TEI Draft Documents (June 7, 2000 iteration):

TEI Draft Documents (June 7, 2000 iteration):

I. Draft Charter:

The TEI (Text Encoding Initiative) is an international research effort established in 1987, intended to produce a community-based standard for encoding and interchange of texts. The original phase of this effort was supported by three of the most important scholarly associations in the field and by major funders in North America and Europe, and included scholars from all over the world and from nearly all the disciplines of the humanities. The TEI Guidelines and the SGML-based TEI DTD are thus the result of the most important international standardisation effort for humanities-related data, and have gained wide acceptance within the humanities and beyond. In recognition of this, the TEI Consortium has been established to maintain, develop, and further the use of the TEI standard.

The goals of the consortium are:

1. To establish and maintain a home for the TEI in the form of a permanent organizational structure.

2. To ensure the continued funding of TEI activities, for example: editorial maintenance and development of the TEI guidelines and DTD, training and outreach activities, and services to members.

3. To create and maintain a governance structure for TEI with broad representation of TEI user-communities.

The fundamental principles on which the Consortium is established are the following:

1. The TEI guidelines, other documentation, and DTD should be free to users;

2. Participation in TEI activities should be open (even to non-members) at all levels;

3. The TEI should be internationally and interdisciplinarily representative;

4. No role with respect to the TEI should be without term.

II. Articles of Incorporation

ARTICLES OF INCORPORATION OF THE TEXT ENCODING INITIATIVE CONSORTIUM (TEI)

The undersigned, desiring to form a nonstock corporation under the provisions of Chapter 10 of Title 13.1 of the Code of Virginia of 1950, as amended (the “Virginia Code”) sets forth the following:

Article I. Name. The name of the Company is the Text Encoding Initiative Consortium, hereafter referred to as TEI.

Article II. Purpose. TEI is organized exclusively for charitable, literary, educational, and scientific purposes, including without limitation:

(a) to build an international and interdisciplinary community that will maintain and further develop the Text Encoding Initiative Document Type Definition (TEI DTD) and its documentation;

(b) to promote the use of the TEI DTD, in the interest of improving the preservation and exchange of electronic texts;

(d) to make distributions to organizations that qualify as exempt organizations under Section 501(c)(3) of the Internal Revenue Code of 1986, as now in force or afterwards amended (hereinafter "the Code").

The following are fundamental and irrevocable principles of TEI:

1. The TEI guidelines, other documentation, and the TEI DTD should be free to users;

2. Participation in TEI activities should be open (even to non-members) at all levels;

3. The TEI should be internationally and interdisciplinarily representative;

4. No role with respect to TEI should be without term.

In addition and consistent with the above, the Company shall have all corporate powers of a nonstock corporation organized under Chapter 10 of Title 13.1 of the Virginia Code, as amended, and not prohibited by Section 501(c)(3) of the Internal Revenue Code, any regulations promulgated thereunder, or any successor statutes or regulations

Article III. Registered Agent. The post office address of the initial registered office of the Company is Suite 300, 250 West Main Street, Charlottesville, Virginia 22902, which is located in the City of Charlottesville, Virginia. The Company's initial registered agent is W. McIlwaine Thompson, Jr., who is a resident of Virginia and whose business address is the same as the initial registered office and who is a member of the Virginia State Bar.

Article IV. Membership. Members shall be entitled to vote as provided in the By-Laws of the Company. The affairs of the Company shall be managed by a Board of Directors, which shall be elected by the members as set forth in the By-Laws.

Article V. Board of Directors.

The affairs of TEI shall be managed by a Board of Directors. The number of directors constituting the initial Board of Directors is seven (7), and members of the initial Board of Directors are as follows:

Lou Burnard

110 Southmoor Road

Oxford OX2 6RB

England

David Chesnutt

2818 Blossom St.

Columbia, SC 29205

USA

Claus Huitfeldt

Bryggjedalen 5

N-5095 Ulset

Norway

Jan Hajic

107 Fireside Circle

Baltimore, MD 21212

USA

Allen Renear

76 East Manning St

Providence RI 02906

USA

John Unsworth

975 Locust Ave.

Charlottesville, VA 22901

USA

Antonio Zampolli

Via San Francesco 32

56126 Pisa

Italy

Except for the initial Board of Directors, the number of directors may be fixed as provided in the Bylaws and shall be not less than seven (7).

Article VI. Operations.

