NMMI Law Suit

FILED IN MY OFFICE DISTRICT COURT CLERK

6/10/2013 2:11:42 PM KENNON CROWFIURST

STATE OF NEW MEXICO COUNTY OF CHAVES FIFTH JUDICIAL DISTRICT COURT

NEW MEXICO MILITARY INSTITUTE,

Plaintiff,

V. Case No.:

NMMI ALUMNI ASSOCIATION, INC, a New Mexico non-profit corporation,

Defendant.

D-504-CV-2013-00339

CDY

COMPLAINT FOR RECEIVERSHIP, CONSTRUCTIVE TRUST, MANDATORY INJUNCTION, AND ACCOUNTING

COMES NOW Plaintiff, the New Mexico Military Institute, by and through its counsel,

Hinkle, Hensley, Shanor & Martin, L.L.P. (Richard E. Olson and Parker El. Poise) and hereby

files this Complaint for Receivership, Constructive Trust, Mandatory Injunction, and

Accounting and in support thereof would show this Court as follows:

I. Introduction

This case is about an unfortunate series of events arising as a result of an absolute and

longstanding failure of the NMMI Alumni Association, Inc. (the "Association"), a New Mexico

Non-Profit Corporation, to properly account, or account in any fashion whatsoever, for financial

transactions and comply with contractual provisions to prepare, submit, and obtain approval for

annual budgets that has caused the New Mexico Military Institute ("NMMI" or "the Institute"), a

Complaint for Receivership, Constructive Trust, Mandcrtoq Injunction, and Accounting

State educational institution, to terminate its relationship with the Alumni Association. The

Association has acted over the years as NMMIs primary alumni outreach facility and has, as a

consequence, an agency relationship with NMMI which, as a consequence of the Associations

continued failures to properly account, has been breached by the Association. As a for instance,

the Association has, for a period of well over a year, failed to generate or provide the most basic

monthly accounting statements showing the status of its financial affairs, despite being

responsible for in excess of $5 million in monies held for the benefit of NMMI. The Association

is no longer able to carry out its purpose, and the Associations Board of Directors is currently

unable to manage the corporate affairs in accordance with the corporations governing

documents. Accordingly, Plaintiff seeks this Courts intervention for the imposition of a

receivership and constructive trust over funds pledged to benefit NIVLMI, the issuance of a

mandatory injunction freezing the Associations accounts until a receiver has been appointed, for

the entry of an order requiring the Association to desist using any of the Institutes intellectual

property rights, and for the entry of an order requiring the Association to account to the Institute

for funds received while acting as an agent of the Institute.

IL Parties

I. NMIVIT is a state educational institution as defined by Article XII, Section 11 of

the New Mexico Constitution with its principal office in Chaves County, New Mexico.

2. The Association is a New Mexico non-profit corporation with its principal office

in Chaves County, New Mexico.

Complaint for Receivership, Constructive Trust, Page 2 of 23 Mandatory Injunction, and Accounting

DJ. Jurisdiction and Venue

3. The Court has personal and subject matter jurisdiction over the parties and claims.

4. Venue is proper in this Court pursuant to NMSA 1978, 38-3-1 by virtue of the

fact that the principal office of each party is located in Chaves County, New Mexico.

IV. Statement of Facts

A. The Associations Corporate Documents

5. The Association is a New Mexico Non-Profit Corporation classified under the

Internal Revenue Code as a 501(c)(3) tax exempt organization. See 26 U.S.C. 501(c)(3).

6. The Associations Articles of Incorporation provide that the Associations

purpose is:

a. to promote the interest and welfare of the New Mexico Military

Institute located at Roswell, New Mexico;

b. to afford a permanent means of contact between the New Mexico

Military Institute and its alumni; and,

c. to create, establish and maintain scholarships and to collect and

administer trust funds and endowments for the use and benefit of the

New Mexico Military Institute Alumni Association and to do generally

any and all things which may be deemed advisable, necessary or

desirable in the interest of the New Mexico Military Institute, its cadets,

faculty, and alumni.

See Associations Articles of Incorporation Art. III "Purpose" (emphasis added). [Ex. 1, p.1]

7. Furthermore, the Associations By-Laws provide that the Associations purpose

is to:


a. to promote the interest and welfare of the NMMI;

b. to be the gateway that fosters lifelong connections between its Alumni

and NMMI;

c. to promote the distinctive values (duty, honor, achievement) of NMMI;

d. to provide avenues for Alumni to interact with each other and with

NMIVIL

e. to help establish and maintain scholarships, in conjunction with the New

Mexico Military Institute Foundation, for deserving cadets to attend

MIMI;

f. to operate in a manner that is connected with and is responsive to the

positive needs of NIWVII.

