AGREEMENT TO FORM A CORPORATION

Transcription

1 AGREEMENT TO FORM A CORPORATION THIS AGREEMENT is made and entered into as of the date of the last signature below by, between, and among Tennessee Trails Association, Inc. ( TTA ) and the individuals whose signatures appear on the signature page of this Agreement (the Organizers ). The TTA and the Organizers are referred to collectively in this Agreement as the Parties. RECITALS A. TTA is a Tennessee nonprofit, public benefit corporation recognized as exempt from federal income taxation as a public charity under Sections 501(c)(3) and 509(a)(1) of the Internal Revenue Code of 1986, as amended, (hereinafter, a tax-exempt organization). Certain individual members of TTA (including the Organizers and other individuals) have previously served as an organizing committee for the Cumberland Trail Conference ( CTC ), which has heretofore operated as a division of TTA under an Assumed Name duly registered by TTA with the Secretary of State of the State of Tennessee. B. The Parties desire to re-organize the CTC as a separate and independent corporation under the Tennessee Nonprofit Corporation Act, for the purposes stated in and pursuant to the Charter attached hereto as Exhibit A and incorporated herein by reference. C. The Organizers propose to recommend for adoption by the corporation upon its formation a set of bylaws substantially in the form attached hereto as Exhibit B and incorporated herein by reference. D. In recognition of the fact that certain pre-incorporation activities must proceed while additional discussion of the details of formation takes place among the interested parties, and to assure that the benefits of such pre-incorporation activities ultimately inure to the corporation to be formed, the Parties have in this Agreement set forth their declaration of intent with respect to the formation. TERMS AND CONDITIONS In consideration of the foregoing and of the mutual promises and covenants contained herein, the Parties agree as follows: 1. Formation of Corporation. Following the execution of this Agreement, the Organizers shall cause a corporation to be formed by filing with the Secretary of State of Tennessee a Charter substantially in the form attached hereto as Exhibit A. The name of the corporation to be formed shall be CTC Formation Group, Inc. (hereinafter the Corporation ). 2. Membership Interests. The Corporation shall have no members within the meaning of the Tennessee Nonprofit Corporation Act. Whenever the word member or membership is used in the Charter, Bylaws, or otherwise in the pre- or post-incorporation activities of the AGREEMENT TO FORM PAGE 1 OF 6

2 Corporation, it shall be understood to refer to formal participation in the activities of the Corporation, the acceptance of certain obligations with respect to the support of the Corporation, and such other benefits and obligations as shall be specified from time to time by the Board of Directors of the Corporation. 3. Initial Costs. The Organizers shall cause the Corporation to be formed as soon as is practicable following the execution of this Agreement. TTA hereby promises to advance such funds as may be necessary to meet the obligations of the Corporation, if any, prior to incorporation, solely with respect to the organization of the Corporation and its application for recognition of exemption from federal income taxation, not to exceed five thousand dollars ($5,000) in the aggregate. Such advance shall be treated as an interest-free loan to be repaid to TTA by the Corporation within twelve (12) months following its formation. 4. Engagement of Counsel. The Parties hereby approve and ratify the engagement of Charles M. Key as legal counsel for the Corporation to be formed. 5. Transfer of Assets and Assumption of Liabilities. 5.1 Conditions Precedent. The following conditions must be satisfied prior to any transfer of assets to or assumption of liabilities by the Corporation. Upon the failure of any of the following conditions, and unless otherwise agreed to in writing, signed by TTA and the Corporation, TTA shall not be obligated to transfer any asset and the Corporation shall not be obligated to assume any liability contemplated in this Section 5. (a) The Corporation shall have been formed under the Charter attached hereto as Exhibit A, shall have received recognition of exemption from federal income taxation as a public charity under Sections 501(c)(3) and 509(a)(1) of the Internal Revenue Code of 1986, as amended, and shall have provided documentation thereof to TTA in the form of file-stamped copies of such Charter and a letter of determination from the United States Internal Revenue Service. (b) Ratification of this Agreement by the membership of TTA on or before December 31, (c) The Corporation s Incorporators shall have appointed the following persons as the First Board of Directors of the Corporation: Rob Weber, Frank Jamison, and Carolyn Miller. No additional directors shall have been elected or appointed by the Corporation without the prior written approval of TTA. (d) The First Board of Directors of the Corporation shall have elected the following persons as the Initial Officers of the Corporation: AGREEMENT TO FORM PAGE 2 OF 6