No part of the net earnings of TEI shall inure to the benefit of or be distributable to any incorporator, trustee, director or officer of TEI or any private individual, except that TEI shall be authorized and empowered to pay reasonable compensation for services rendered and to make payments and distributions in furtherance of the purpose of TEI.[jmu1] No substantial part of the activities of TEI shall be the carrying on of propaganda, or otherwise attempting to influence legislation, nor shall TEI participate in, or intervene in (including the publishing or distribution of statements) any political campaign on behalf of or in opposition to any candidate for public office. As a means of accomplishing its charitable purposes, TEI shall make distributions of its income and principal at such times and in such manner as not to subject TEI to tax under Section 4942 of the Internal Revenue Code. TEI shall have all of the rights, powers and privileges now or hereafter given to non-stock corporations under the laws of the Commonwealth of Virginia, except that neither TEI nor anyone acting on its behalf shall (1) engage in any act of self-dealing as defined in Section 4941 of the Internal Revenue Code, (2) retain any excess business holdings as defined in Section 4943 of the Internal Revenue Code, (3) make any investment that would subject the corporation to tax under Section 4944 of the Internal Revenue Code, (4) make any taxable expenditures as defined in Section 4945 of the Internal Revenue Code or (5) conduct or carry on any activities not permitted to be conducted or carried on by an organization exempt under Section 501(c)(3) of the Internal Revenue Code and its regulations, as amended, or by an organization, contributions to which are deductible under Section 170(c)(2) of the Internal Revenue Code and regulations, as amended. (Each reference to a Section of the Internal Revenue Code means a Section of the Internal Revenue Code of 1986, as amended, or the corresponding provisions of any subsequent federal tax law.)

Article VII. Dissolution.

In the event of the dissolution of TEI, or the winding up of its affairs, and after all liabilities of TEI have been paid, satisfied and discharged or adequate provisions made therefore, all remaining assets shall be distributed, as designate by the Board of Directors, to one or more organizations exempt from income taxation under Section 501(c)(3) of the Internal Revenue Code, or corresponding section of any future Federal tax code, or shall be distributed to the Federal government, or to a state or local government, for a public purpose.

Article VIII. Indemnification.

A. Every person, and his or her heirs, executors and administrators, who was a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding of any kind whether civil, criminal, administrative, arbitrative or investigative, or was or is the subject of any claim, whether or not by or on behalf of the Corporation, by reason of his or her being or having been a director or officer of the Corporation or by reason of his or her serving or having served at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, committee, trust or other enterprise or at the request of the Corporation in any capacity that under Federal law regulating employee benefit plans would or might constitute him or her a fiduciary with respect to any such plan, whether or not such plan is or was for employees of the Corporation, shall be indemnified by the Corporation against expenses (including attorneys' fees), judgments, fines, penalties, awards, costs, amounts paid in settlement and liabilities of all kinds actually and reasonably incurred by him or her in connection with, or resulting from, such action, suit, proceeding or claim if he or she acted in good faith and in the manner he or she reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful; provided that no indemnification shall be made in respect of any claim, issue or matter as to which he or she shall have been adjudicated to be liable to the Corporation for willful misconduct or a knowing violation of the criminal law in the performance of his or her duty to the Corporation unless, and only to the extent, that the court in which such action, suit or proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all circumstances of the case, he or she is fairly and reasonably entitled to indemnity. The termination of any such action, suit or proceeding by judgment, order or conviction, or upon a plea of nolo contendere or its equivalent, or by settlement, shall not of itself create a presumption that any such person did not act in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interest of the Corporation.

B. Any indemnification under the preceding paragraph (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of such person is proper in the circumstances because he or she had met the applicable standard of conduct set forth in such paragraph. Such determination may be made either (i) by the Board of Directors of the corporation by a majority vote of such quorum consisting of directors who were not parties to such action, suit or proceeding; or (ii) if such a quorum is not obtainable or, even if obtainable, if a quorum of disinterested directors so directs, by independent legal counsel in a written opinion. or (iii) by the members.

C. Expenses (including attorneys' fees) incurred by or in respect of any such person in connection with any such action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative, may be paid by the Corporation in advance of the final disposition thereof upon receipt of an undertaking by, or on behalf of, such person to repay such amount unless it shall ultimately be determined that he or she is entitled to be indemnified by the Corporation.

D. The Board of Directors of the Corporation shall have the power, generally and in specific cases, to indemnify its other employees and agents to the same extent as provided in this Article with respect to its directors and officers.

E. The provisions of this Article are in addition to, and not in substitution for, any other right to indemnity to which any person who is or may be indemnified by or pursuant to this Article may otherwise be entitled, and to the powers otherwise accorded by law to the Corporation to indemnify any such person and to purchase and maintain insurance on behalf of any such person against any liability asserted against or incurred by him or her in any capacity referred to in this Article or arising out of his or her status as serving or having served in any such capacity (whether or not the Corporation would have the power to indemnify against such liability.)

F. If any provision of this Article shall be adjudicated invalid or unenforceable, such adjudication shall not be deemed to invalidate or otherwise affect any other provision hereof or any power of indemnity which the Corporation may have under the laws of the Commonwealth of Virginia.

G. No amendment or repeal of any provision of this Article shall limit or eliminate the right to indemnification provided hereunder with respects to acts or omissions occurring prior to such amendment or repeal.

Article IX. Elimination of Liability.

A. To the maximum extent permitted by Virginia Code §13.1-870.1 or any successor provision thereto, or any other statutory or decisional law, no officer or director of the Corporation shall be liable in any proceeding brought by or on behalf of the Corporation or brought by or on behalf of members of the Corporation against such officer or director.