See Associations Amended By-Laws of the NMMI Alumni Association, Inc. (a Non-Profit

Corporation) Article III "Purpose" (emphasis added) [Ex. 2]

8. Additionally, the Associations Articles of Incorporation provide that, upon

dissolution, "the Board of Directors shall, after paying or making provision for the payment of

all the liabilities of the Corporation, dispose of the assets of the Corporation to the New Mexico

Military Institute, Roswell, New Mexico. " See Articles of Incorporation Art. IX

"Dissolution" (emphasis added) [Ex I, p.4]

9. Thus, it is clear that the Associations principal and authorized purpose is to serve

and support the New Mexico Military Institute.

10. The Associations sole purpose was to serve as the Institutes alumni resource.


11. The Association solicited funds on behalf and for the benefit of the Institute and

served as the Institutes agent with regard to solicitation of funds and alumni affairs.

12. Alumni and others have made numerous and substantial monetary contributions to

the Association on the condition, both express and implied, that those funds directly benefit

NMMI.

13. Accordingly, NMMI is the intended beneficiary of the funds maintained by the

Association.

B. The Associations Assets

14. Upon information and belief, the Association maintains three separate accounts.

a. A "Permanently Restricted" account. Donated funds are often received

with restrictions and must be applied in accordance with donors intent,

e.g. on condition that they fund NMMI cadet scholarships or support

NMMI programs.

b. A "Temporarily Restricted" account. The temporarily restricted funds

have been contributed to the Association for a specific purpose and are

applied to that specific purpose (e.g. to help fund NMMIs annual Trail

Ride).

c. An "Unrestricted" account. These monies were donated to the Association

without restrictive conditions or are funds from the Association selling

placards and engravings for flagpoles, benches, and bricks on NMMI


property, and a very small portion of this account comes from membership

dues.

(the "Accounts").

15. The majority of the funds held by the Association are restricted and are required

to be used to benefit the Institute in some way.

16. The Association solicits tax deductible donations from alumni and friends and

then distributes those funds in accordance with the donors intent, which, unless indicated

otherwise by the donor, ultimately are to be distributed or utilized in a fashion that benefits the

Institute.

17. Some funds now held by the Association are a result of annual membership dues;

however, the Association only has 241 annual dues paying members, and at $50.00 per annual

membership this equates to roughly $12,050.00 per year. The other 2,141 members are

considered Life Members and have paid a one-time $750.00 fee to become members for life and

as a result such dues are not reoccurring. Thus, in total, the Association has roughly 2,382

members, in comparison to the Institutes 20,000 plus alumni.

18. Historically, the Association has been unable to be financially self sustaining.

All overhead expense is provided by the Institute (including phones, computers, and office

space) and a large portion of its annual budget comes from funds distributed to the Association

from the New Mexico Military Institute Foundation, Inc.

The Foundation has provided over S500,000.00 to the Association since 1995 in order to keep the Association solvent.


C. Financial Management of the Association

19. In 2009, then Association Executive Secretary, Mr. Reggie Franklin, began

questioning the Associations financial bookkeeping and had serious concerns with regard to

the Associations ability to fund current expenditures.

20. After Mr. Franklin conveyed his concerns to the Associations Board of

Directors, Dr. Randy Brown, then President of the Associations Board of Directors, was so

concerned about the ability of the Association to care for the monies entrusted to it that he

directed that the scholarship fund be moved to the NMMI Foundation for better oversight and

management.

21. Additionally, the Alumni Association Board of Directors hired Tardy & Co. P.C.

to complete an internal review of the corporations financial affairs ("the Tardy Report").2

22. The Tardy Report identified the Associations primary function "to develop

between alumni and the Institute, a strong relationship that supports the educational goals,

enhances the life-time experience of the alumni and supports the mission of the Institute." See

Tardy Report p.2.

23. The Tardy Report also indentified that "there was potentially some confusion

over the use and the allocation of certain funds earnings... [and] a certain process for allocation

to funds was followed that was not understood and/or agreed to by the Board and may be

contrary to the original intent of the donors gifts." Tardy Report p.7.

