Highland Swim Club Association, Inc.
P.O. Box 301
Absecon, New Jersey 08201
DESCRIPTION OF OFFERING
Highland Swim Club Association, Inc., a New Jersey nonprofit corporation
(the "Association"), if offering up to two hundred fifty (250) swim club
membership bonds (the "Bonds") at a subscription price of $1,250.00 per
bond. The Bonds will initially be offered in the following order:
. First, to fee-paying members of the Highland Swim Club Association, Inc. as of
the date of this offering.
. Second, to fee-paying members joining after the date of this offering.
Individuals interested in purchasing a Bond must return a completed Subscription
Agreement, in the form attached hereto as Exhibit A, along with a check in the amount of
$1,250.00 (less any discount described below), to the Association. All checks should be
made payable to "Highland Swim Club Association, Inc." Preference may be given to
subscriptions based on the order in which they are received. If a subscription is accepted,
the subscriber will be notified by the Association within thirty (30) days. If a subscription
in rejected, the subscription payment will be returned to the subscriber. Bonds will be
issued in a single name only, as outlined in the By-Laws of the Association.
The Association is a New Jersey nonprofit corporation which was organized in
1993 by several residents to establish a neighborhood swim club. The principal executive
offices of the Association are located at the site, 433-A Eighth Avenue, Galloway
Township, with a mailing address of P.O. Box 301, Absecon, NJ 08201.
The date of this offering Memorandum is March 25, 1997.
DESCRIPTION OF FACILITY
The net proceeds (the "Proceeds") from the sale of the Bonds offered by the
Association hereby are estimated to be $260,000.00 after deducting offering expenses
payable by the Association and assuming that all of the Bonds offered hereby are
subscribed for. The Proceeds will be used by the Association to maintain and operate a
recreational swim club (the "Swim Club") for the exclusive use of the Bondholders, their
permitted guests, and such Associate Members as may be admitted from time to time by
the Board of Trustees of the Association, on an approximately 3.09 acre parcel of land
located at Lot 26.03, Block 982, in the Township of Galloway. This property is owned by
the Association. Permanent Financing has been arranged through the Commerce Bank,
N.A. in the form of $210,000 mortgage loan (See "Financing").
DESCRIPTION OF MEMBERSHIP BONDS
The Association is authorized to issue a maximum of two
hundred fifty (250) Bonds. Set forth below is a general summary and description of the Bonds and the rights of Bondholders. The summary and description contained herein is, however, subject to, and qualified in its entirety by, the information contained in the Association's By-Laws.
Each Bondholder will be a member of the Association. Each Bondholder in good standing, is entitled to cast one vote on all matters presented to the Bondholders at any annual or special meeting. Whenever any action, including without limitation the election of Trustees, is to be taken by vote of the Bondholders, it shall be authorized by a majority of the votes cast at a meeting of the Bondholders by the holders of Bonds entitled to vote
thereon, unless a greater plurality is required by the Association's Certificate of Incorporation or By-Laws.
Each Bond conveys to the holder the right to an annual renewable family or
individual membership in the Swim Club, subject to the timely payment of dues and the observation of all pool rules and regulations. Only Bondholders, their permitted guests and such Associate Members as may be admitted from time to time by the Board of Trustees of the Association shall be entitled to use the Swim Club.
Each Bondholder is required to pay the annual dues for one membership in the
Swim Club each Calendar year. Upon proof of the extreme extenuating circumstances, the Board of Trustees of the Association will consider requests, on a case-by-case basis, to waive this requirement for any calendar year. Except as provided in the immediately preceding sentence, a Bondholder who does not subscribe for one membership in any calendar year is required to surrender his Bond to the Association upon demand by the Association. Upon resale all accrued dues and/or fees for unpaid membership will be deducted from the proceeds.
A Bondholder may allow a designated individual ("Designee") to use his
Bond upon prior notification to and consent of the Board of Trustees of the Association. In such event, the Designee will become a member of the Swim Club upon payment of the applicable dues and compliance with the Association's rules and regulations. The Bondholder will not be entitled to be a member of the Swim Club so long as the Designee remains a member. The Bondholder, however, will guarantee payment of the Designee's dues and shall be entitled to exercise any voting rights associated with the Bond pursuant to the Company's By-laws. If the Designee does not pay any applicable dues or fees, the Association will place a lien against the Bondholder's Bond.
