To Whom It May Concern

[Frank Menez]

Are the following statements true or false

NAWCC/NWCM merger- If they don't merge the NAWCC will likely lose its 501(c)(3) status

If the merger does not take place the NAWCC will likely run out of money

The membership has to know the facts before voting

Frank Menez
NAWCC 15520

[Tom McIntyre]

These questions and several others will be addressed in depth in a special issue of the Mart Magazine that will be mailed with the proxy ballot.

The short answer is that we have been reviewed by the IRS for 501(c)3 compliance and the results of that review are on hold pending the outcome of our current merger proposals.

The merger, in and of itself, will not prevent us from running out of money or facing a dwindling membership. However, the current elected leadership believe that the merger is a necessary first step to rejuvenating the organization.

I would urge all members to vote for the merger. The downside risk of merging is small and the upside benefit potential is very large.

Tom McIntyre
NAWCC 2nd VP
Tommy the JOAT's Web (http://www.AWCo.org)

[Jon Hanson]

I would like to know if opposing views will be given equal time, you know, a minority report in the prospectus?

Jon Hanson, NAWCC #8801
Founder and President Chapter 149 (http://nawcc-ch149.com), The Early American Watch Club

[John Hubby]

Frank, Tom has generally covered your points but I'll provide some addtional info for each one:

-- Frank Menez wrote:
Are the following statements true or false:

NAWCC/NWCM merger- If they don't merge the NAWCC will likely lose its 501(c)(3) status

ANSWER: TRUE. Although it might take a few months for the IRS to reopen the file they have made it clear we do not meet the minimum requirements to hold a 501(c)(3) as we are presently structured. Further, we have not found any course of action that could be taken other than merger with the Mueseum that could possibly increase the level of public education and services needed to hold the 501(c)(3). On our own, what we do for member-only services is just too big to offset in any other way.

On the other hand they have also clearly stated if we do merge they will close the file and no further action will be taken (IRS Letter dated July 14, 2003 from Director of Exempt Organization Examinations Branch).
===================

If the merger does not take place the NAWCC will likely run out of money

ANSWER: TRUE, but it might take up to 3 years. As Tom has said the merger is not a guarantee we won't run out of money eventually but it certainly will place us in the most favorable position for acquiring outside funding to offset membership dues. It also avoids the payment of taxes and other income loss in the order of $200K annually as noted below. At our current and projected cash flow as a merged entity, our present reserves would be good for at least 5 to 8 years if we don't do anything to improve our situation. This will not be the case as our first priorities now on the agenda are to boost outside funding and reverse the membership decline, and turn this around so we become consistently cash positive.

However, if we don't merge there is no question we will run out of money especially if we lose our 501(c)(3). We currently do NOT pay any of the following, that will become payable if we lose our tax status: Property and ad valorem taxes, sales and use taxes, income taxes on all miscellaneous income such as MART receipts, increased workmen's compensation, and other fees and taxes. There is a potential that the state and local taxing authorities could claim payment of back taxes within the statute of limitations, if they did we have no idea what would result but certainly just legal fees would be quite large. ALSO, members' donations would no longer be tax deductible, and that source of income would obviously dry up. The estimated total of all these is in the order of $200,000 annually or more, which put together with ongoing declining membership would exhaust our cash reserves in about three years.
=======================

The membership has to know the facts before voting
Frank Menez
NAWCC 15520

ANSWER: I fully agree, and the December MART will contain all the merger documents including FAQs that provide answers to questions such as yours. Please read them carefully and send us your questions and concerns.
=========================

-- Jon Hanson wrote:
I would like to know if opposing views will be given equal time, you know, a minority report in the prospectus?

ANSWER: Jon, what is provided is a brief analysis of the six alternatives that were studied as we developed the present proposal. There is no minority report as such.

I think a minority report would have been appropriate if anyone had provided ANY viable alternative to the merger proposal. I offered an invitation many times for someone to provide specific written proposals that could be achieved in the same time frame, could be done without significant expenditure of funds, etc. NONE were received, all that we got were objections of "I don't like it". I know that there are members of Council and the Trustees who also "don't like it", but the majority have voted to accept a proposal that offers reasonable and doable compromises on the many facets of our operation to achieve a common goal of survival and growth of the NAWCC.

John Hubby, Chairman
NAWCC / NWCM Merger Task Force

[michael h schneider]

Let me offer another opinion:

The NAWCC is going down the tube. It’s dead. All that’s left is to see which vultures get the choicest pieces of the carcass, and that’s what the merger is all about.

We’re losing members (rapidly) and we’re going broke (rapidly). The merger won’t change that.

We’ve got roughly $2 million in the bank, if we count both NAWCC and NWCM money. That sounds like a lot, but it isn’t. At the rate we’re spending it, it won’t last long.