3 Rob Weber Frank Jamison Carolyn Miller Chair Vice Chair Secretary and Treasurer No additional officers shall have been elected or appointed by the Corporation without the prior written approval of TTA. (e) The Corporation shall have adopted the Bylaws attached hereto as Exhibit B, and shall have adopted a committee structure approved by TTA. (f) The Corporation shall have adopted, and made available to TTA, a mission statement and a written framework for accomplishing its mission. (g) The Corporation shall have entered into a working relationship with the Tennessee Department of Environment and Conservation (TDEC), as appropriate for carrying out its mission. (h) The Corporation and TTA shall have entered into a Memorandum of Understanding regarding their future communication, cooperation and mutual assistance, covering, at a minimum: sharing and coordination of membership lists; reciprocal discounts; working relationship regarding trail building; and joint publicity. (i) The Corporation shall have presented releases or other documentation to TTA sufficient to assume responsibility for all obligations previously undertaken by TTA relative to the Cumberland Trail. 5.2 Transfer of Assets. Upon satisfaction in full of the conditions precedent stated in Section 5.1 above, but not sooner than November 15, 2015, TTA shall cause the transfer to the Corporation of any and all right, title, and interest TTA has, may have, or may in the future have in the following assets: (a) The name Cumberland Trail Conference, including but not limited to TTA s execution and delivery to the Corporation of an Application for Cancellation of Assumed Corporate Name relative to the name Cumberland Trail Conference; (b) Cash and financial assets, equipment, supplies, and other assets reflected in the Balance Sheet of the Cumberland Trail Conference dated as of the last day of the month preceding the date of the Closing (described in Section 5.4 below) and in any inventory of assets available at Closing, including (whether or not itemized as such in the aforementioned Balance Sheet) payments owed by the State of Tennessee on invoices for construction of the bridge across Big Soddy Creek and for trail construction on the western slope of Black Mountain, and any proceeds from claims against the North Chickamauga Creek Conservancy; AGREEMENT TO FORM PAGE 3 OF 6

4 (c) Any contract assumed by the Corporation under Section 5.3 below; (d) Any interest in real property owned by TTA that is located in or adjacent to the Cumberland Trail State Scenic Park; and (e) Any lease of real property by TTA that is located in or adjacent to the Cumberland Trail State Scenic Park. Each such asset shall be transferred as is, with no representation or warranty with respect thereto. The full performance of such transfer shall be acknowledged and confirmed by the parties, consistent with this Agreement, upon its occurrence, as hereinafter set forth. 5.3 Assumption of Liabilities. Simultaneous with the transfer of the aforementioned assets to the Corporation, the Corporation shall assume the following liabilities: (a) All remaining obligations to past donors of property or monies to TTA in connection with the Cumberland Trail; (b) All remaining obligations to TDEC or any other agency of the State of Tennessee incurred by TTA in connection with the Cumberland Trail; (c) All remaining obligations to past or present employees of TTA in connection with the Cumberland Trail, or to others arising out of any actions by such employees, for which TTA would be responsible; (d) All remaining obligations to other parties, with whom TTA has had contracts or other arrangements related to the Cumberland Trail, whether or not such obligations currently are known or quantified; and above. (e) All of TTA s obligations relative to the assets transferred under Section Closing. On completion of all of the conditions to performance of this Agreement listed above, and on request of The Corporation, the parties shall hold a closing at a mutually agreed place and time at which TTA shall transfer ownership of the assets described above to The Corporation. At the closing, TTA and The Corporation shall present releases, sign documentation, and take other steps sufficient to assure the transfer of assets and assumption of obligations listed above, to secure title in the assets to the Corporation free and clear from liens and encumbrances, and to protect TTA from future liability with respect to the obligations assumed by the Corporation. Following the closing of the transaction contemplated by this Agreement, TTA shall discontinue any and all use of the name Cumberland Trail Conference, except as authorized by the Corporation. AGREEMENT TO FORM PAGE 4 OF 6

5 5.5 Indemnity. The Corporation shall defend, indemnify, and hold TTA harmless from and against any liability, damages, cost, or expense of any kind, including but not limited to reasonable attorneys fees and costs reasonably incurred, that may arise in whole or in part out of the transfer of assets described in Section 5.2 above, the assumption of liabilities described in this Section 5.3 above, or otherwise out of the execution of this Agreement or the performance of any obligation hereunder. 6. Binding Effect. This Agreement shall be binding according to its terms upon each of the Parties and their respective legal representatives, successors, and assigns. 7. Entire Agreement. This Agreement is the entire agreement of the parties and supersedes all previous agreements made between the parties related to the subject matter of this Agreement. 8. Headings. The headings used throughout this Agreement are for convenience only and shall not in any way affect the meaning or interpretation of this Agreement. 9. Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Tennessee. 10. Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original but all of which together shall constitute one (1) and the same instrument. 11. Survival of this Agreement. This Agreement shall survive the formation of the Corporation, and each of the Parties shall continue to be bound by its terms, as applicable. [signature page follows] AGREEMENT TO FORM PAGE 5 OF 6

6 IN WITNESS WHEREOF, the undersigned have executed this Agreement, effective as of the date of the last signature below. TENNESSEE TRAILS ASSOCIATION, INC. ( TTA ) By: Levonn Hubbard Vice President Date: THE ORGANIZERS : Rob Weber Date Frank Jamison Date May 4, 2015 Carolyn Miller Date AGREEMENT TO FORM PAGE 6 OF 6

