Special Meeting of the Initial Board Minutes
MINUTES OF SPECIAL MEETING
A meeting of the Board of Directors of the Internet Corporation for Assigned Names and Numbers (the "Corporation") was held by teleconference on July 26, 1999. The following Directors of the Corporation were present by telephone: Geraldine Capdeboscq, George Conrades, Gregory L. Crew, Esther Dyson, Frank Fitzsimmons, Hans Kraaijenbrink, Jun Murai, Michael Roberts, and Linda Wilson. Also present on the teleconference were Andrew McLaughlin, Interim Secretary of the Corporation; and Joe Sims and Louis Touton of Jones, Day, Reavis & Pogue. Andrew McLaughlin acted as secretary for the meeting.
The meeting was called to order by Esther Dyson at 9:22 am U.S. Eastern Daylight Time.
Interim President and Chief Executive Officer Roberts briefed the Board on the Corporation's efforts to obtain a permanent and stable funding source. It was noted that in its July 8, 1999, letter to Interim Chairman Dyson the U.S. Department of Commerce suggested that the Corporation suspend collection of the $1 variable component of the registrar accreditation fee until Directors selected by Supporting Organizations are seated so that a Board including those Directors can consider and approve an appropriate long-term funding mechanism. While agreeing that the $1 per-registration component of the registrar accreditation fee is a rational and appropriate approach to long-term funding that was the result of full notice and comment, is consistent with the White Paper, and is fully authorized by the Memorandum of Understanding between the Department of Commerce and the Corporation, the July 8 letter noted that the $1 component had become controversial. After the July 16, 1999 Board meeting, Ms. Dyson wrote the Department of Commerce on July 19, 1999, indicating that the Board had decided to defer the collection of the $1 registrar fee and to appoint a task force made up of name and address registry administrators and gTLD name registrars, the entities that will bear primary responsibility for ICANN's cost-recovery needs, to make recommendations for a permanent funding structure.
Upon motion made by Mr. Crew and seconded by Ms. Dyson, the Board unanimously approved the following resolutions:
WHEREAS, the budget adopted on May 27, 1999, by Resolution 99.55 established the variable component of the registrar accreditation fee at $1 per registration-year;
WHEREAS, that $1 component has recently been the subject of controversy, causing the U.S. Department of Commerce to request that ICANN suspend collection of the fee until the matter can be considered by a Board including directors selected by ICANN's supporting organizations;
WHEREAS, various accredited registrars have announced that they intend to voluntarily pay the $1 component in the event its collection is suspended;
WHEREAS, that Board would benefit from additional views from name and address registry administrators and registrars, which will provide a principal source of ICANN's funding on an ongoing basis;
RESOLVED [resolution 99.61], the Interim President and Chief Executive Officer is authorized to suspend collection of the $1 variable component of the registrar accreditation fee until further action by the Board;
FURTHER RESOLVED [resolution 99.62], the Interim President and Chief Executive Officer is directed to convene a President's Task Force on Funding, chaired by him and also consisting of representatives chosen by him from IP address registries, domain-name registrars, and administrators of gTLD and ccTLD registries, and charged with formulating recommendations on cost-recovery mechanisms that fairly apportion ICANN's funding needs, as reflected in the budget that has been adopted, among the Internet name and address registry administrators and registrars and possibly other parties;
FURTHER RESOLVED [resolution 99.63], based on the input of the President's Task Force on Funding and such consultation with staff and legal counsel as he deems appropriate, the Interim President and Chief Executive Officer is directed to have posted a preliminary report on funding alternatives on the ICANN web site in advance of the Board meeting scheduled for August 25 and 26, 1999, in Santiago, Chile, with further consideration of this matter to be as directed by Board resolution at that meeting or otherwise.
The Board then discussed the need to secure short-term funding to allow the Corporation to meet its immediate responsibilities. Mr. Roberts reported on the status of voluntary contributions and noted that they were not sufficient to fund the Corporation's ongoing activities, so that the Corporation has had to rely in large part on the willingness of its trade creditors to defer requiring payment. Because this situation is not sustainable, a search has been undertaken for more formal, long-term debt arrangements. As a result, a number of commercial entities have indicated a willingness to loan the Corporation funds for a one-year term at interest of 7% or below. Mr. Roberts indicated that approximately $2 million in such loans would be desirable to meet the Corporation's operating expenses until a long-term cost recovery mechanism can be put into place.