We’re going to spend about $150,000 cash from our savings this year, if the current budget proves accurate (it’s in the October Bulletin, at page 673). However, that’s a cash budget, which omits our consumption of non-cash assets. Things like telephones systems, the HVAC system, computers, etc are wearing out, and this budget makes no provision for replacing those items - so our actual deficit is probably more like $350,000 to a half million dollars this year.

We’re losing about 1,500 members a year. We’ve been losing members since 1999. During that time we’ve gone from about 34,500 down to our current 28,000 (roughly). That’s about $300,000 less in income each and every year (figuring 6,500 members at $50 each, less postage and other costs saved by not having to send the Bulletin to those people). In the first 4 months of this fiscal year we’ve lost members at an annual rate of about 1,700 per year.

Next year we’ll have at least $75,000 less in dues income. The year after, $150,000 less. The year after that, $225,000 less. Then $300,000 less. Yet expenses will undoubtedly rise - so it won’t be long before we’re spending a half million dollars a year or more from savings. John Hubby thinks we have at least five years before we run out of savings. I think he’s wildly optimistic.

The merger won’t change the fact that we’re going broke, soon.

The merger won’t change the fact that we’re looking at major cutbacks. Expenses will have to be reduced, and that means something will have to go - maybe the Bulletin, maybe the library, maybe the museum. That’s where the merger is crucial.

However, the merger will assure that you and I, the members, won’t have any part in deciding what to jettison and what to keep.

First, a major part of the new Board of Directors won’t be elected, they’ll be appointed. More than 40% of the votes in the new Council will be appointees. The talk was of appointing people with clout around Columbia - politicians, business leaders, philanthropists and the like from the Columbia vicinity. Guess what they’ll think is most important to save?

Second, we will no longer have free and fair elections for those we do elect. In the past, any candidate could run on whatever platform they liked, and argue its merits in the Bulletin. After the merger, there will be a committee to decide what are important qualifications, and which candidates have those qualifications. The Committee will print a list of the qualifications it thinks each candidate has - and that list will go to every voter right along with the ballot. Guess who will be elected?

I wish I could tell you where to look in the merger plan to verify my statements, but you can’t see the merger plan. It’s a secret. It’s been finished for almost eight weeks now, completely final, but it’s still secret. Only unauthorized versions have circulated privately in places such as the members’ forum. So all you can know is the opinions you hear from the people Tom McIntyre likes to call “management”. Isn’t that fair and open?

The upshot will be that the people who get to decide what to do with the carcass will be those whose primary loyalty and interest is in Columbia. Guess which parts the members will get?

Mike Schneider
119354

[Charles E. Davis]

I have learned to rarely take on Mike because he spends much more time with the minutiae that I do. But . . .
Forty percent is not the majority. We will still elect the majority and they will represent us when they select those minority members who will balance out the required expertise needed to properly carry out the duties of the directors.
Also the past can give us a great deal of guidance as we face the future. But trends are no fool proof projection of the future. The Bush tax cuts were based on a trend and then justified later as needed because the trend disapeared.
I don't share Mike's concern about some screning of candidates. Especially since the new proposals will make it possible for any member to easily appear on the ballot, either on their initiative or other members.

Charlie Davis, La Verne, CA

[Gene Klodzen]

Dear Mrb411,

First off, let me say that I'm sorry that you have had a bad experience as a member of the NAWCC. That's not good for you nor the Association.

Since this particular Board's focus is, or ought to be, on discussion of NAWCC Chapters and Chapter life in general, and since you've expressed dissatisfaction with your membership in the Association, I'm wondering if you might care to be a little more specific?

Were you a Chapter member, and if so, what Was the nature of the problem with the Chapter with which you were associated (you don't have to name the Chapter). How might that Chapter have better meet your needs? How might Chapters in general better meet the needs of all of their members?

From my experience I'd say that the majority of Chapter members and officers are constantly striving to provide their members with the very best horological and social experiences possible, and thus, as readers of this Board,they would be most interested in hearing you out, if for no other reason then to assure that their respective Chapters ARE meeting the needs of all their members, and perhaps one or more of them can persuade you to change you mind and rejoin our Association, and a Chapter, at some future time.

Thanks in advance
Gene Klodzen
Moderator

Gene Klodzen
#127702
Washington DC Chapter 12

[Tom Chaudoir]

Gents,

This conversation has nothing to do with the spirit of this forum. True, some small minded people forced me to remove the permanent link to the NAWCC forum. (http://groups.yahoo.com/group/nawcc/). That does not mean that we can now air our dirty laundry in public. As I have said in the past, the NAWCC forum. (http://groups.yahoo.com/group/nawcc/) will not be moved to the message board. This forum is here so that members can share information about their local chapters. Please do not attempt to hijack it for discussions of internal business. Use the NAWCC forum. (http://groups.yahoo.com/group/nawcc/) instead. The message board is our front porch for the public.

Regards,

Tom Chaudoir
Milwaukee, WI
America
150429