Classification of Bonds.
The Bonds shall be divided into two classes for the purpose of determining the surrender value of the Bonds. Class 1 Bonds will be composed of those Bonds originally issued by the Association, and which have not been transferred by a member or surrendered to the Association. Class 2 Bonds will be composed of all other Bonds, including without limitation Bonds subscribed for after a date to be fixed by the Board of Trustees subsequent to the date of this offering. Bonds not originally issued by the Association, including those Bonds transferred from one member to another in accordance with the By-Laws of the Association and those Bonds reissued by the Association after their surrender by previous members. Except as otherwise provided in the By-Laws of the
Association, all Class 1 Bonds will immediately and automatically be converted to Class 2 Bonds upon their transfer to another member or upon surrender to the Association.
Surrender and Resale of Bonds.
Any Bondholder who desires to terminate his membership in the Swim Club must
surrender his Bond to the Association. If the surrendered Bond is a Class 1 Bond at the time of its surrender, upon resale of such Bond by the Association to a new member, the surrendering Bondholder will receive from the Association one hundred percent (100%) of the face value of the surrendered Bond (less aggregate amount of any dues and/or fees then owed by the surrendering Bondholder to the Association). Upon resale of a Class 2 Bond by the Association to a new member, the holder of the Bond will receive from the
Association an amount equal to ninety percent (90%) of the face value of the Bond (less the aggregate amount of any dues and/or fees then owed by the surrendering Bondholder to the Association).
All Bonds surrendered to the Association will be offered to a waiting list of potential members who have applied for admission, in accordance with the terms and provisions of the By-Laws, with the exception of the preferential transfer provisions shown below. Any Class 1 Bonds which have been surrendered to the Association must be sold before any Class 2 Bonds which have been surrendered to the Association may be offered for resale. If within any class of Bonds more than one (1) Bond has been surrendered and is available for resale at any time, such Bonds will be offered for resale based upon their surrender date, with the Bond having the earliest surrender date being the first to be available for resale. All Bonds reissued by the Association will be resold at the rate established by the Board of Trustees, which rate shall not be less than the amount which the Bondholder surrendering the Bond is entitled to receive from the Association for the surrendered Bond. However, no surrendered bonds will be resold until this initial offering of 250 bonds has been fully sold by the Association.
If any bondholder fails to pay any annual dues, or other fee assessed by the Association, within thirty (30) days of the date required by the Association for such payment, the Bondholder shall immediately forfeit membership in the Swim Club and be deemed to have surrendered their Bond to the Association. Upon resale of such Bond by the Association, the Bondholder will be entitled to payment in accordance with the terms and provisions of the Association's By-Laws, offset by the amount of any sums due and owing to the Association, including late fees and costs.
Preferential Transfer Provisions.
No private transfers of Association bonds are permitted. The following transfers may be directed to certain individuals in lieu of being offered to the waiting list:
. Transfers between any individual within the Family Unit, as defined in the
By-Laws of the Association.
. Pursuant to the sale of the present Bondholders home, the Bond may be
transferred only to one of the named purchasers of the home, upon the consent
of the Board.
In the event of a preferential transfer the current Bondholder shall have the obligation of notifying the Association of the transfer, and providing completed subscription and membership forms for the new Bondholder to the Association. The Bondholder shall then surrender the Bond to the Club. Upon approval by the Board the Bond will be issued to the designated individual and the original Bondholder shall relinquish all rights in the Association and all of the rights and privileges as well as the obligations of membership shall be transferred to the new Bondholder. The Association shall not have any financial involvement in preferential transfers.
Membership Dues and Fees.