2 Available at http://www.nmmi.eduiregents/documentsfrardy%2OReport.pdf


24. Furtheimore, "all programs did not have specific budgets" and "the Association

was working without an approved budget for the year." Tardy Report p. 7.

25. Most alarmingly; however, was the fmding that "with continued losses in

investment accounts, it has become clearer that the Association has been operating on cash

transfers from the Alumni Endowment fund which are eroding the corpus. These transfers have

been occurring for several years and continuance of the practice without determining ways to

increase funding from other sources for the group could put the Associations existence in

jeopardy." Tardy Report p. 7-8.

26. The Tardy Report concluded that "based on representations made by Board

members and review of financial documents, proper fiscal management of the Association

has been lacking." Tardy Report p.9.

27. These findings proved very troubling for the Institute as the Association was the

Institutes alumni resource and had used the Institutes good name and offices in soliciting

funds intended to benefit the Institute.

28. A change in Association operations occurred in July 2010 when Mr. Franklin

resigned as the Associations Executive Secretary and the Association then hited Mr. Lee Jones.

29. In September of 2010, MG Jerry W. Grizzle wrote to Dr. Randy Brown and

requested to meet with the Associations Executive Committee with the NMMI Board of

Regents and the New Mexico Military Institute Foundation, Inc. (the "Foundation") regarding

the Associations compliance with its agreements under which the Association operated in its

relationships with the Institute and the Foundation.


30. Representatives from the Institute met with Association Board members to

address various issues, including financial solvency and compliance with agreements between

the entities, which resulted in an agreement by the Association to correct deficiencies.

31. However, notwithstanding this agreement and the serious shortcomings noted in

the Tardy Report no adequate curative actions were implemented by the Association to correct

or improve the Tardy Reports noted deficiencies.

32. As a result of Board inaction, Dr. Randy Brown resigned from his position and

membership on the Board.

33. Mr. John Phinizy then took over as the Associations Board President and

immediately increased staff, in contravention of the Tardy Reports recommendation, and also

directed that the management of the endowed scholarships be transferred back to the

Association from the Foundation.

34. The Association then terminated Mr. Jones and hired Mr. David Romero as the

Associations Executive Secretary.

35. At that point, all meaningful action to correct or improve the Associations

position relative to the Tardy Reports recommendations ceased.

36. After Homecoming in 2011, Mr. Jock Brownfield was elected as the

Associations Board President.

37. Again, Institute representatives met with Association representatives to address

the continuing issues related to financial discrepancies and the Associations inability to

maintain compliance with its agreements with NMMI.


38. Mr. Brownfield and the Association committed to address and correct the various

mismanagement issues.

39. In January of 2012, without knowledge of the Association Board, David Romero

attempted to transfer the management of the scholarship fund to a third party accounting firm,

May-Taylor and Co., but May -Taylor refused to accept the responsibility.

40. However, May-Taylor did attempt to establish a new set of accounting

procedures and books for the Association, but repeated subsequent requests for variances from

the Association made bookkeeping entries convoluted and difficult and left May-Taylor with

the limited ability to only perform minimal operational entries.

41. In July 2012, the Association Board did not renew Mr. Romeros employment

contract and hired Mr. James Lowe to serve as the Associations Executive Secretary, now titled

Executive Director.

42. Mr. Lowe immediately began to investigate the Associations operations and

tried to ascertain its true financial solvency.

43. Mr. Lowe quickly realized the state of the Associations financial disrepair.

44. In August of 2012, Mr. Lowe discovered that the Association had not been

keeping monthly financial statements since March 2012. As a result, the Association had no

year-end financial statement for the fiscal year ending June 30, 2012.

45. In October of 2012, unprepared to file a year-end tax return, the Associations

auditor requested an extension from the IRS, which was granted until February 15, 2013, but the

Association did not meet the February 15, 2013 deadline and requested another extension.


46. In December of 2012, May-Taylor finally completed a year-end financial

statement for the fiscal year ending June 30, 2012, but because May-Taylors statement was

based upon incomplete information provided by the Association, the statement had numerous

errors.

47, By January of 2013, the Association produced another inaccurate year-end

financial statement and had only recreated monthly statements through July and August of

2012.

48. In January of 2013, the Association met with Foundation and Institute

representatives to develop a fiscal year 2013 budget, which was required to be submitted by the

Association almost a year prior in April of 2012.

49. During that process, further incorrect revenue and expense entries were

discovered, again affecting the June 30, 2012 year-end financial statement.