7 Agreement to Form a Corporation Exhibit A CHARTER OF CTC FORMATION GROUP, INC. ARTICLE I. GENERAL PROVISIONS Section 1.1. Name. The name of the corporation is CTC Formation Group, Inc. (hereinafter the Corporation ). Section 1.2. Public Benefit Corporation. Pursuant to the provisions of Section (2) and (3) of the Tennessee Nonprofit Corporation Act, the Corporation is a public benefit corporation. Section 1.3. Registered Office and Agent. The street address and zip code of the Corporation s current registered office is 409 Thurman Avenue, Suite 102, Crossville, Tennessee The current registered office of the Corporation is located in Cumberland County, Tennessee, and its current registered agent at that office is the Corporation itself. Section 1.4. Incorporator. The name, street address, and zip code of the incorporator is as appears beneath the signature of the incorporator, affixed hereto. Section 1.5. Principal Office. The street address and zip code of the principal office of the Corporation is 409 Thurman Avenue, Suite 102, Crossville, Tennessee Section 1.6. Not for Profit. The Corporation is not for profit. Section 1.7. Members. The Corporation shall have no members within the meaning of the Tennessee Nonprofit Corporation Act. CHARTER PAGE 1 OF 5

8 Section 1.8. Distribution of Assets on Dissolution. Upon the dissolution of the Corporation, the Board of Directors, after paying or making provision for the payment of all of the liabilities of the Corporation, shall distribute all of the assets of the Corporation exclusively for one or more of the purposes of the Corporation, or to an organization or organizations which is or are then exempt from federal income taxation under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (or the corresponding provision of any future United States internal revenue statute) (hereinafter a tax-exempt organization ), or to the government of the United States or the State of Tennessee, or to a local government or governments, for a public purpose. Any such assets not so distributed shall be distributed by the Chancery Court of the county in which the principal office of the Corporation is then located, exclusively for the purposes of the Corporation, or to a tax-exempt organization or organizations, or to another organization or organizations to be used in such manner as in the judgment of the Court will best accomplish the general purposes for which the Corporation was organized. ARTICLE II. PURPOSES AND POWERS Section 2.1. Purposes. The purposes for which the Corporation is organized are to provide financial and volunteer assistance with land acquisition, design, construction, and maintenance of the Cumberland Trail in Tennessee; to serve as an advocate for the Cumberland Trail and the regions bounding it in order to preserve the natural resources, beauty, and intrinsic value of the region; to assist local communities in the planning, land acquisition, design, construction, and maintenance of connector and other trails along the Cumberland Trail; and to promote educational and recreational opportunities to this system of trails. The foregoing enumeration of purposes is intended to specify purposes characterized as charitable, scientific, or educational within the meaning of Section 501(c)(3) of the Internal Revenue Code of 1986 (or the corresponding provision of any future United States internal revenue statute), as now exists or as may hereafter be amended (hereinafter referred to as the Code ). The Corporation is organized and shall be operated exclusively for such charitable, scientific, or educational purposes, and all CHARTER PAGE 2 OF 5

9 provisions of this Charter shall be limited by and construed to be consistent with such purposes. Section 2.2. Powers. The Corporation shall have all powers attributed to public benefit corporations under the Tennessee Nonprofit Corporation Act and, consistent therewith, shall be empowered to engage in any and all lawful activities which may be incidental or reasonably necessary to any of its enumerated purposes, including but not limited to: (a) the power to purchase, receive, lease, or otherwise acquire, and own, hold, improve, use, and otherwise deal with, real or personal property, or any legal or equitable interest in real or personal property, wherever located; and (b) the power to sell, convey, mortgage, pledge, lease, exchange, and otherwise dispose of, or grant a security interest in, all or any part of the real or personal property of the Corporation; provided, however, that the Corporation shall not conduct or carry on any activity not permitted to be conducted or carried on by any organization recognized as exempt from federal income taxation under Section 501(c)(3) of the Code. Section 2.3. Limitations. The following limitations shall apply to the purposes, powers, and activities of the Corporation: (a) no part of the net earnings or receipts of the Corporation shall inure to the benefit of, or be distributable to, its members, officers, or other private persons, except that the Corporation shall be authorized and empowered to pay reasonable compensation for items or services rendered and to make payments and distributions in furtherance of its charitable, scientific, and educational purposes; CHARTER PAGE 3 OF 5

10 (b) no substantial part of the activities of the Corporation shall consist of carrying on propaganda or otherwise attempting to influence legislation; (c) no part of the activities of the Corporation shall consist of participating in or intervening in (including the publishing or distributing of statements) any political campaign on behalf of any candidate for public office; and (d) notwithstanding any other provision of this Charter, the Corporation shall not, except to an insubstantial degree, pursue any purpose, exercise any power, or engage in any activity which is not consistent with and in furtherance of one or more of the exempt purposes stated in Section 501(c)(3) of the Code. ARTICLE III. ORGANIZATION AND GOVERNANCE Section 3.1. Board of Directors. The business and affairs of the Corporation shall be governed by a Board of Directors. The initial Board of Directors shall be designated by the incorporator. Thereafter, the Board of Directors shall be selected in the manner prescribed by the bylaws of the Corporation. The bylaws shall specify the qualifications and number of directors, provided that there shall be at all times at least three (3) directors. The bylaws shall also specify the term each director shall serve, procedures for removal of directors and filling of vacancies, and the time and manner of meetings of the Board of Directors. Section 3.2. Bylaws. The Board of Directors of the Corporation shall adopt bylaws for the management, regulation, and control of the affairs, property, and operation of the Corporation, provided that such bylaws shall not be inconsistent with this Charter or with the law of the State of Tennessee. The bylaws of the Corporation may be altered, amended, or repealed at any time by the Board of Directors. CHARTER PAGE 4 OF 5

