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					       Membership Presentation




Report to Membership of the Proposed Bylaw
Changes



                                                       Dallas, Texas

                                 Presented by the Board of Governors
                                                 September 29, 2005




                                                                       0
Northwood Club seeks to increase the fairness, value and clarity
of its membership categories

                                 Ad-Hoc Bylaws Committee Charter
                                                  Mission
  Review current bylaws for clarity, consistency and assess membership categories for fairness to the
   Member and to the Club including the long-term financial wellbeing of the Club and to make
   recommendations

                                              Objectives
  Improve the long-term financial health of the Club

  While promoting the financial health of the Club, protect the vested interest of the Member

  Avoid significant increases in use of golf course

  Increase clarity and decisiveness within the Bylaws, while eliminating inconsistencies

  Provide value to the member

  Benefits, privileges and costs are clearly defined




                                                                                                         1
What approach was taken by the Bylaws Committee?


                                       Approach
    Reviewed mission from Board

    Assessed Bylaws of Northwood, and other premier clubs in the Dallas area

    Reviewed member files where special letters were written to evaluate whether
     intent of bylaw or policy was executed clearly and/or consistently

    Evaluated golf course use

    Assessed financial impact of different scenarios (e.g., refunds)

    Legal counsel has reviewed and recommended proposed bylaw language




                                                                                    2
                                  Key Findings

 Bylaws reflected the uniqueness of Northwood


 The future rights are unclear


  – Execution of bylaws and policy has been inconsistent or lax
  – Bylaws simply don’t read the way we do things and want to do things


 Bylaw language caused confusion and conflict


 Golf course usage has been impacted by changes in membership levels and fees




                                                                                 3
Overall, our findings suggest four fundamental types of changes to
the bylaws in order to achieve our mission

                    Fundamental Types of Changes

      Clarify expectations
       – Admission
       – Conversion
       – Transfer
       – Refunds

      Remove ambiguous language

      Insure policy is consistent with Bylaw intent

      Ensure sustainable economics




                                                                     4
 Summary of Major Changes by Category

1 - General Cleanup of Bylaws

2 – Senior Membership & Resident to Senior Conversion

3 – Initiation Fee Refund

4 – Change in Member Categories




                                                        5
Proposition 1 - General Cleanup of Bylaws

                            Examples of Clean-up


  Clearly define Categories of Membership’s rights and privileges
   (e.g. Article I, Section 4 B)




                                                                     6
Proposition 1 - General Cleanup of Bylaws

                          Examples of Clean-up


  Article I, Section 4 (b) Senior Members shall have all
   of the rights and privileges which are possessed by
   Resident Members, except for those rights expressly
   reserved for Resident Members under Section 3.(a)
   of this Article I or under Articles II and IV of these By-
   laws; and except that no person who became a
   Senior Member on or before December 11, 1990,
   shall have any of the rights conferred upon Resident
   Members under Section 3 above other than refund of
   the aggregate amount of all refundable Capital Dues
   paid by such Member not previously refunded.

                                                                7
Proposition 1 - General Cleanup of Bylaws (cont.)

                                     Examples of Clean-up


   Clearly define Categories of Membership’s rights and privileges (e.g. Article I,
    Section 4 B)

   Letters to the file instead of bylaw exceptions (Grandfathering e.g. Certain Senior
    and Senior Social Members)

   Juniors “fully paid” now have all rights of a Resident Member

   “Capital Dues“ now called “Assessments” for clarity

   Classes replaced by “categories”, “invitation” to join now called “nomination”.

   Right to Transfer of a Resident membership limited to one time (exclusive of a
    transfer to a spouse)




                                                                                          8
Proposition 2 – Senior Membership & Resident to Senior
Conversion

                                     Significant Changes


   Right to Transfer a Resident membership is exclusive to the Resident Member,
    which transfer fee shall be a minimum of 25% of the then prevailing initiation fee
    at the time of the Transfer

   Upon conversion to another category, right of Transfer is surrendered

   Grandfathered the right of transfer for existing Senior and Senior Social
    Members that have not received a Refund (not provided in the Bylaws but with
    letter in the file)

   Bylaw structure and language properly sets forth Senior Member rights and
    privileges




                                                                                         9
Proposition 2 – Senior Membership & Resident to Senior
Conversion
                           Senior Rights and Privileges Recap
   Eligibility:                       No change

   Golf:                              No change

   Fees, Dues & Assessments           No change

   Requirements for Conversion        No Change

   Conversion to Senior               Yes - to Social, Senior Social, Non-Resident

   Transfer:                          If Refund not received - rights same as resident
                                       If Refund has been received –no change

   Refund:                            If Refund has been received - no change
                                       If Refund not received - same as resident; Payable upon death,
                                       resignation or expulsion

   Vote:                              No change – No

   Board:                             No change – No

   Committees:                        Yes – Now can serve on all committees except Executive,
                                       Nominating and Membership

   Chair Standing Committees          No change -No


                                                                                                    10
Proposition 3 – Initiation Fee Refund

                                        Significant Issues


   When Club initiation fees were increased from $62,500 to $85,000, Club incurred
    an immediate increase in financial liability of refunds in excess of $3.5 million!