50. By February of 2013 the Association still had no monthly financial statements

for September 2012, October 2012, November 2012, December 2012 or January 2013.

51. On February 11, 2013, the Associations Executive Director, Mr. Jim Lowe,

submitted a report to the Associations Board outlining the grim situation.

52. At that point, the Institute was compelled to take further and more far reaching

steps to protect its interests and to ensure the protection of the assets maintained by the

Association.

Complaint for Receivership, Constructive Trust, Page 11 0/ 23 Mandatory Injunction, and Accounting

D. The Memorandum of Agreement and Its Termination

53. As a state "agency" the legislature requires that "[p]rior to [NMMI] accepting

property or funds that have been transferred to an agency by an organization, the agency and the

organization shall enter into a written agreement..." NMSA 1978, 6-5A-1(B).3

54. Thus, in order to accomplish the purpose of the Association, to clarify the rights

and responsibilities between the two entities, and to insure compliance with state statute, the

Association and NMMI entered into Memorandum of Agreement ("MOA" or "Agreement"),

the most recent and controlling document having been executed on March 30, 2012. [Ex. 3]

55. The IVIOA provides that the Association is permitted to use, with prior written

approval, the name "New Mexico Military Institute" as well as other trademarks or logos, in

connection with activities in support of the Institute. MOA Article ifi. 3.1(C). [Ex. 3, p. 5]

56. Furthermore, the Association is to organize, maintain, and update an "alumni

database" on behalf of the Institute to serve as a primary records repository and single point of

information relating to alumni of the Institute. MOA Article. IL 2.1(g). [Ex. 3, p. 3]

57. Under the MOA, in order to maintain its relationship with the Institute and

competently serve and support NMMI, the Association is required to:

3 "Agency" is defined as, inter alio, "any public institution of higher education or public post-secondary educational institution..." NMSA 1978, 6-5A-1(A)(I). "Organization" is defined as "an organization that has been granted exemption from the federal income tax by the United States commissioner of internal revenue as an organization described in Section 501(c) of the Internal Revenue Code of 1986, as amended or renumbered, and whose principal and authorized purpose is to complement, contribute to and support or aid the function of or forward the purposes of a single agency through financial support or contribution of services, goods, data or information that help or aid the agency in carrying out its statutory purpose and goals, including, but not limited to, the provision of scholarships to students of educational institutions and the provision of grants to supplement ongoing research or to provide funds for research and programs being carried out by an agency." Thus, NMM1 is clearly an " agency" and the Association is clearly an "organization as defined by this subsection.


a. "maintain a financial accounting system considered adequate under

customarily and currently accepted governmental accounting standards,

or such other standards as may be required by law, in staff coordination

with the Institute and its internal and external auditors;"

b. "cause its financial operations to be audited annually in accordance with

generally accepted governmental auditing standards by an independent

professional auditor approved by the Institute..."

c. "cause a copy of the annual audit.., to be furnished to the Institute..."

See MOA Article H. 2.1 "Undertakings of the Association," subsections (1-n) [Ex 3, p. 4]

58. Thus, the Association is required to keep acceptable financial accounting records

and to provide them to the Institute to ensure compliance with the MOA.

59. As of February of 2013, the Association had not completed any of the above

financial accounting requirements for the preceding fiscal year of 2012 (including the

preparation of a 2012 budget), nor had the Association formulated a fiscal year 2013 budget,

despite being seven months into the new fiscal year.

60. Due to the Associations numerous, and seemingly insurmountable, difficulties

in managing its own affairs and its complete failure to fulfill its obligations set forth under the

MOA, on February 21 ,2013, the Institute elected to terminate the relationship between the two

entities. [Ex. 4]


61. Under the MOA, either party may terminate the Agreement upon at least 60 days

written notice. See MOA Article TV.4.5 [Ex. 3, p.6] A defaulting party may then have 30 days

to cure. Id.

62. In the event the Association were unable to cure, the Association would no

longer be provided working space on NMMI campus, would lose access to the alumni database,

would no longer be permitted to use the name "New Mexico Military Institute" in its corporate

title or be permitted to use any of the Institutes intellectual property rights, including logos and

trademarks. See MOA Article TV.4.5 [Ex. 3, p.6]

63. The Association was unable to cure its financial deficiencies within the requisite

30 day cure period.