11 Section 3.3. Immunity of Directors. To the extent allowed by the Tennessee Nonprofit Corporation Act, the directors of the Corporation shall be immune from personal liability to the Corporation for monetary damages for breach of fiduciary duty as a director. IN WITNESS WHEREOF, this Charter is hereby adopted by the undersigned incorporator for filing with the Secretary of State of Tennessee, this day of, Charles M. Key Incorporator 716 W. Brookhaven Circle Memphis, Tennessee /29/ :56 AM CHARTER PAGE 5 OF 5

12 OF CTC FORMATION GROUP, INC. Agreement to Form a Corporation Exhibit B ARTICLE I GENERAL PROVISIONS Section 1.1. Name. The name of the corporation shall be CTC Formation Group, Inc. (hereinafter the Corporation ). Section 1.2. Principal Office. The principal office of the Corporation shall be 409 Thurman Avenue, Suite 102, Crossville, Tennessee Section 1.3. Meaning of Terms. The Corporation shall have no members within the meaning of the Tennessee Nonprofit Corporation Act. Whenever the word member or membership is used in these bylaws or otherwise in the activities of the Corporation, it shall be understood to refer to formal participation in the activities of the Corporation, the acceptance of certain obligations with respect to the support of the Corporation, and such other benefits and obligations as shall be specified from time to time by the Board of Directors of the Corporation. ARTICLE II BOARD OF DIRECTORS Section 2.1. Composition. The business and affairs of the Corporation shall be conducted by a Board of Directors consisting of no fewer than three (3) nor more than twenty (20) natural persons. The Board should be comprised of members with a broad range of skills, expertise, and perspectives, each of whom shall be committed to the mission and purposes of the Corporation. Section 2.2. Eligibility. The Board shall consist only of individuals: (a) who have not been compensated by the Corporation in the past twelve (12) months, including full-time and parttime compensation as an employee or as a contractor; (b) whose own compensation is not determined by individuals who are compensated by the Corporation; (c) who do not receive, directly or indirectly, material financial benefits (i.e., service contracts, grants or other payments) from the Corporation; and (d) who are not members of the immediate family of any individual described above. Section 2.3. Term. The members of the Board of Directors shall serve for terms of three (3) years each, beginning at the close of the annual meeting at which they are appointed, and continuing until their successors are elected and qualified. Notwithstanding the foregoing, the terms of the first elected Board of Directors shall be of unequal duration not to exceed three (3) years each, as determined by the Board of Directors, so as to establish staggered terms for future elections. No director who has served continuously for an uninterrupted period of nine (9) or more PAGE 1 OF 14

13 years shall be eligible for re-election at the end of his or her current term or for appointment to fill a vacancy on the Board, unless and until at least one (1) year has passed since the end of his or her last term. For purposes of this Section 2.3, a year shall be the lesser of one (1) calendar year or the period between successive annual meetings. Section 2.4. Method of Election. The method of election of directors of the Corporation shall be as follows: (a) (b) (c) Governance Committee. The Governance Committee established by the Board of Directors pursuant to Article VI of these bylaws shall select candidates for election to the Board of Directors. Meeting of Governance Committee. The Governance Committee shall meet prior to the time of the annual meeting for the purpose of making its nominations. The Governance Committee shall exercise its discretion in selecting such nominees as it determines will best serve the interests of the Corporation, consistent with these bylaws, and shall contact each nominee and verify that the nominee is able and willing to serve if elected. The Governance Committee shall nominate a number of candidates at least equal to the number of anticipated vacancies. Preparation of Ballot and Vote. The Governance Committee shall prepare a ballot for presentation to the Board of Directors at the annual meeting. Nominations may also be made from the floor at the annual meeting, provided that the director making the nomination from the floor shall attest that he or she has contacted such nominee and verified that the nominee is able and willing to serve if elected. Directors shall be elected by a plurality of votes cast at such properly constituted annual meeting. Section 2.5. Resignation and Removal. Any director may resign at any time by written notice delivered to the Chair, Secretary, or Board of Directors of the Corporation at the principal office of the Corporation. Any such resignation shall take effect on the date of receipt of such notice or at any later time specified therein, and the acceptance of such resignation shall not be necessary to make it effective. The Board may remove any director for missing three (3) consecutive meetings of the Board of Directors, by majority vote of the directors then in office, provided that such removal shall not be valid unless each director is given at least seven (7) days written notice that the matter will be voted on at the meeting, or unless notice is duly waived. Section 2.6. Vacancy. In the event of a vacancy on the Board of Directors, the vacancy may be filled by the affirmative vote of a majority of the directors remaining in office for the remainder of the unexpired term of the vacancy. PAGE 2 OF 14