B. No amendment to or appeal of this Article shall limit or eliminate the benefits provided to directors and officers of the Corporation hereunder with respect to any act or omission which occurred prior to such amendment or repeal.

___________________________________

W. McIlwaine Thompson, Jr., Incorporator

III. BYLAWS OF TEI

ARTICLE I

Members

1. Members.

(a) Classes of Members. There shall be one class of members. Each member shall be entitled to one vote for each director position to be elected and for any other vote requiring the vote of the members. Consortium members will have the right, also, to propose officially sanctioned TEI training and services, with such agreements screened by the TEI Council and approved, ultimately, by the TEI Board of Directors.

(b) Application. Any organization or individual eligible to become a member of TEI may apply by submitting an application, in form prescribed by the Board of Directors, along with any dues or filing fees required to be submitted with an application, to the Secretary of TEI. If the Secretary finds that such applicant has complied with all requirements in connection with the application, the Secretary shall add the applicant's name to the list of members.

(c) Dues, Etc. Members shall pay membership dues (and such other charges and assessments relating to membership as are established by the Board of Directors) in such amounts and at such intervals as determined by the Board of Directors from time to time. The Directors may establish differences among members with respect to the amount or timing of membership dues or other charges or assessments.

No member shall be entitled to a refund of any membership dues or other charges or assessments upon such member's resignation or termination as a member.

(d) Special Categories. The Board may from time to time establish special categories to recognize outstanding contributions by members. The development of tools that further the use of TEI, for example, may entitle a member to be designated as a TEI Developer or other title which, in the discretion of the Board, appropriately reflects such member's contribution.

(e) Membership Requirements. The Board may establish such attendance and other requirements as it deems proper.

2. Duration. Each member may hold membership as long as such member remains qualified for membership, except that membership may be sooner terminated by suspension or expulsion as provided in Section 3 of this Article or by resignation as provided in Section 4 of this Article.

3. Termination. The Board of Directors may terminate a member's membership in TEI upon a good-faith finding of (a) misconduct by such member reflecting discredit upon TEI or (b) violation of these Bylaws (including but not limited to the nonpayment of membership dues or other required charges or assessments).

4. Resignation. Any member may resign from the Consortium by delivering written notice of resignation to the Secretary. Such resignation shall be effective upon the Secretary's receipt of such written notice.

ARTICLE II

Meetings of Members

1. Meetings. Meetings of the members shall be held not less than once a year, on such dates and at such places as the Board of Directors may designate from time to time. The first meeting after June 30 shall be designated as the annual meeting. At the annual meeting, the Chair shall report on the operation of TEI for the preceding year and announce the results of the election of the Board of Directors.

2. Special Meetings. A special meeting of members may be called by the Board of Directors in its discretion or upon written request to the Secretary by one-third or more of members of TEI entitled to vote. No business other than that specified in the notice of the meeting shall be transacted at any special meeting of the members. The notice of each annual meeting shall include a proxy for the election of the members of the Board and such other matters as may require the vote of the membership. The proxies shall be returned to the Secretary who will tabulate the results of the matters on which a vote is taken. To be included in the tabulation of the vote, a proxy must be received by the time designated in the material sent with the notice of meeting. The final vote will be presented to the members at its annual meeting by the Secretary either in person or by certificate delivered to the Chair of TEI. The vote by proxy for the election of the Board shall be final. As to matters other than the election of the Board, the votes for and against each item by proxy will be presented at the annual meeting and provisions made for those present to participate in a discussion and vote on such items, changing the earlier vote by proxy if desired.

3. Voting. At meetings of the members, members shall be entitled to voting rights as provided in Article I of these Bylaws.

4. Notice of Meetings. Written notice stating the place, day and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called shall be given not less than twenty-one (21) days nor more than sixty (60) days before the date of the meeting (except as otherwise required by law) by or at the direction of the Chair or the Secretary, or the persons calling the meeting, to each member entitled to vote. A notice shall be deemed duly given to a member when it is either delivered in person, by courier service [jmu2] , electronically mailed, or mailed by first class (domestic) or airmail (international) post, postage-prepaid, to the address of such member as it appears on the records of TEI.

5. Quorum. A quorum at any meeting of the members, whether annual, regular, or special, shall exist if at least one-third of the members entitled to vote are present in person or by proxy. The vote of a majority of the members entitled to vote that are present in person or by proxy at a meeting at which a quorum is present shall be necessary and sufficient for the adoption of any matter voted upon by the members, unless a greater vote of the members is required by law or these bylaws.

ARTICLE III

Officers

1. Selection of Officers. The officers of TEI shall be elected by the Board of Directors and shall consist of a Chair, a Secretary, and a Treasurer. The Board of Directors may also select additional officers as it deems necessary or appropriate from time to time. The officers of TEI shall have the respective powers set forth herein and as otherwise provided by resolution of the Board of Directors. With the possible exception of the treasurer, each officer of TEI shall be selected from among the Board of Directors. Notwithstanding any other provision herein, the power to set salaries and fees of employees and independent contractors shall reside in the Board of Directors and not in any officer or officers.