   If initiation fees were raised to $100,000, the financial liability of refunds would
    increase by almost $2.4 million!

   Current financial obligation of refunds now stands in excess of $14 million!

   Past 21 years - $28 million spent on capital improvements
    – Source of Capital over the past 21 years
                             Net initiation fees - $20 million
                             Capital Assessments - $7 million
                             Debt - $1 million




                                                                                           11
Proposition 3 – Initiation Fee Refund
                                                     Inflow vs Outgo
  $4,500,000


  $4,000,000


  $3,500,000


  $3,000,000


  $2,500,000


  $2,000,000


  $1,500,000


  $1,000,000


   $500,000


       $-
               1984 1985   1986   1987 1988   1989 1990   1991   1992 1993   1994 1995   1996 1997   1998   1999 2000   2001 2002 2003 2004 2005



                           Total Cash Requirements                                                                       Net Initiation Fees


                                                                                                                                                   12
Proposition 3 – Initiation Fee Refund




                                        13
Proposition 3 – Initiation Fee Refund

                                     Significant Changes


   Only Resident Members, those converted to Senior, fully-paid Junior Members
    and Resident in Waiting Members would now be able to get a Refund

   New Resident Members fixed at the lesser of 25% of original initiation fee or
    prevailing initiation fee

   Existing Resident Members at the lesser of $21,250 or 25% of prevailing
    initiation fee

   Grandfather Senior and Senior Social Members that have not received a Refund
    at the lesser of $21,250 or 25% of prevailing initiation fee (by letter to file to
    protect the vested interest of the Senior Member)

   Refunds paid only upon death, resignation or expulsion




                                                                                         14
Proposition 4 – Change in Member Categories

                                     Significant Changes


   Created new Resident-In-Waiting Category (limit 50 members) with limited golf
    privileges.

   Revised fee, dues and assessment percentages for Resident-In-Waiting

   Increased membership for Seniors from 75 to 100

   Associate Member is a closed category (39 > 0)

   Entitled fully-paid Junior Members all rights and privileges except holding an
    interest in the Club




                                                                                     15
Proposed Changes to Membership — Financial Impact: Positive
                                 Golf Course Use Impact: Minor
                                                           Impact of Changes

                                                        NOTES:
 Membership                                   Current   (1) Current Resident in
                    Before   After   Change
  Category                                     Level
                                                            Waiting listed in Family
                                                            Social Awaiting Resident

Resident-in-                                            (2) Associate Category
Waiting (1)           0       50      + 50     26 (1)        closed. Will be
                                                             eliminated as Associate
                                                             Members depart Club
Senior               75      100      + 25     80 (3)

                                                        (3) Current Bylaws provide
Family Social (1)    150     150       0       102           for a total of 135 Senior
                                                             Members combined with
                                                             Associate Members
Associate            60       0       -60       39




                                                                                         16
                        Proposed Changes to Membership - Golf Course Impact

                                                Total Rounds                                                                                                            Total Usage



                         40,000                                  9-holes            18-holes                                                         40,000                               Guests             Members




                                                                                                                18-Hole Equivalent Rounds per Year
                         35,000                                                                                                                      35,000                      A 5-10% increase would
                                   33,618    33,184   29,532   29,897      31,732      30,254       6-Year                                                                         return course use to
                                                                                                  Average
Total Rounds per Year




                                                                                                                                                              30,841   30,396           prior levels                Compounded
                                                                                                   = 31,370                                                                                                         Annual Growth
                         30,000                                                                 +/- 1 Std Dev                                        30,000                                         28,299
                                                                                                                                                                                26,444   26,802                 26,959 -2.7%

                         25,000                                                                                                                      25,000


                                                                                            Compounded
                         20,000    28,065    27,607                        24,865                                                                    20,000
                                                      23,356   23,707                 23,664Annual Growth                                                     25,247   25,562
                                                                                                 - 3.3%                                                                                             24,256
                         15,000                                                                                                                      15,000                     22,639   22,962                23,339    -1.6%


                                                                   Fewer 18-hole rounds
                         10,000                                       offset by more                                                                 10,000
                                                                                                                                                                                                  Significant decline
                                                                      9-hole rounds
                                                                                                                                                                                                   in guest rounds
                           5,000                                                                                                                      5,000
                                    5,553     5,577   6,176    6,190        6,867      6,590     + 3.5%                                                       5,594    4,834                         4,043               -8.3%
                                                                                                                                                                                3,805    3,840                  3,620
                               0                                                                                                                         0
                                    1999      2000    2001     2002         2003       2004                                                                   1999      2000    2001     2002        2003       2004


                        Source: Northwood Club data


                                                                                                                                                                                                                         17
Summary

  The Board of Governors believe the proposed changes meet the mission of the bylaws review
   – The proposed changes are fair to all member categories, and reflect the vested interest of
     the Member
   – The changes create value for the Members and the Club
   – The changes increase clarity to avoid future misunderstandings and ambiguity
   – Prior promises to Senior Members have been kept
   – The financial position of the Club is strengthened, not weakened
   – No measurable increase in golf course usage

  Letters to the file
   – Current Senior transfer rights remain
   – Entitlement to assessment refund, certain members (current by-law Article I, Section 2c)
   – Social members admitted prior to 5/26/94 entitled to refund




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