14 Section 2.7. Advisory Board. (a) (b) Composition. The Corporation shall have an Advisory Board, which shall consist of members drawn primarily from the ranks of land managers, organizational funders, and conservation or recreational consultants active in the Cumberland Trail corridor and its associated communities. The Board of Directors shall determine the number of Advisory Board members, and shall appoint members to it. The Board of Directors shall endeavor to assure balanced community representation. Advisory Board members shall be appointed to staggered three (3) year terms, with one-third (1/3) of the members elected each year. Appointments shall be made annually. Vacancies shall be filled by the Board of Directors for the remainder of any unexpired term. Purposes. The Advisory Board shall provide representation, leadership, resources, and focus for the Corporation in carrying out its mission in an advisory role to the Board of Directors. The members of the Advisory Board shall be invited to attend no fewer than two (2) Board of Directors meetings in a calendar year. Additional attendance shall be at the discretion of the Board of Directors. The members of the Advisory Board shall have no vote, and shall receive no compensation for their services and duties. ARTICLE III OFFICERS Section 3.1. Board Officers. The Corporation shall have the following officers elected by and from among the members of its Board of Directors: a Chair, a Vice-Chair, a Secretary, and a Treasurer. The officers shall be chosen annually by the affirmative vote of a majority of the members of the Board of Directors. Section 3.2. Resignation and Removal. Any board officer may resign at any time by giving written notice to the Board of Directors or to the Chair or Secretary of the Corporation. Any such resignation shall take effect on the date of the receipt of such notice or at any later time specified therein. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Any board officer may be removed from office at any time, with or without cause, by a two-thirds (2/3) vote of the directors then in office. Section 3.3. Vacancy. In the event of a vacancy in any office, the vacancy may be filled by the affirmative vote of a majority of the directors remaining in office. PAGE 3 OF 14

15 ARTICLE IV DUTIES OF OFFICERS Section 4.1. Chair. The Chair shall preside at all meetings of the Board of Directors, shall have the general powers and duties usually vested in the office of the Chair, and shall have such other powers and duties as may be prescribed by the Board of Directors. The Chair shall, subject to the control of the directors, have general supervision, direction, and control of the affairs of the Corporation. Section 4.2. Vice-Chair. In the absence or disability of the Chair, the Vice-Chair shall, for the period of such absence or disability, perform all the duties of the Chair, and shall when so acting have all of the powers of and be subject to all the restrictions upon the Chair. The Vice- Chair shall have such other powers and perform such other duties as from time to time may be prescribed for him by the Board of Directors. Section 4.3. Secretary. The Secretary shall keep, or cause to be kept, a record of the proceedings of the meetings of the Board of Directors. Proposed minutes of each meeting shall be distributed by the Secretary to the members of the Board of Directors for their review, correction, and approval at the next regularly scheduled meeting of the Board. Approved minutes shall be maintained in the corporate offices of the Corporation and shall be available for inspection by any member of the Board on reasonable notice during regular business hours. The Secretary shall also have such other powers and perform such other duties as may be prescribed by the Board of Directors. Section 4.4. Treasurer. The Treasurer shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the properties and financial business transactions of the Corporation. The Treasurer shall also have such other powers and perform such other duties as may be prescribed by the Board of Directors. ARTICLE V MEETINGS OF THE BOARD OF DIRECTORS Section 5.1. Annual and Regular Meetings. The Board of Directors shall hold an annual meeting in August of each year at the principal office of the Corporation, or at such other time and place as may be determined by the Board of Directors. Regular meetings shall be held at least quarterly at such time and place as shall be determined by the Board of Directors. Section 5.2. Special Meetings. Special meetings of the Board of Directors may be called for any purpose at any time by the Chair, the Vice-Chair, or by any four (4) directors. Notice of the day, time, and place of any special meeting shall be communicated by any reasonable means to the directors at least forty-eight (48) hours prior to the meeting. All special meetings shall take place at the principal office of the Corporation unless another location is approved by a majority vote of all directors then in office. Notice of a special meeting may be waived by either filing with PAGE 4 OF 14