2. Chair. The Chair shall be the chief executive officer of TEI and shall, subject to the direction of the Board of Directors, generally supervise and manage the affairs of TEI. In general, the Chair shall perform all duties customary to the office of Chair, shall see that all orders and resolutions of the Board of Directors are carried out, and shall oversee the other officers in the discharge of their duties. He shall, if present, preside at all meetings of the Board of Directors and of the members.

3. Vice-chair [jmu3] . In the absence of the Chair, the Vice-chair shall carry out the Chair’s duties at meetings. In the event the position of Chair becomes vacant, the Vice-chair shall carry out the Chair’s duties as set forth in Section 2, above, until the Board elects or appoints a successor Chair.

4. Secretary. The Secretary shall keep the minutes of all meetings of the members and of the Board of Directors, shall serve all notices, shall present all pertinent communications before the proper committees, shall be custodian of the records, shall attest the seal of TEI on all contracts and agreements required by law to be under seal as authorized by the Board of Directors, shall conduct the correspondence incident to this office and shall perform such other duties as the Board of Directors may require.

5. Treasurer. The Treasurer shall collect, have custody of and be responsible for all funds of TEI, shall keep an accurate account of such funds, shall pay all just bills when due and funds are available, and shall submit a financial report as of the end of each year at the annual meeting. All checks, drafts, notices and orders for the payment of money issued by TEI and other similar documents requiring the signature of TEI shall be signed by the Treasurer or by such other person or persons, if any, as the Board of Directors may from time to time designate. In the event that the Treasurer is not selected from among the Board of Directors, the Treasurer shall become a member of the Board.

ARTICLE IV

Board of Directors

1. Directors. The Board of Directors shall initially consist of a minimum of seven (7) directors and a maximum of nine (9), [jmu4] and thereafter may be increased or decreased within the foregoing range from time to time by a majority vote of the Board of Directors then in office, or by members. The TEI Editor (or Editors) shall be included in meetings of the board as ex officio members. TEI Hosts will have the option of appointing a representative to the Board of Directors, on a rotating one-year term [jmu5] . Other Directors will normally be elected by the members, except during the first two years of the TEI, when the three scholarly societies that originally sponsored development of the TEI (the Association for Literary and Linguistic Computing, the Association for Computers and the Humanities, and the Association for Computational Linguistics) will have the option to appoint a representative to the Board of Directors. [jmu6] In the event that the appointive option of either the Hosts or the original sponsoring societies is not exercised, the resulting vacancy on the Board shall be filled by a vote of members in normal or special elections. [jmu7] Individuals who are not members of the TEI may be nominated and elected to serve on the Board of Directors. The minimum and maximum numbers of directors may be changed, either to different minimum and/or maximum numbers or to a single fixed number, only by the members. No decrease in the number of directors shall affect the tenure of any incumbent director. Any vacancy in a director position resulting from the increase in the number of directors shall be filled by the Board. Vacancies in a director position resulting from other causes shall be filled by the vote of members in normal or special elections.

2. Term and Class. Each director shall be elected for a term of two (2) years. The Board of Directors shall consist of two classes of directors (appointed and elected) with each class being as nearly equal to the other class as possible.

3. Election. At each annual meeting the members will elect members to any of the elected positions on the Board of Directors due to be vacated. Elected Directors will serve a two-year term, which term will commence at the annual meeting of the Board of Directors immediately following the annual meeting of the members and continue until the expiration of their term or until their respective successors shall have been duly elected and qualified. In the election of directors each elected director position shall be voted on as a separate matter with each member entitled to vote receiving one vote for each director position.

4. Meetings. Regular meetings of the Board of Directors may be held at such time and place as the Board of Directors may by resolution designate. Directors may attend Board meetings by telephonic or other two-way connection provided that the director(s) not physically present can hear, and be heard by, all those participating in such meeting, and a director so participating shall be deemed present for quorum purposes. [jmu8] One of such meetings, as close in time as may be practicable to the annual meeting of the members, shall be designated by the Board as the annual meeting of the Board. Special meetings may be called by the Chair or any combination of directors constituting at least one-third of the total number of directors then in office.

5. Quorum. A majority of the directors shall constitute a quorum for the transaction of business. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless a greater vote of the directors is required by law or these Bylaws, or pursuant to the Members’ Agreement. [jmu9] . In lieu of action at a regular or special meeting, the Board may act pursuant to unanimous written consent signed by all directors in one or more counterparts which together shall constitute a single instrument, and the Board may authorize, to the extent consistent with the laws of the Commonwealth of Virginia, the use of secure electronic signatures to sign such instruments if circulated by electronic mail.[jmu10]

6. Notice of Meetings. Written notice of all meetings of the Board of Directors shall be required. Written notice shall be given at least seven (7) days prior to special meetings and at least fourteen (14) days prior to special meetings. The notice shall state the date, time, and place of the meeting and the purpose thereof. A notice shall be deemed duly given when it is either delivered in person, by courier service [jmu11] , electronically mailed, or mailed by first class (domestic) or airmail (international) post, postage prepaid, to the address of such directors as it appears on the records of TEI.