64. As a result of the Associations failure to cure it defaults, on April 22, 2013, the

Institute delivered its final notice of termination of the MOA to the Association, terminating the

relationship between the two entities. [Ex. 5]

65. Thereupon, the entities began negotiations regarding a suitable plan to provide

support and services to NMMI alumni.

66. As a result of seemingly productive ongoing negotiations between the parties and

the Associations willingness to work in coordination with the Institute to develop more

specifically a plan for the dissolution of the Association and the distribution of Associations

assets, the Institute did not fully effectuate the MOAs tennination provision and continued to

provide working space and personnel support to the Association.


67. On May 4, 2013, in accordance with the parties negotiations, the Associations

Board of Directors held a special meeting to adopt a resolution to recommend the dissolution of

the corporation which would be submitted to the Association membership at-large for an

affii ming vote and to begin the process of transferring the Associations assets to the

Foundation and to agree to a forbearance document tendered by the Institute that would stay the

Institutes enforcement of the MOA termination provisions so that the Association could

continue to have a working space in order to effectuate the necessary steps towards dissolution.

68. However, on May 4, 2013, by a vote of 5-3, the Associations Board of Directors

did not adopt a resolution for dissolution and rejected the terms of the forbearance document.

69. Without an acceptable form of forbearance, the Institute effected the MOA

termination provisions and requested that the Association move its property from the Institute

campus.

70. On May 13, 2013, the Association removed most of its property from the NNLMI

campus.

71. The status of the funds in custody of the Association which are held for the

benefit of the Institute are now uncertain, if not in jeopardy.

72. The Association, being the custodian for those funds, is inhibited in its ability to

administer the funds in accordance with donors intent, as the relationship between the Institute

and the Association is now severed, and, the integrity of the funds is, at a minimum, in question,

as a result of the longstanding history of financial mismanagement by the Association.

Complaint for Receivership, Constructive Trust, Page 15 of 23 Mandatory Injunction, andAccounting

73. In order to protect those funds, the Institute made demand upon the Association

to transfer the funds over to the Foundation for proper naaintenance.

74. In accordance with the Associations agreement, the Institute also made demand

for the Association to desist in using the Institutes name and intellectual property rights,

including but not limited to trademarks, logos, and service marks.

75. The Association made no response to the Institutes demand.

76. However, on Tuesday, May 14, 2013, the Associations President called for a

special meeting of the Associations Board of Directors for Friday May 17, at 1:00 p.m. in order

to devise a plan to transfer the restricted and permanently endowed funds over to the

Foundation.

77. Unfortunately, the Associations Board of Directors became increasingly

divisive, with several members calling for resignations of other members and accusations of

breach of various duties having been made.

78. In opposition to the official Board meeting called by the President, other Board

members called for a Board meeting to occur off campus on Thursday, May 16, 2013.

79. Six board members attended the Thursday meeting called by other board

members.


80. Four board members attended the meeting called by the President of the

Associations Board of Directors the next day on Friday, May 17, 2013, which meeting was

boycotted by five of the six Board members who attended the Thursday meeting.4

81. Two splintered Boards were now acting independently of each other, seemingly

in contradiction of each other, putting the management of the already struggling corporation in

complete jeopardy.

82. Thus, the status and safety of the funds in the custody of the Association for the

benefit of the Institute are in serious question.

E. The Alliance Agreement

83. The Association had also entered into an agreement which was to govern the

relationship between the Institute, the Association and the NMM1 Foundation (the "Fourth

Amended Alliance Agreement" or "Alliance Agreement").

84. The Fourth Amended Alliance Agreement, effective July 1, 2012, outlines the

relationship between the entities to coordinate fundraising efforts with a goal of maximizing

support for NMMI programs and projects while minimizing fundraising expenditures. See

Alliance Agreement attached hereto. [Ex. 6]

85. The goal was to allow the involved entities to work together to maximize the

"Annual Fund" fundraising efforts.

86, Under the Alliance Agreement, "[a]nnual fund donations recorded and receipted

by the Association, other than membership fees, will be paid over to the Foundation, which

4 One Board member of the six that met on Thursday resigned in advance of the Friday meeting.

Complaint for Receivership, Constructive Trust, Mandato?), Injunction, and Accounting

Page 17 of 23

shall treat such funds as restricted funds to be administered pursuant to the terms of this

Agreement" Alliance Agreement Section 5.4. [Ex. 6, p. 8]

87. The Association, completely unaware of what funds it has received as a result of

its lack of accounting processes, has not paid over any funds to the Foundation.