16 the minutes of the meeting a written waiver signed by the director(s) entitled to notice, or by such director(s) attendance at and participation in such meeting without objection. Section 5.3. Meeting by Telephone. Any or all directors may participate in any regular or special meeting by telephone, provided that all participating directors can simultaneously hear each other at all times during the meeting. A director participating by telephone shall be deemed for all purposes to be present in person at the meeting at all times during which such director is in simultaneous contact with every other director participating in the meeting. Section 5.4. Action without Meeting. Any action required or permitted to be taken by the Board of Directors may be taken without a meeting if all of the directors consent in writing and if such action is approved by the affirmative vote of a majority of the directors. The action must be evidenced by a written consent, executed in one (1) or more counterparts by each director, describing the action to be taken and indicating the vote of each director for or against such action, filed with the records of the Corporation. Such action is effective when the last director signs the consent, or at such other date as specified in the consent. Section 5.5. Quorum. The attendance of a majority of the directors in office shall constitute a quorum for the transaction of business. Section 5.6. Executive Session. It shall be the prerogative of the Board, on the call of the Chair, or on motion duly made, seconded, and approved by the affirmative vote of a majority of directors in attendance at any properly constituted meeting of the Board, to declare any meeting of the Board of Directors, or any portion thereof, an executive session. Any meeting or portion thereof that has been declared an executive session shall be attended only by the duly elected or appointed voting members of the Board of Directors, except that other persons may be admitted, whether for all or for a portion of the executive session, on the invitation of the Chair or on motion duly made, seconded, and approved by the affirmative vote of a majority of directors in attendance. The proceedings of the Board of Directors in executive session, and all information, opinions, reports, statements, or expressions of any kind adduced during such proceedings, shall be kept in confidence among those in attendance and shall not be made known to any other person without the express written approval of the Chair or by majority vote of the members of the Board of Directors in attendance at any properly constituted meeting. Minutes of each executive session shall be prepared and maintained by the Secretary or by such other person as shall be designated ad hoc by the Chair, and shall be maintained in confidence in the records of the Corporation s corporate legal counsel, or otherwise as directed by the Chair. ARTICLE VI COMMITTEES OF THE BOARD OF DIRECTORS Section 6.1. Creation of Committees. The Board of Directors may establish such committees as it deems necessary and appropriate for the conduct of the business and affairs of the Corporation, including, but not limited to, an Executive Committee, an Audit Committee, and a Governance Committee. The members of such committees may be members of the Board of PAGE 5 OF 14

17 Directors or other natural persons as determined by the Board of Directors or these bylaws, who shall serve at the pleasure of the Board of Directors. The Chair shall designate a chair for each such committee, provided that, as required by the Tennessee Nonprofit Corporation Act, creation of a committee and appointment of members to it must be approved by a majority of all directors in office at the time the action is taken. Section 6.2. Limitation of Authority. Each committee shall have the powers and authority delegated to it by the Board of Directors, provided that no committee shall be empowered or authorized to do any of the following: (a) elect, appoint, or remove directors or fill vacancies on the Board or any of its committees; (b) adopt, amend, or repeal the Charter or these bylaws; (c) dissolve the Corporation; (d) take any action otherwise prohibited by these bylaws or by law, or expressly reserved to the Board of Directors. No committee other than the Executive Committee shall be authorized to act on behalf of the Board of Directors. The Board of Directors shall have the exclusive authority to approve or disapprove the Corporation s annual budget, review and authorize the filing of the Corporation s federal income tax returns, and establish the general policies of the Corporation, including but not limited to policies concerning personnel and fiscal matters. Section 6.3. Meetings of Committees. The committees of the Board of Directors shall meet on an as-needed basis, on the call of the chair of the committee, the Board of Directors, or the Chair of the Board of Directors. Notice of such meetings shall be communicated by any reasonable means to each member of the committee at least twenty-four (24) hours prior to the meeting, stating the day, time, and place of such meeting, provided that all committee meetings shall take place at the principal office of the Corporation unless another location is approved by the unanimous consent of all members of the committee or by a majority vote of the Board of Directors. Notice may be waived by either filing with the minutes of the meeting a written waiver signed by the committee member(s) entitled to notice, or by such member(s) attendance at and participation in such meeting without objection. Committees may meet and members may participate by telephone to the same extent and in the same manner as provided in these bylaws for meetings of the Board of Directors. The attendance of a majority of the members of the committee shall constitute a quorum at any committee meeting, except where a greater number is required by these bylaws. Section 6.4. Action without Meeting. Any action required or permitted to be taken by any committee of the Board of Directors may be taken without a meeting if all members of such committee consent in writing and if such action is approved by the affirmative vote of a majority of the members of the committee. The action must be evidenced by a written consent, executed in one (1) or more counterparts by each committee member, describing the action to be taken and indicating the vote of each member for or against such action, filed with the records of the Corporation. Such action is effective when the last committee member signs the consent, or at such other time as may be specified in the consent. PAGE 6 OF 14

18 Section 6.5. Executive Committee. (a) (b) (c) Composition. There shall be an Executive Committee consisting of the Chair, Vice- Chair, Secretary, and Treasurer of the Board of Directors, the Immediate Past Chair of the Board, and one at-large member appointed by the Board. In the event the Immediate Past Chair is unavailable or unwilling to serve, the Board shall appoint a replacement. The then-current Chair of the Board of Directors shall serve as Chair of the Executive Committee. Purpose and Powers. The purpose of the Executive Committee shall be to conduct the business and affairs of the Corporation on a day-to-day basis, subject to the policy and direction established by the Board of Directors. The Executive Committee shall be authorized to exercise all of the powers of the Board of Directors, to the extent consistent with the established policies of the Board and as permitted by law. A summary of all actions taken by the Executive Committee since the last Board meeting shall be given at each meeting of the Board of Directors. Quorum. The attendance of at least four (4) members of the Executive Committee shall constitute a quorum at any committee meeting, provided, however, that no action may be taken by the Executive Committee without the affirmative vote of at least four (4) committee members. Any action voted on but not approved shall be placed on the agenda for the next Executive Committee or Board meeting (whichever first occurs). Section 6.6. Audit Committee. (a) (b) The Board of Directors shall establish an Audit Committee consisting of at least three (3) members of the Board of Directors, at least one (1) of whom shall have expertise in financial management. The Board may also appoint such additional non-director committee member or members as may be needed to obtain the requisite financial management expertise. All of the members of the Audit Committee shall be individuals: (i) who have not been compensated by the Corporation in the past twelve (12) months, including full-time and part-time compensation as an employee or as a contractor; (ii) whose own compensation is not determined by individuals who are compensated by the Corporation; (iii) who do not receive, directly or indirectly, material financial benefits (i.e., service contracts, grants or other payments) from the Corporation except as a member of the charitable class served by the Corporation; and (iv) who are not members of the immediate family of any individual described above. No staff member shall be eligible to serve on the Audit Committee. The duties of the Audit Committee shall be to consider and make recommendations to the Board of Directors concerning: (i) the Corporation s policy for travel; (ii) PAGE 7 OF 14