ARTICLE V

Funds

Funds for meeting the expenses of TEI may be provided in such manner as the Board of Directors may determine, including without limitation such annual or other periodic membership dues as may be fixed from time to time by the Board of Directors and specified in a Membership Agreement to be signed by each new member of TEI, [jmu12] , and such charges for meetings, seminars, and publications as may be fixed from time to time by the Board of Directors. Charges other than for membership dues and assessments may be set on a per-person basis or any other basis deemed appropriate by the Board of Directors [jmu13] .

ARTICLE VI

Committees

1. Committees. Except as provided otherwise herein, the Board of Directors from time to time may appoint such committees as it deems necessary to carry out the purposes of TEI, including but not limited to any committees described in these Bylaws. These committees shall be assigned the responsibilities described in these Bylaws or specified by the Board of Directors and shall report to the Board of Directors and/or the members as required herein or by the Board of Directors.

2. TEI Council. The Board of Directors shall establish a TEI Council to superintend the technical work of the TEI. The TEI Council will consist of twelve members, one of which shall be the TEI [jmu14] Chair and one of which shall be another officer, and may include such other directors or members as designated by the Board of Directors. The Chair of the TEI Council will be designated by the Board of Directors. Council members will be elected to two-year terms by TEI [jmu15] members, with nominations (and nominees) open to the general public. The work of the TEI Council will be to collect, propose, evaluate, and implement editorial changes to the TEI DTD (and its derivatives), to produce up-to-date documentation for the TEI, and to evaluate agreements for official TEI training and services and make recommendations to the TEI Directorate concerning endorsement of such training and services. The TEI Council may delegate any of those functions to appointed working groups or committees, at its discretion. The TEI Council will also have the power to create working groups with a fixed term and a specific charter, and to appoint or to delegate the appointment of the membership of those working groups. The TEI Council may convene upon call of the Chair or at the request of a majority of the Board. A majority of the members of the TEI Council shall constitute a quorum.

3. TEI Hosts. [jmu16] Upon incorporation, the first four TEI Hosts shall be Brown University (the Scholarly Technology Group), the University of Virginia (the Institute for Advanced Technology in the Humanities and the Electronic Text Center), Oxford University (The Humanities Computing Unit), and The University of Bergen (Humanities Information Technologies Research Programme), each of whom shall serve a four-year term. Thereafter, the Board of Directors shall select a minimum of four TEI Hosts, using a public Request for Proposals process. Hosts may be re-appointed for second and subsequent terms, but they must participate in the RFP process. In selecting Hosts, the Board of Directors shall respect those fundamental principles of the TEI Consortium calling for international and interdisciplinary representation. Hosts must be members of the TEI. Hosts shall serve for a minimum four-year term, and shall agree, in addition to a membership fee, to provide support services for the TEI and to organize, convene, or assist in TEI meetings. Hosts may also assist the TEI in recruiting members, raising endowment, providing training or consulting to members, and disseminating information and tools relevant to the use of TEI.

3. Editors: The TEI Editor (or Editors) will be appointed for five-year terms [jmu17] by the TEI Board, presumably (though not necessarily) from among the Council. Editors may be reappointed to consecutive terms.[jmu18]

ARTICLE VII

Amendments

These Bylaws may be repealed or changed and new Bylaws made by a true majority of those members present by proxy or in person at a meeting of the members of TEI or, to the extent permitted by law and not in conflict with the Articles of Incorporation, by a true majority of the Board of Directors. A copy of any proposed change to these Bylaws shall accompany the required notice of meeting at which the change is to be considered. [jmu22]

The undersigned, being the duly elected Secretary of TEI hereby certifies that these Bylaws were adopted as the Bylaws of the Consortium by a unanimous consent approved by all of the Directors effective on December ___, 2000.

______________________

Secretary

ETC…[jmu23]

[jmu1] All: Lou’s lawyers asked:

whether this University [Oxford] (and Norway, and Pisa)

would qualify for the purpose of distributions under paragraph

(d) of Article 11 of the proposed Articles of Incorporation. It

would be good to bring in overseas not-for-profit institutions

for this purpose. In the case of a UK University one could

reference exempt charities within the meaning of the Charities

Act 1993. In a sense, this is the counterpart to Section 501

is likely to be that the US corporation would find it difficult

to secure tax exemption under Section 4942 of the IRC. In our

meeting, I explained the difficulty that tax exempt status for

charities is essentially something which is governed on a

country-by-country basis: it is not as if there are any

international arrangements or treaties for this.

