1. Structure and Documentation of Club Membership Programs

2. Types of Membership Programs Equity Non-equity

3. Types of Membership Programs Equity –Developer forms nonprofit club entity (“Club”) –Developer contracts with Club to construct and convey facilities in exchange for rights –Developer sells memberships to recoup costs, profit (?) –Developer retains right to control until memberships / property sold –Ultimately members take control

4. Types of Membership Programs Non-Equity –Developer/owner retains complete control over management and operation –May operate on daily fee, semi-private or private basis –Memberships are mere licenses to use facilities

5. Types of Membership Programs Non-Equity approaches –“Right to Use” (with or without refund/payment on resignation) –“Membership Deposit” Initial payment by member treated as loan to club Club unconditionally obligated to repay by date certain –“Convertible to equity”

6. Types of Membership Programs “Founder” Memberships –Class of membership, not type of program –May offer in equity or non-equity club –3 basic structures: Limited partnership interest “Investor” who loans substantial money to help facilitate construction Early members who help jump start sales - receive “founder” designation and extra perks

7. Avoiding Securities Issues “Howey” investment contract analysis –No dividends or distributions of income –Restrict ability to transfer, pledge –Any payment on resignation must be contingent and limited –Marketing must disclose restrictions and avoid emphasis on profit potential

8. Avoiding Securities Issues California “Risk Capital” analysis –Not dependent on sales proceeds to construct facilities –Members should not be entitled to refund on resignation (avoid “evidence of indebtedness”)

9. Membership Documentation Equity –Membership Application –Membership Agreement –Articles of Incorporation and Bylaws –Club Rules –Agreement for Transfer of Club Property –Escrow Agreement –Lease Agreement –License Agreement –Summary of Membership Plan or similar document

10. Membership Documentation Non-Equity –Membership Application –Membership Agreement –Membership Policies –Club Rules