19 the Corporation s policy for executive staff compensation, including but not limited to establishing a framework for performance evaluations; (iii) compliance, conflicts of interest, ethics, and program integrity; (iv) an annual budget; (v) such other matters involving the financial resources of the Corporation as may from time to time arise; (vi) the selection of auditors for the Corporation; and (vii) an annual audit report. The Committee shall retain, oversee, and interact with the auditors of the Corporation selected by the Board, including at least one (1) executive session with the auditor. The auditors shall report directly to the Board of Directors. The committee shall use information regarding compensation levels for similar organizations in its geographic area and other appropriate information as a basis for executive staff compensation. Section 6.7. Governance Committee. The Governance Committee shall consist of no fewer than three (3) members, including no fewer than two (2) incumbent directors plus one (1) or more additional members who may be either incumbent directors or former members of the Board of Directors. Neither an incumbent director who is currently standing for re-election nor the incumbent Chair of the Board of Directors shall be eligible for service on the Governance Committee. In addition to the duties specified in Article II of these bylaws, the Governance Committee shall be responsible for gathering and summarizing the history of the Corporation, for orientation and training of new directors, and for assisting the Board of Directors in selfassessment and evaluation of its own performance consistent with these bylaws. The Governance Committee shall conduct an annual review of these bylaws, and shall make recommendations to the Board of Directors for improvements in governance as may from time to time be deemed appropriate. Section 6.8. Special Committees. The Board of Directors may from time to time establish other committees as it deems necessary and appropriate to the conduct of the business and affairs of the Corporation. The membership, purposes, and powers of such special committees shall be as determined by the Board of Directors, consistent with these bylaws, the charter of the Corporation, and public law. ARTICLE VII CONFLICTS OF INTEREST Section 7.1. Purpose. The purpose of this conflict of interest policy is to protect the interests of the Corporation and those it serves in conducting the Corporation s business or when considering a transaction or arrangement that might benefit the private interest of a director, officer, or committee member of the Corporation, might place such person in a position of divided loyalties, or might result in a possible excess benefit transaction. This policy is intended to supplement but not replace any applicable state and federal laws governing conflict of interest applicable to nonprofit and charitable organizations. PAGE 8 OF 14

20 Section 7.2. Definitions. (a) (b) Interested Person. Any director, officer, or member of a committee with Board of Directors delegated powers, who has a direct or indirect interest, as defined below, is an interested person. Direct or Indirect Interest. It is impossible to enumerate every circumstance which could give rise to a conflict of interest, but ordinarily an individual, in the exercise of good judgment, will know whether a particular situation involves an actual or potential conflict of interest. Circumstances that may give rise to a conflict of interest include but are not limited to those in which the director, officer, or committee member, or a member of his or her immediate family: (i) (ii) (iii) has a significant direct or indirect financial interest in, a professional interest in, or an obligation to; is a principal or representative of, financial supporter of, participant in, or past or present beneficiary of; or has an interest in a competitor of an organization to which the Corporation provides or is considering providing financial or other material support. (c) Financial Interest. A person has a financial interest if the person has, directly or indirectly, through business, investment, or family: (i) (ii) (iii) an ownership or investment interest in any entity with which the Corporation has a transaction or arrangement; a compensation arrangement with the Corporation or with any entity or individual with which the Corporation has a transaction or arrangement; or a potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which the Corporation is negotiating a transaction or arrangement. Compensation includes direct and indirect remuneration as well as gifts or favors that are not insubstantial. (d) An interest is not necessarily a conflict of interest. Under Section 7.3(b) below, a person who has an interest may have a conflict of interest only if the appropriate Board of Directors or committee decides that a conflict of interest exists. PAGE 9 OF 14