Elsie responded:

Article VI is a very standard articulation of things that the corporation WILL NOT do, things that would jeopardize its tax exempt status, such as lobbying, misusing funds, etc, which would subject it to penalties and grim consequences under Section 4292 and related sections. The Articles should not include discussion of distributions to specified foreign entities. Although a U.S.charitable tax-exempt corporation can fund foreign activities under its general purposes, it must not be a mere conduit to foreign entities but must exercise judgment and oversight over use of donated US tax-exempt funds. (see the memo on this subject provided some time ago - if you don't have this in hand I can send.) The charitable status of a particular entity is indeed a country-by-country issue.

My reading of this is that TEI can dispense money from US accounts to foreign entities, provided that in the judgment and oversight of TEI these expenditures further the general purposes of TEI. My reading is also that we should not specify, in Article VI, any particular intention to dispense funds to foreign entities, but rather, be silent on that matter. Does everyone agree to leave the language of Article VI as is?

[jmu2] TEI Folks: This language added at Mac Thompson’s suggestion, to explicitly cover Fed-Ex delivery of notices. Any objection to the new language?

[jmu3] TEI Folks: This is a new officer category inserted at the suggestion of the US lawyers, Mac and Elsie Thompson, who felt it was a bad idea to allow someone not elected to the board (e.g., the Treasurer) to act as Chair of the Board in the event the Chair isn’t available. Is the addition of a vice-chair and the transfer of backup chair responsibilities from treasurer to vice-chair OK?

[jmu4] TEI Folks: We need minimum and maximum numbers here, to start off with; those numbers can be changed later. We have seven initial directors, so that’s our minimum. I arbitrarily chose 9 as a maximum; that would allow us three sponsoring organization representatives and four hosts plus two elected members, initially, if we decided all hosts needed to be on the board (I can’t remember where we lean on that now; I still think we only need a representative host on a rotating appointment, in order to allow for the election of more new people). Is an initial maximum of 9 OK?

[jmu5] TEI Folks: This assumes that we agree on a host-representative being appointed to the Board by the Hosts, rather than having all hosts serve on the Board. I’ve stated my reasons for thinking this is the way to go. Do we agree to have one Host on the Board?

[jmu6] Mac and Elsie: This is the explanation for “appointed or elected” in section 2, below, and was indeed missing from these articles, though present in our original consortium agreement, in section 5.1 (“The TEI Directorate”). Also, in answer to your question of whether we want to stagger the terms of directors, I think the expiration of the three appointive seats at the end of the first two years will provide some staggering.

[jmu7] All: This language seems to be made necessary by the more specific description of the mechanism for appointing directors. Any objections?

[jmu8] TEI Folks: This language inserted at Elsie Thompson’s suggestion, to permit telephone participation at Board meetings. Any objections?

[jmu9] TEI Folks: This language inserted at Elsie’s suggestion and in response to Lou’s lawyers’ concerns, e.g.:

Looking at the draft Articles for the US Corporation, we

talked about the desirability of a separate Shareholders'

Agreement. This would ensure that in certain critical areas

the consent of all the shareholders/ members (or at least the

consent of Oxford University!) is required. Absent such an

agreement, most things will be within the gift of the majority.

Under English law, a simple (51 %) majority of the members is

all that is required to control the composition of the Board of

Directors.

Elsie and Mac raised similar concerns, and suggest a “Members Agreement” rather than a Shareholder’s Agreement, since we are contemplating a non-stock corporation:

As currently drafted, the Articles contemplate a member corporation rather than a stock corporation. The Shareholders' agreement suggested, however, could be a members' agreement to be drafted and adopted at the outset, covering items such as dues and fees, personnel and contractor decision process and management, etc. that are appropriate to it, the terms of which would be developed by the Board of Directors and could be modified from time to time, possibly by a defined supermajority. Each new member would sign on to the agreement in order to join.

The bylaws themselves can describe in what instances a "supermajority" of Board - or Member - votes is required. (For example, in the for-profit world, the disposition of "all or substantially all" of a corporation's assets is a typical supermajority item - often requiring a 2/3 vote of stockholders - by operation of state law. With regard to the issue of subversion by a simple majority, you and I had a similar discussion in which I mentioned the concept of cumulative voting as a means of insuring minority representation on the Board itself, but that may not solve the problem. And of course if the Board quorum is low, and 51% of quorum can make policy, then a very small turnout at a Board meeting can be a problem.

I think we probably should have a members agreement, and I nominate Allen to draft that as part of the membership package—agreement to cover dues, rights and responsibilities, adherence to the charter principles of TEI, and consent to the terms of membership. Other language elsewhere in this draft of the articles of incorporation and bylaws will spell out how that membership agreement is created, approved, altered, etc., and when it is and is not relevant to matters of governance.

[jmu10] TEI Folks: This language proposed by Elsie Thompson. Do we agree to keep it?

[jmu11] TEI Folks: This language added at Mac Thompson’s suggestion, to explicitly cover Fed-Ex delivery of notices. Any objections to this new language?

