CC MEMO -- Memorandum of Organization

7 Apr 2004


TO: Circolo Vela Gargnano / Clan Des Team
AC 32 Second Challenger

CC: AC Management
Prospective Challengers

FROM: Golden Gate Yacht Club / ORACLE BMW Racing
AC 32 Challenger of Record

RE: CHALLENGER COMMISSION – MEMORANDUM OF ORGANIZATION

In accordance with Article 6.3(a) of the Protocol Governing the 32nd America’s Cup (as amended on 21 January 2004), Golden Gate Yacht Club (“GGYC”) as Challenger of Record hereby establishes the Challenger Commission (“CC”) and will maintain it until after the last race of the Match, as follows:

1. Interpretation

1.1 Further to terms defined herein, in the interpretation of this Memorandum of Organization (“MO”) Articles 1.1, 1.2 and 1.3 of the Protocol shall apply.

1.2 The word “majority” herein means a “simple majority” (i.e., the first whole number greater than one half) unless otherwise specified (e.g., a “two-thirds majority”).

2. Status

Initially the CC shall be an unincorporated association of Challengers, but it is the intention of the Challenger of Record to proceed with the establishment of a company in Spain, with its own bank account, to administer the CC as soon as possible following the acceptance by SNG of a second Challenger. The company’s articles of incorporation, constitution and other governing rules shall be established by the Challenger of Record with the consent of the CC, and shall be consistent with the Protocol and this Memorandum.

3. Purpose

The CC shall have the rights and obligations as set forth for the CC in the Protocol, and carry them out in accordance with the Protocol.

4. Challenge Representatives

4.1 Further to Article 6.3(b) of the Protocol, each Challenger shall inform the Chairman of the CC of the name and contact information of their one representative to the CC (“Challenge Representative”). Prospective challengers may nominate a provisional Challenge Representative who may attend CC meetings if and as invited by the CC, and if so invited may participate with voice but not vote.

4.2 Challengers may substitute or replace their Challenge Representative if and as they deem necessary by written notice to the CC Chairman.

4.3 The Challenger of Record shall also appoint its Challenge Representative and advise the name and contact information of their one representative. Golden Gate Yacht Club hereby advises that until further notice its Challenge Representative will be Russell Green [email address deleted].

4.4 For the avoidance of doubt, Article 6.3 ( c) of the Protocol also applies, and states that:

“Upon a Challenger (including the Challenger of Record) being excused, eliminated or disqualified by the Jury from further participation in the Event, or if half or more of its performance bond has been forfeited, such Challenger shall, unless otherwise agreed by the Jury, cease to be a member of the Challenger Commission and shall have no further entitlement to vote on any matter before the Commission; however, where they remain entitled to receive a share of surplus revenue in accordance with Article 4.3, they shall be entitled to vote on any matter regarding distribution by the Challenger Commission of surplus revenue;”

5. Chairman

GGYC shall name the initial chairman of the Challenge Commission. He or she shall serve in that capacity until the first CC meeting following the close of the late challenge period (29 April 2005) unless, through the resignation or otherwise, he or she is replaced before then by GGYC. At the first CC meeting after 29 April 2005 the CC shall elect a chairman, who may or may not be the initial chairman. GGYC hereby names Tom Ehman [email address deleted] as the initial chairman.

6. Other Officers

The CC may elect a Secretary, Treasurer or such other officers as it may from time to time deem necessary.

7. Article 6.4 Representative

7.1 The CC Chairman shall be the initial representative (“CC Delegate”) pursuant to Article 6.4 of the Protocol.

7.2 At the first CC meeting after there are at least three Challengers (including the Challenger of Record), the CC shall elect the CC Delegate in accordance with Article 6.4 of the Protocol, who may or may not be the initial CC Delegate. The CC may substitute or replace the CC Delegate if and as the CC deems necessary.

8. Meetings

8.1 The CC shall meet at the call of the Chairman, the CC Delegate, or upon the written request of at least three Challenge Representatives at a location and date to be proposed by the Chairman subject to the approval of a majority of the Challenge Representatives. At least 30 days notice of CC meetings shall be given unless a majority of the Challenge Representatives shall agree an earlier date.

8.2 Meetings shall be conducted in person unless otherwise agreed (e.g., a meeting via conference call).

8.3 The quorum necessary for the transaction of business at any meeting shall be a majority of Challengers.

8.4 Further to Article 6.3(b) of the Protocol, all issues before the CC shall be determined by a majority vote of Challenge Representatives attending the meeting (including those attending by phone if that has been agreed under clause 8.2 above). In the case of a tie vote, the resolution shall fail.

8.5 The Chairman, or Secretary if one is elected by the CC, shall cause appropriate minutes of meetings to be made, kept and communicated to Challenger Representatives and others as the CC deems appropriate.

9. Funding

9.1 The CC shall be funded in accordance with the Protocol.

9.2 The Chairman, or a Treasurer if one is elected by the CC, shall cause a bank account to be established in the name of the Challenger Commission for the receipt of the CC fees required of Challengers under Article 3.6(b)(i) of the Protocol, and shall cause appropriate books of account to be kept which shall always be open to the reasonable inspection of any Challenge Representative.

9.3 Except as otherwise provided in the Protocol, (e.g., reimbursement of reasonable Challenger of Record expenses prior to the establishment of the CC pursuant to Article 3.6(b)(i) of the Protocol), disbursements from CC funds shall be in accordance with a budget to be established by the CC, and disbursements over an amount to be established by the CC shall require the approval of a majority of Challenge Representatives..

10. Other Rules

The CC may adopt other organizational rules. For the avoidance of doubt, Article 6.3(d) of the Protocol also applies, and states that:

“The Challenger Commission shall have no power to amend this Protocol or any of the documents referred to in Article 12.1, or to alter any right or obligation of any Competitor under those documents.”

11. Amendments

This MO may be amended by the Golden Gate Yacht Club provided a majority of the CC ratifies any such amendment.

CC DRAFT Final TFE 2004.04.07/tos7100


The Challenger Commission's mission -- "To relieve
the Defender from the burden of holding the Cup."