21 Section 7.3. Procedures. (a) (b) (c) Duty to Disclose. In connection with any actual or possible conflict of interest, an interested person must disclose the existence of the interest and be given the opportunity to disclose all material facts to the directors and members of committees with Board of Directors delegated powers considering the proposed transaction or arrangement. Determining Whether a Conflict of Interest Exists. After disclosure of the interest and all material facts, and after any discussion with the interested person, he or she shall leave the Board of Directors or committee meeting while the determination of a conflict of interest is discussed and voted upon. The remaining board or committee members shall decide if a conflict of interest exists. Procedures for Addressing the Conflict of Interest. (i) (ii) (iii) (iv) An interested person may make a presentation at the Board of Directors or committee meeting, but after the presentation, he or she shall leave the meeting during the discussion of, and the vote on, the transaction or arrangement involving the possible conflict of interest. The Chair of the Board of Directors or committee shall, if appropriate, appoint a disinterested person or committee to investigate alternatives to the proposed transaction or arrangement. After exercising due diligence, the Board of Directors or committee shall determine whether the Corporation can obtain with reasonable efforts a more advantageous transaction or arrangement from a person or entity that would not give rise to a conflict of interest. If a more advantageous transaction or arrangement is not reasonably possible under circumstances not producing a conflict of interest, the Board of Directors or committee shall determine by a majority vote of the disinterested directors whether the transaction or arrangement is in the Corporation s best interest, for its own benefit, and whether it is fair and reasonable. In conformity with the above determination it shall make its decision as to whether to enter into the transaction or arrangement. (d) Violations of the Conflicts of Interest Policy. (i) If the Board of Directors or committee has reasonable cause to believe a member has failed to disclose actual or possible conflicts of interest, it shall inform the member of the basis for such belief and afford the member an opportunity to explain the alleged failure to disclose. PAGE 10 OF 14

22 (ii) If, after hearing the member s response and after making further investigation as warranted by the circumstances, the Board of Directors or committee determines the member has failed to disclose an actual or possible conflict of interest, it shall take appropriate disciplinary and corrective action. Section 7.4. Records of Proceedings. The minutes of the Board of Directors and all committees with board delegated powers shall contain: (a) (b) The names of the persons who disclosed or otherwise were found to have an interest in connection with an actual or possible conflict of interest, the nature of the interest, any action taken to determine whether a conflict of interest was present, and the Board of Directors or committee s decision as to whether a conflict of interest in fact existed. The names of the persons who were present for discussions and votes relating to the transaction or arrangement, the content of the discussion, including any alternatives to the proposed transaction or arrangement, and a record of any votes taken in connection with the proceedings. Section 7.5. Compensation. (a) (b) (c) A voting member of the Board of Directors who receives compensation, directly or indirectly, from the Corporation for services is precluded from voting on matters pertaining to that member s compensation. A voting member of any committee whose jurisdiction includes compensation matters and who receives compensation, directly or indirectly, from the Corporation for services is precluded from voting on matters pertaining to that member s compensation. No voting member of the Board of Directors or any committee whose jurisdiction includes compensation matters and who receives compensation, directly or indirectly, from the Corporation, either individually or collectively, is prohibited from providing information to any committee regarding compensation. Section 7.6. Annual Statements. Each director, officer, and member of a committee with Board of Directors delegated powers shall annually sign a statement which affirms such person: (a) has received a copy of this conflicts of interest policy; (b) has read and understands this policy; (c) has agreed to comply with this policy; and (d) understands the Corporation is charitable and in order to maintain its federal tax exemption it must engage primarily in activities which accomplish one or more of its tax-exempt purposes. PAGE 11 OF 14

23 Section 7.7. Periodic Reviews. To ensure the Corporation operates in a manner consistent with charitable purposes and does not engage in activities that could jeopardize its tax-exempt status, periodic reviews shall be conducted. The periodic reviews shall, at a minimum, include the following subjects: (a) (b) Whether compensation arrangements and benefits are reasonable, based on competent survey information, and the result of arm s length bargaining. Whether partnerships, joint ventures, and arrangements with management organizations conform to the Corporation's written policies, are properly recorded, reflect reasonable investment or payments for goods and services, further charitable purposes and do not result in inurement, impermissible private benefit, or in an excess benefit transaction. Section 7.8. Use of Outside Experts. When conducting the periodic reviews as provided for in Section 7.7 above, the Corporation may, but need not, use outside advisors. If outside experts are used, their use shall not relieve the Board of Directors of its responsibility for ensuring periodic reviews are conducted. ARTICLE VIII MISCELLANEOUS Section 8.1. Annual Audit or Financial Review. From and after such times as the Corporation shall have a sufficient volume of financial activity as to qualify for an audit under generally recognized accounting standards, the books and records of the Corporation shall be audited at least once a year by a Certified Public Accountant approved by a majority vote of the directors in office at the time the action is taken. The results of said audit shall be presented to the Board of Directors by the Treasurer within one hundred eighty (180) days after the close of the Corporation s fiscal year, which shall be from January 1st to December 31st of each year. Until such time as the Corporation s books shall become auditable, the Corporation shall have an annual financial review by a Certified Public Accountant approved by a majority vote of the directors in office at the time the action is taken, and the results of such review shall be reported in lieu of audit results. Section 8.2. Records of Meetings. Summaries of the proceedings of all regular and other meetings of the Board of Directors and its committees shall be maintained and made available to any member of the Board of Directors. Section 8.3. Notices and Other Communications. (a) General Requirements. Any notice required under these bylaws shall be in writing unless oral notice is reasonable in the circumstances and written notice is not expressly required by these bylaws. Unless otherwise agreed to between the sender and the recipient, words in a notice or other communication shall be in English. A PAGE 12 OF 14