[jmu12] All: Here’s an explicit mention of a membership agreement, in the context of a stipulation that this agreement would cover membership dues… Any problem with this new language?

[jmu13] All: Lou’s lawyers asked:

The question of the level of membership fees is one issue

which might be a candidate for a Shareholders' Agreement. If

the Board sets the fees at too high a level, the only recourse

seems to be for the member to resign.

(17) The questions of the levels at which salaries and fees of

employees and contractors are to be set is another candidate

for a Shareholders' Agreement.

If we’re going to have a members agreement, then these articles probably need to say more than they now do about what that agreement covers, how it is revised, etc.. Suggestions about where and how and how much to define the members agreement?

[jmu14] TEI Folks: Elsie says:

for clarity, I would suggest the insertion of “TEI” before “Chair”, because farther down you make reference to the “Chair” of the Council itself, who is not necessarily the TEI Chair.

Any objections?

[jmu15] All: Changed from “Consortium” for consistency. Any objections?

[jmu16] TEI Folks: Elsie says:

Once again, do you wish to stagger these terms for the sake of continuity? Or does the likelihood of reappointment make this less important? If the whole host group were turned over at the same time, would the organization suffer? Is it necessary to mention the Host concept anywhere else in the Bylaws?

I would say that we don’t need to stagger host terms, though it’s a good question. And Hosts are now mentioned elsewhere in the bylaws, in Article IV section 1 of the Bylaws, and also in Article VI section 3. Are there those who think we need to stagger host terms?

[jmu17] TEI Folks: Elsie rightly points out:

Given the stipulation that no role with respect to TEI shall be without term, do you need a term for the Editor(s)? This is an appointive spot, but would appear to be a “role.”

I think we do want a term to this role as to all others, and I suggest five years, since the commitment to edit the TEI involves somewhat more immersion than other roles and therefore probably shouldn’t change as frequently. Any objections?

[jmu18] TEI Folks: If we have a term for editors, I think we have to say explicitly that editors can be reappointed. Any objections?

[jmu19] TEI Folks: This is changed, at Elsie’s suggestion, from the previous and more vague “a reasonable time before the notice date” etc. She says:

In my experience one aspect of board governance that tends to get haphazard and last-minute unless structured is the nominating process. It can also be a lot of work for just two people.

Any objections to this change in the rules for the nominating committee?

[jmu20] TEI Folks: Our earlier language (May draft) said “two or more candidates” which, as Elsie Thompson pointed out to me, locks us in to competitive elections in which someone loses. This language (“one or more”) leaves it open, perhaps on a case-by-case basis, for us to decide whether elections will be contested. Of course, if we think voting is a principal benefit of membership, voting for the only candidate might seem problematic. Do you want to leave it as “one or more” or return to “two or more”?

[jmu21] TEI Folks: Elsie suggests adding this language because:

It is important to have a procedure in place for identifying Board members (and others) willing and able to serve as officers…[and, with respect to the vacancy clause]… to address the issue of mid-term resignations from the Board, Council and roster or officers (note that the word “may” is used - this is not mandatory - depending on the situation, activation of the Nominating Committee may not be necessary.)

Any objections to this more specific charge to the nominating committee, or to the mechanism for nominating midterm replacements for the Board?

[jmu22] TEI Folks: Elsie points out:

This is a very important provision, and again needs to reflect the allocation of authority between the Board and the members of TEI. You may wish to identify precisely which portions of the Bylaws can be amended by the Board, and which require membership approval. Membership approval is much more cumbersome. Is it appropriate for the board to make amendments to the provisions relating to members? If the Board is indeed representative, perhaps. In addition, it would seem appropriate to require approval by a true majority of the Board. The conference call and unanimous consent provisions would make this a reasonable from a logistical standpoint. A non-controversial amendment could be handled by consent, while sufficient participation could be secured by conference call at a meeting if the amendment had controversial aspects. With a provision requiring a true majority vote, a Bylaw change could not be passed by a mere ¼ plus 1 of the board (half of the one-half quorum, plus one).

I believe the nub of this observation is that our bylaws, as they stand in the May iteration, allow the bylaws to be amended by a vote of the members in a meeting, where a quorum for such a meeting is defined as one-third of members, and a vote to amend bylaws is defined as a majority of that quorum, so the bylaws could be amended by one sixth of the members plus one: if we had six members, two could amend the bylaws; if we had twelve, three could; if we had twenty-four, five could, and so on (See Article II of the Bylaws). Per Article IV, if we had 7 Directors, four could change the bylaws. Key in Elsie’s analysis: “If the Board is representative”—I think it is: if not in the first two years, when the sponsoring societies hold appointive seats, then certainly thereafter, when all board members except the host representative (if my proposition on that score is accepted) would be elected by members. Still, I take the point that we might want “a true majority vote” either of members or of the Board, to change the bylaws (that is, a majority of all who hold that position, not just a majority of those in that position who attend a meeting. Given that we have provisions for proxy, courier, email, conference calls, etc., I should think we could require that true majority without impeding any desirable openness to change. Therefore, I’ve inserted the modifier “true” in two places here. Any objection to the notion that bylaws could be changed only by a true majority of members or directors?