88. Furthermore, the Foundation and the Association are required to develop and

craft budgets to be submitted to a committee designated by the parties to the Alliance

Agreement ("Alliance Committee") annually for review and approval.

89. The Association is required to submit its annual budget to the Alliance

Committee on or before April 1 for review for the next fiscal year beginning the following July.

See Alliance Agreement Section 6.3. [Ex. 6, p. 10]

90. Thus, the Association was required to submit its 2013 budget on April 1, 2012.

91. However, to date, the Association has yet to create a budget for 2013, let alone

submit one to the Alliance Committee in a timely fashion.

92. The Associations inability to abide by its obligations under the Alliance

Agreement was a determining factor in the Board of Regents decision to terminate its

relationship with the Association.

93. Additionally, on May 22, 2013, the Institute terminated the Alliance Agreement

in accordance with the relevant provision.

94. As both governing documents, the MOA and the Alliance Agreement, between

the two entities are terminated, the relationship between the Institute and the Association is now

severed.


95. The Institute now seeks this Courts intervention and assistance (i) to freeze the

Accounts in order to prevent waste or misuse by the Association, (ii) to order the Association to

account to the Institute for the funds the Association received as the Institutes agent, (iii) to

appoint a receiver to manage the Accounts until their final disposition is determined, (iv) to

impose a constructive trust to protect the funds in the Accounts retained by the Association, (v)

to order the transfer of the Associations funds to an entity capable of managing and distributing

the funds in accordance with the donors intent, and (vi) to enforce the MOAs provision

revoking the Associations privilege to use the Institutes intellectual property rights, including

logos and trademarks.

V. Causes of Action

1. Claim for Receivership

96. Each of the preceding paragraphs numbered 1-95 are incorporated herein, the

same as if set forth in full.

97. The Institute seeks the appointment of a receiver over the Accounts in the

custody of the NMMI Alumni Association Inc.

98. Under NMSA 1978, 44-8-3, the Accounts retained by the Association are the

property that is subject to the receivership estate.

99. Upon information and belief, those Accounts are currently held by or invested in

accounts of Wells Fargo Bank.

100. Because those Accounts were solicited and obtained by the Association as an

agent for and on behalf of and to ultimately benefit the Institute, the New Mexico Military


Institute is an "interested person" as it has an interest in the receivership estate. NMSA 1978,

44-8-3(C).

101. As the relationship between the Institute and the Association is terminated, the

Association cannot fulfill the conditions placed upon the monies the Association received.

102. As a result, the Court may appoint a receiver, as this is an action between or

among persons "owning or claiming an interest in the receivership estate," and also because

"just cause exists, and irreparable harm may result from failure to appoint a receiver" See

NMSA 1978, 44-8-4(B)(2) and (B)(5).

103. The Institute respectfully requests a Court appoint a receiver to be determined.

2. Claim for Constructive Trust



105. Plaintiff respectfully requests the Court to impose a constructive trust over the

Accounts and all others funds intended to benefit the Institute.

106. Numerous solicitations were made and numerous donations were given to the

NMMI Alumni Association, Inc. upon condition that they be used to benefit the Institute.

107. The Institute is an intended beneficiary of funds retained by the Association.

108. The Association would be unjustly enriched if it were allowed to retain funds

given by donors who received charitable deductions on the premise that the donations would

benefit NMMI.

Complaint for Receivership, Constructive Trust, Page 20 of 23 Mandatmy Injunction, and Accounting

109. The condition of the Accounts in question must be fulfilled, and such funds must

be ordered transferred to a qualified entity in accordance with the requirement that they benefit

the Institute.

110. Any other result would be inequitable and result in unjust enrichment to the

Association.

111. Given the Associations Boards inability to act in accordance with its expressed

and implied obligations, the Courts intervention is necessary.

112. As a result, the Institute requests the Court impose a constructive trust over the

Association funds.

3. Claim for Mandatory Injunction



114. The Institute respectfully requests that the Court issue a preliminary and

permanent mandatory injunction, freezing the Associations Accounts until a receiver is

appointed and prohibiting the Association from using NIvLMI logos, trademarks, and name in

accordance with the relevant MOA provision.

115. Additionally, given the inability of the Association to transfer its funds to the

Institute absent an MOA, combined with the inability of the Board to meet as one Board to

work towards a solution wherein the funds of the Association can be distributed in a fashion that

meets the conditions on those funds, it is apparent that the Association cannot properly manage

its own affairs and puts the future of the funds in peril.