The Board of Trustees will establish the annual membership dues and fees to be paid by each Bondholder. The membership dues assessed by the Board of Trustees must be sufficient to provide for the necessary operating expenses and debt service of the Association and to fund a capital reserve which is sufficient to assure the proper maintenance and improvement of the association's property. Initial annual dues shall be established by the Board and shall be payable upon thirty (30) days' prior written notice to the Bondholders. In the event the Association does not have sufficient funds to provide for the necessary operating expenses of the Association in any calendar year, the Board of Trustees shall have the power, subject to Bondholder approval at a special meeting, to make a special assessment on the bondholders in such amount as the Board of Trustees shall, in their discretion, determine to be necessary to provide sufficient operating funds to the Association.
Any member failing to pay the applicable membership dues by April 30th, or such other date as has been established by the Board of Trustees upon thirty (30) days prior written notice to the Bondholders, will be notified by the Treasurer of the Association in writing that, if such fees are not paid within thirty (30) days thereafter, the delinquent member will be suspended by the Board of Trustees and, in most instances, will be required to surrender the Bond. A late charge will be assessed by the Board of Trustees on all delinquent membership fees in an amount equal to the greater of $30.00 or the
maximum interest rate then permitted by law. Any delinquent member will not be
considered to be a member in good standing and may not (1) cast any votes in any
Bondholders' meeting, or (2) serve as a member of the Board of Trustees. Dues owed will be deducted from the proceeds of the sale of the Bond as outlined in the By-Laws.
Distributions Upon Dissolution. Upon dissolution of the Association, for any reason, the Association's surplus remaining after the payment of all its liabilities will be distributed pro rate among the then record holders of Bonds.
BOARD OF TRUSTEES
The Association, and its properties and affairs, will be managed by a Board of Trustees. Annual meetings of the Association's Bondholders will be held as outlined in the Association By-Laws at such time and place as the Board of Trustees may determine for the purpose of electing Trustees. All Bondholders in good standing as of the date of any meeting will be entitled to vote at such meeting. Each Bondholder will be entitled to cast one vote for each Trustee to be elected at the meeting. Nominations for the Board of
Trustees must be made in accordance with the Association's By-Laws.
The Board of Trustees is comprised of five members. Each member of the
Board of Trustees must be at least twenty-one years of age and a member, in good
standing, of the Association.
Trustees elected at the first meeting of Bondholders will be divided into two classes: One class (comprised of 3 members) will serve for two-year terms; the second class (comprised of 2 members) will serve for one-year terms. Thereafter, all Trustees shall be elected for two-year terms.
The Board of Trustees will appoint a Membership Committee and a
Nominating Committee. The Membership Committee will, from time to time,
recommend the names of proposed members of the Swim Club to the Board of Trustees,who will make the final determination in admitting new members. If there are more applications than available memberships, the Membership Committee will prioritize the waiting list in accordance with the order in which applications are received. The Nominating Committee will be responsible for nominating candidates for election to the Board of Trustees.
The Association has sole responsibility for all organization, planning, site approvals, building permits, construction contracts, occupancy permits and other governmental approvals necessary for completion of the Swim Club. Initial financing for the construction of the Swim Club and its related facilities will be provided through the sale of the Bonds. The cost of constructing the Swim Club and related facilities will be approximately $400,000.00.
In addition to the funds provided from sales of the Bonds, the Association has secured mortgage financing for $210,000.00 from Commerce Bank, N.A. Such financing is in the form of a mortgage with an interest rate and terms consistent with prevailing commercial lending practices. Loan repayments will be based on a twenty (20) year amortization schedule. The mortgage financing is subject to such other terms and
conditions as are contained in the final note and mortgage and all such terms and conditions are carried over to the bond offering by reference.
This Offering Memorandum may incorporate documents by reference which may not be presented herein or delivered herewith. Attached as Exhibit B are the By-Laws of the Association. Any other documents are available upon request from the Secretary, Highland Swim Club Association, Inc., P.O. Box 301, Absecon, New Jersey 08201. Furthermore, prospective subscribers or their representatives may, at any time during normal business hours prior to the completion of the Offering, ask questions of the Trustees of the Association with respect to the terms and conditions of the Offering and request additional information. The Trustees of the Association will provide answers and
information to the extent such answers and information are available or can be obtained without unreasonable effort or expense.