[jmu23] All: Some important addenda follow; please read.

Lou’s lawyers say

that the University will need to see a Business Plan if it is to be represented in any company; even if my directorship is personal rather than institutional, he advises that this would be a sensible thing to ask for -- I quote:

(1) If the University is to participate in one or more

companies, the Director of Finance will need to see a Business

Plan. I would have thought that the prospective directors would

like to consider such a plan in any event, to give them the

personal reassurance which they need. One would expect the plan

to be drawn up by accountants. You mentioned that, since the

likely home for at least the US corporation will be the

University of Virginia, very likely their in-house

accountants will draw up the document. One would expect the

document to contain a description of the project, an account of

how the venture is to be structured and managed, and then pro

forma accounts: these would comprise trading account, profit and

loss account, balance sheet and cashfiow projections. They

should cover the initial period of activity, ideally the first

five years.

(2) The financial projections would take account of all

identifiable outgoings. This morning we focused in particular

on the likely legal fees in acquiring the necessary intellectual

property rights.

Elsie responds:

This is indeed important to consider now, as the budget and plan of operation will figure in the 501(c) (3) application as well. Any granting entity, academic or otherwise, will want this, too. An accountant or numbers person can draw up the actual document, but the basic input will have to come from the Board - where and how the funds contributed by members or raised from other entities will be spent, what the target budget is in year 1 and years following, etc. Board members can put together an initial sketch of the plan and budget, circulate it as appropriate, and consult on fleshing it out into a working document.

Mac’s firm has an accountant they work with in filing the 501(c) (3) applications: if we can settle the language of the charter, articles, and bylaws to everyone’s satisfaction, then we could circulate a budget (one was drafted already for the NEH concept paper, and unless Allen’s membership work changes the picture substantially, we could probably start from there). If it’s necessary, I could hire someone to put together a full-blown business plan (of the sort you’d use to troll for venture capital), but I’d rather avoid that expense, since I think all we need for the purposes at hand is a set of simple budget projections and sketch of our plan of operation.

Also, on a separate matter (of interest to European lawyers in particular), Elsie says:

here are several useful web sites for US and VA code provisions:

Federal:

http://uscode.house.gov/usc.htm

www.law.cornell.edu/uscode/

Virginia:

http://leg1.state.va.us/000/src.htm

Useful US nonprofit info:

www.ncnb.org/main.htm

And one other thing we’re going to have to confront, I think: liability insurance for officers. I think such insurance will be in the hundreds of dollars a year, but I think we need it, and I will pursue that with Mac and Elsie and others locally. For the record, and thanks to Elsie, the Virginia law on this subject is as follows:

§ 13.1-870.1

Limitation on liability of officers and directors; exception

A. Except as otherwise provided in this section, in any proceeding brought by or in the right of a corporation or brought by or on behalf of members of the corporation, the damages assessed against an officer or director arising out of a single transaction, occurrence, or course of conduct shall not exceed the lesser of:

1. The monetary amount including the elimination of liability, specified in the articles of incorporation or, if approved by the members, in the bylaws as a limitation on or elimination of the liability of the officer or director; or

2. The greater of (i) $100,000, or (ii) the amount of the cash compensation received by the officer or director from the corporation during the twelve months immediately preceding the act or omission for which liability was imposed.

B. In any proceeding against an officer or director who receives compensation from a corporation exempt from income taxation under § 501 (c) of the Internal Revenue Code for his services as such, the damages assessed arising out of a single transaction, occurrence or course of conduct shall not exceed the amount of compensation received by the officer or director from the corporation during the twelve months immediately preceding the act or omission for which liability was imposed. An officer or director who serves such an exempt corporation without compensation for his services shall not be liable for damages in any such proceeding.

C. The liability of an officer or director shall not be limited as provided in this section if the officer or director engaged in willful misconduct or a knowing violation of the criminal law.

D. No limitation on or elimination of liability adopted pursuant to this section may be affected by any amendment of the articles of incorporation or bylaws with respect to any act or omission occurring before such amendment.

E. 1. Notwithstanding the provisions of this section, in any proceeding against an officer or director who receives compensation from a community association for his services, the damages assessed arising out of a single transaction, occurrence or course of conduct shall not exceed the amount of compensation received by the officer or director from the association during the twelve months immediately preceding the act or omission for which liability was imposed. An officer or director who serves such an association without compensation for his services shall not be liable for damages in any such proceeding.

2. The liability of an officer or director shall not be limited as provided in this subsection if the officer or director engaged in willful misconduct or a knowing violation of the criminal law.

3. As used in this subsection, "community association" shall mean a corporation incorporated under this chapter which owns or has under its care, custody or control real estate subject to a recorded declaration of covenants which obligates a person, by virtue of ownership of specific real estate, to be a member of the incorporated association.

Comments on business plan or liability issues? Volunteers?