116. As a result, the Institute respectfully requests this Court enter an injunction

ordering the transfer of the Associations assets to an entity (such as the Foundation) capable of

managing and distributing the assets in accordance with the condition upon those funds that are

intended to be of benefit to the Institute and its cadets.

4. Claim for an Accounting

117. Each of the preceding paragraphs numbered 1416 are incorporated herein, the


118. The Association served as the alumni relations aim of the Institute,

119. The Association solicited and received funds from third parties to benefit the

Institute.

120. As such, it was an agent of the Institute and has fiduciary obligations to the

Institute.

121. As a result of the termination of the relationship between the parties, the

Association now has a duty to account to the Institute for the funds it received which were,

expressly or impliedly, for the benefit of the Institute and/or its cadets.

VI. CONCLUSION

WHEREFORE, Plaintiff respectfully requests that this Court grant a mandatory

injunction (i) freezing the Associations Accounts to preclude waste and misuse of the corporate

assets; (ii) prohibiting the Association from using NMMI logos, trademarks, and name, (iii)

imposing a constructive trust on the funds in the custody of the Associations until the Court

fully resolves the issues of entitlement to and management of said funds of the Association, (iv)

Complaint for Receivership. Constructive Trust, Page 22 of 23 Mandatory Injunction, and Accounting

B

appointing a receiver to handle the Accounts which are the subject funds of this dispute, (v)

ordering the Association to account to the Institute for the funds it received while an agent for

the Institute, (vi) ordering the Association to transfer all funds received for a charitable purpose

to the Foundation or other appropriate custodian so that the condition of those funds may be

met, (vii) and for such other and further relief that the Court deems just and proper.

Respectfully submitted,

HINKLE, HENSLEY, SHANOR & MARTIN, L.L.P.

Richard E. Olson [email protected] Parker B. Folse pfolse@hinklelawfirm. corn P.O. Box 10 Roswell, New Mexico 88203 Tel: (575) 622-6510 Fax: (575) 623-9332

Attorneys for the New Mexico Military Institute


1. 1

, -/5.2 9-4 RESTATED

ARTICLES OF INCORPORAT ON

OF

ALUMNI ASSOCIATION, IN

(A Non-Profit Cceponstion)

Wo, the undorsignod, BOW of Dirsztors of the tiMMa ALUMNI ASSOCIAlION

pursuant to Section 33-8-39 NMSA 1978 Comp, upon =EWA duly mado, seconded, and passed

by a unottimeus vote, do ivreby mono sod arneral the Ankles of Incorporation of the NMMI

Alumni Association which shall truporscdc the origirial Articles of hu;orporatIon ad all

Antentimoras thereto.

tkRlICLE, I

NAME

Msts name of the co/Isolation isNMMS Alumni Association, Inc.

ARTICLE U.

REGISTERED OFFICE

Thc registered office of thy Corporation in thc Soto of New Mexico until olficnsise

designated as provide:16y law shall be at Roswoll, New Mexico.

ARTICL4 In

PURPOSE

This corporation is organised oxclusively for charitable purposes, including for such

purposes the making of distributions to organizations that quail/ 11.5 CUMpt organiratiena under

section 301(c)(3) of the Internal Revenue Code of t9136 (or any amendment thereto).

The objcchr arid purpose3 for which the Corporation is formed ore Its follows to promote

the intarcst and wilfaro of New Maxie* Military Institute located in Roswell, New Mexico; to

afford a permanent MUM of contact between the New Mexico Military Instituk and its alumni; to

mate, establish and maintain scholarship and to collect and administer trust Rinds and

eadownsang fbr the uso and benefit of New Mexico Military laititat0 Alumni Associatice and to

do generally any and all things which may be deterrod advisable, necessary or *limbic la the

interest of the New Mexico Military Institute, its cadets, faculty, and alumni.