Upon motion duly made by Mr. Crew and seconded by Ms. Dyson, the Board unanimously adopted the following resolutions:
WHEREAS, several commercial entities have expressed to the Interim President and Chief Executive Officer of the Corporation a preliminary interest in lending funds to the Corporation at interest rates no greater than seven percent annually;
WHEREAS, the Board of Directors has determined that it is in the best interests of the Corporation to borrow up to US$2,000,000 on an unsecured basis at such rates;
RESOLVED [resolution 99.64], that the Corporation is authorized to borrow the aggregate principal amount of $2,000,000 from various lenders selected by the Interim President and Chief Executive Officer on an unsecured basis, at interest rates not to exceed seven percent per annum, with repayment terms of not less than one year, and on other terms and conditions substantially as set forth in Exhibit A hereto;
RESOLVED FURTHER [resolution 99.65], that the Interim President and Chief Executive Officer may (i) negotiate, execute and deliver for and on the behalf of the Corporation, notes or agreements, on substantially the above-stated terms, with such changes, additions, or deletions as the Interim President and Chief Executive Officer may approve, such execution to be conclusive evidence of such approval; provided, however, that (a) the interest rate on any such borrowing shall not exceed seven percent per annum, (b) the repayment term of such borrowing shall not be less than one year from the date of the initial borrowing, and (c) any such borrowing shall be unsecured; and (ii) negotiate, execute and deliver all other instruments, certificates, papers, agreements, and other documents which any lender under any such borrowings may require in connection with any such borrowing, in such form and content as the Interim President and Chief Executive Officer shall approve, such execution to be conclusive evidence of such approval;
RESOLVED FURTHER [resolution 99.66], that the Interim President and Chief Executive Officer is hereby authorized to negotiate, execute and deliver, for and on behalf of the Corporation, any addendum to, amendment of, or other renewal or extension of, any note or agreement at any time after the execution thereof in a manner consistent with these resolutions, such addendum, amendment, renewal or extension to be in such form and of such content as shall be approved by the Interim President and Chief Executive Officer, such execution to be conclusive evidence of such approval;
RESOLVED FURTHER [resolution 99.67], that the Interim President and Chief Executive Officer, or any other officer or employee of the Corporation authorized in writing by him, may issue borrowing instructions and direct the disbursement of any proceeds of borrowings made by the Corporation pursuant to these resolutions;
RESOLVED FURTHER [resolution 99.68], that the Interim President and Chief Executive Officer, or any other officer or employee of the Corporation authorized in writing by him, may otherwise pay any and all costs, expenses and fees, and do and perform all acts, in the name and on behalf of the Corporation, as the Interim President and Chief Executive Officer deems necessary or appropriate to carry out the purposes and intent of these resolutions; and
RESOLVED FURTHER [resolution 99.69], that the authority given in these resolutions is retroactive and any and all acts authorized herein performed before the passage of these resolutions are ratified and affirmed.
Andrew McLaughlin reported on the status of plans for the Santiago meetings, to take place August 24-26. Mr. McLaughlin noted that the local host committee had completed the arrangements for meeting spaces, primarily at the College of Economic Sciences, University of Chile, and for simultaneous translation into Spanish and Portuguese for the plenary sessions. Mr. McLaughlin informed the Board that ICANN had again asked the Berkman Center for Internet & Society to provide realtime webcasting and remote participation services, and that new capabilities (such as chat and translation webcasting) will be added.
The Board then discussed possible changes in meeting formats to accomplish the goal of an open Board meeting on Thursday, August 26, in addition to the public open meeting on Wednesday, August 25. After discussing several alternatives, the members of the Board agreed that the Wednesday open meeting should be devoted to public comment and discussion on the agenda items, with the Thursday Board meeting made open to public observation and webcasting.
Counsel briefed the Board on the status of the proposed Bylaws amendments relating to representation on the Names Council, which had been posted for public comment several weeks earlier. Noting that few public comments had yet been received, the members of the Board agreed that action on the proposed amendments should be deferred until a date certain in advance of the Santiago meetings; and that the Internet community should again be encouraged to review the proposals and to make comments and arguments, pro or con.
The Board agreed to schedule its next teleconconference meeting for August 12, at 9:00am Eastern Daylight Time.
Mr. Roberts updated the Board on the previous week's hearings before the U.S. House Commerce Committee in Washington, DC. Mr. Roberts also noted that he would be testifying before the Subcommittee on Intellectual Property of the U.S. House Judiciary Committee on July 28, 1999.
Mr. Roberts briefed the Board on the staff's progress toward a staff report on the implementation of an At-Large Membership structure. The Board discussed the need to make significant progress on At-Large Membership over the course of the next two Board meetings in Santiago and Los Angeles. Mr. Roberts stated that the staff report on membership implementation issues would be completed and posted for public comment in advance of the Board's Santiago meetings.
The meeting was adjourned at 10:28 am Eastern Daylight Time.