsection (b) of this section.

(2) (i) The amount of the bond shall be increased, or may be decreased,
as necessary to take into account changes in the health club facility's outstanding
liabilities to members in the following cases, whichever comes first:

1. When the health club facility's outstanding liabilities to
members increase or decrease by $10,000; or

2. On a quarterly basis.

(ii) If a registrant's outstanding liabilities to the members exceed the
amount of the bond, and the registrant has failed to increase the bond, then the
registrant shall immediately stop selling health club services agreements and shall
refrain from selling health club services agreements until the requirements of this
subsection have been satisfied.

(3) (i) An irrevocable letter of credit in a form acceptable to the
Division, or cash, may be filed with the Division instead of a surety bond.

(ii) Notwithstanding any other provision of this subtitle, a seller of
health club services agreements does not have to file or maintain a bond, letter of
credit, or cash in excess of $200,000 per health club services facility. The bonding
requirement of this subsection applies to each location at which health club services are
sold in any case where a person operates or plans to operate more than one facility
within the State.

(h) (1) Each person who sells health club services to be offered at a planned
facility or a facility under construction shall:

(i) Register under subsection (a) of this section before conducting
any sales activities; and

(ii) Maintain a surety bond in an amount not less than $50,000 until
the value of obligations to consumers exceeds that amount.

(2) Until the time a person opens a health club services facility, the
amount of the bond shall be increased as necessary to take into account increases in the
person's outstanding liabilities to the members with a final adjustment to be made at
the time of opening.

(3) Upon opening the facility, the person is subject to the provisions of
subsections (a) through (e) of this section.

SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take
effect July 1, 1990.

Approved May 29, 1990.

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