A state trade association desired to reorganize and amend its operating agreement and related documentation. We assisted in the reorganization by drafting the necessary documents to preserve and enhance its cooperative status.
A national trade association requested our help in converting from a conventional corporation into a foreign state limited liability company. We prepared the certificate of formation, operating agreement, enrollment agreements and other member processing documents for the new LLC; ascertained which default rules under the Delaware LLC statute were to be countermanded to comply with the governance structure desired; prepared the documents required to effect the merger of the corporate entity into an LLC and assisted in the filing of an election to be treated as a corporation for federal income tax purposes.
A prestigious Midwestern private club requested we advise and draft amendments to the Club’s existing bylaws for the purpose, among other things, of (i) moving provisions over which the governing board exercises control to a policies compendium; (ii) conforming the bylaws and policies to current private club industry “best practices”; (iii) enhancing the Club’s distinctly private and tax exempt statuses vis-à-vis Titles II and VII of the 1964 Civil Rights Act, Title III of the ADA, and I.R.C. § 501(c)(7) and related case law, regulations and rulings. We also recommended amendments based on (i) nonprofit corporate governance standards and practices set forth in the state not for profit corporation act and the ABA Model Nonprofit Corporation Act perceived to be applicable or useful in the context of private, nonprofit, tax exempt clubs; (ii) conformity to the club’s articles of incorporation.
A Southeastern trade association retained us to draft organizational documents for a proposed buyers’ club as a wholly owned subsidiary of the association. We prepared an enrollment agreement for the buyers’ club, prepared other collateral documents, e.g., group agency purchasing agreement, loan agreement and management agreement and amendments to the association’s operating agreement to allow for formation of the direct subsidiary buyers’ club.A Southeastern resort developer requested our assistance in designing and documenting a corporate and residential member program for a new 36-hole semi-private club, residential and hotel facility. The membership plan required integration of hotel guest access with off premise corporate member privileges, unaffiliated group outings, daily fee play and residential lot owner access preferences.
A golf course management company asked us to assist in designing and implementing a residential membership program for a new full service, semi-private country club. The legal work included critique and recommendations regarding the subdivision declarations, development loan agreement, joint venture agreement with the land developer and determining requirements for escrow of membership sales proceeds pending completion of the facilities.
A Midwestern developer retained us to prepare a membership plan for a private membership club being developed simultaneously with a surrounding residential subdivision. We reviewed and made recommendations with respect to the Declaration of Covenants and Restrictions for the subdivision to ensure that vested rights or easements were not created, inuring to the benefit of the residential lot purchasers. We prevailed on the developer to exclude the golf course from the legal description for the residential subdivision and to separate it entirely, thereby avoiding undesirable potential legal claims that might be made on the Club by either the lot purchasers or the homeowners association. We also suggested and furnished sample forms of reciprocal easements between the Club and the subdivision to ensure an equitable allocation for contribution for subdivision amenities used by both the Club and the subdivision lot owners and to protect the Club’s boundaries and provide for necessary easements.
The members of a Mid-Atlantic country club asked us to represent them in connection with the turnover of the Club to the members by the developer. We worked with local counsel to restructure the developer-originated purchase agreement, avoiding severe income tax problems that arose because of the nature of the developer’s prior method of operating the Club and to ferret out and identify environmental and other legal concerns which were not evident to the members.
The members of a prestigious Mid-Atlantic club which had previously hosted several USGA golf events were concerned that their membership practices might be held suspect by the organization which was contemplating holding a nationally televised tour event on one of their golf courses. We counseled with the Club and exposed the Club directors to the legal, media and other issues involved. The Club was able to persuade the tournament promoter that, notwithstanding the Club’s lack of diversity in its membership constituency, the Club was a suitable location for the proposed event.
In another similar scenario, another Mid-Atlantic club which had previously held nationally televised golf tournaments was also approached by a perennial tournament promoter. In this case, after we counseled with the Club, the Club determined to forbear changing its membership practices solely to suit the public relations needs of the tournament promoter and refrained from holding the tournament, primarily to avoid potential claims from prospective members who had been informed they were on a priority waiting list.
In response to a request by a Midwestern private club developer, we were able to work in conjunction with a national accounting firm to devise a membership plan which avoided recognition of income with respect to membership contributions made by new members. Additionally, we were able to supply the developer with persuasive arguments to convince a lender to alter the terms of a development loan to make completion of the golf club project consistent with both the terms of the membership plan and the economic needs of the overall project.
We assisted members of a Southeastern developer-owned club in negotiating a turnover of the Club facilities at a price considerably more favorably to the members than the price originally offered by the developer. At the same time, we were able to assist the members in devising a program which successfully achieved the acquisition of control of the Club, but forestalling the liability for operating deficits until the developer demonstrated the Club could be operated on at least a break even basis.
In response to a request by an internationally known Western resort, we structured a non-equity membership plan for the Club facilities owned by the resort operator, but which preserved the operator’s ownership prerogatives and avoided potential claims of existing homeowners. Access rights of existing homeowners were protected simultaneously with creating a new bundle of rights for those homeowners and others who desired to have membership participation.
A Southeastern club turned down a prospective member who threatened the Club with a lawsuit. We counseled with the Club officers and a procedure was worked out consistent with the Bylaws to reconsider the prospect’s credentials. Further, we suggested revisions to the membership admission practices to ensure the Club would be able to support future rejections, should they be necessary and to minimize potential liability for rejections.
Several clubs have called us from time to time with regard to EEOC complaints. We have been able in those cases where the clubs were tax exempt, distinctly private clubs, to induce the EEOC to close their file based upon the statutory exemption available for tax exempt, distinctly private clubs. In those cases where one or more of the Club’s practices or policies made their private status suspect, we suggested reformation of the practices to ensure the Club would be able to sustain the Club’s private status in the face of current EEOC attacks on the private club exemption under Title VII.
On behalf of a national trade association client, we were able to obtain a deferral of a California Air Quality Board mandate for zero emission standards. The deferral enabled the Association’s members’ customers (golf clubs) needed additional time to plan for conversion of equipment sold or leased to the customers by the Association members.
We assisted two Mid-Western private clubs to eliminate costly member redemption programs which were inhibiting them from making needed capital improvements and having a dampening effect on new member recruitment efforts because of long redemption wait lists.
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