In carrying out the objects and purposes for which the Corporation is Armed and without

in any partlaslar mulcting or ladling any of the objects and powers of the Corporsdoe, h Is

hereby expressly cloclind and provided that the Corporation shall bar) power to take, hold and

acquire by paean, gila, devise or bequest, real and personal property of whatsoever kind, nature

or description, and whomsoever the nine may be situated, and to use and occupy such part of its

properties, real or personal, as may be atecsauy or proper for the thrtharanco of its oblool to 3c11

or citiscrwiso dispose of all or any portion of My real or personal property acquired by the

Corporatioo; to invest end reinvest the Parch and properties of the Corporation, whether acquired

by gill, devise, becinest, purchase, sale, ions, credits or otherwise, in any kind of property, real,

personal or mixed, and every kind of investment specifically Including, but not by way of

limitation, bonds, debentures, stocks, preened or common, oil, gas or other mineral interests,

lands and notes; to mortgage, hypothecate, pledge, or otherwise encumber any or all dike assets

of the Corporation, including real and personal property and the income thtuefrom, as security for

the performance of any undonakIng or obligation of the Corporation; to mako and perform

contracts of every kind and description; and generally in carrying on its business or for the purpose

of attaining any a its objects or purposes the Corporation shall have the power to sell, melange, transfisr, convey, haw, mortgage, hypothecate, pledge or otherwise =umber and dispose of any

or all of the property of the Corporation; to borrow money and to executor deliver and issue notes

and other obligations and to execute and deliver mortgages, deeds of trust and other instruments of

pledger and hypothecation to secure the same; to receive, hold and administer troll finds and

endowments for the 4.303 and purposes of said Corporation; and to do and perform all other things

and exorcise any and all other powers which a co-pattnership, or natural person coirld do sad

exercise or whkh now or hereafter may be authorized by law.

ARTICLE IV

LIMITATIONS ON LIABILITY

The Corporation shall ban no capital stock or power to issue capital stock and shaR be

strictly 4 401PPIVEt OCelpOrat:41 devoted Mid:Dainty to carrying out the objects and purposes for

which to Corporation Is ibrmod and the Corporation studl not afford pecuniary gain, incidentally

or otherwise, to its members, and there shall be no liability for the indebtedness oldie Corporation

on the part of any member thereof; provided, however, that nothing herein contained stall be

construed as limiting the right of; person holding a contractual indebtedness agabnt the

Corporation to reach be income as well as any other assets of the Corporation VI the payment

thereof, The Corporation shall Indemnify the Directora and Officers as provided by sections 53-

8-26 NMSA 1978 Comp.

ARTICLE V

DURATION

The time for which this Corporation shall exist shall be pc-Tomei

A1L1C1..E Vi

ORIGINAL INCORPORATORS

The names and addresses of the original Incorporators were: Tom Hall, Jr Charles F.

Smith, Charles Martin, Ted Hunt and Sam W. Agee all of Roswell, Now Mexico.

6=0a(

DIRECTORS

The affairs of the Corporation shall be administered by a Board of Directors emsisting of

not less dna three (3) nor more than fifbxn (15) members and the present Directors shall continue

3

tur

u Diroctors until their summon ere duly elocted and qualify as provided by tho By-Lows of be

Corporation, The Board of Directors shall have power to adopt By-Laws to govern the affairs of

the Corporation, A copy of the By-Laws of the Corporation shitll be Med in the Ofko albs

Stab Corporation Commission, together with all arnoulmards thereof u provided by law.

ARTICL,E YR/

TAX EXEMPT STATUS

Nowt uf the net =ming s of lho Corporation shall bum to the bentifit of or be distmlnited

to its mambas, mimeos, officers or other private personas comp; that the Corporation shall be

authorized and empowered to pay reasonable compensation for services modeled and to =ice

payments and distributions to 6u1hermos of tho purposes act forth hi ArdcloJEl thereof, No

substantial pan of the activities shall be the carrying on of propaganda, or otherwise attempting, to

influences legislatiou, and the Corporation ohail not participate hi, or intervene in (facludIng the

publishing or distaution of intermits) Any political cronpaign on behalf of any candidate for

public o co, Notwithatanding any other provision of these utiotes, the CorPoralka Shall not

awry on any other activity not permitted to be carried on (a) by a corporation except on Federal

111001110 Tax =ler nation 601 (oX3) of tho Iambi Revenue Code of the 1986 (or any arrandment

theteto) or (b) by a corporation, contributions Co which are deductible undo section 176(0(2) of

the, Internal Revenue Code of 1956 (or any amendment tlion;to).

AKIICLEIX

DISSOLUTION

Upon the dissolution of the Corporation, the Board of Directon shall, after paying or

making provisions for the payment of all of the liabilitiss or dm Corporation, dispose of all ofthc

eSSOU of the Corporation to the NEW MEXICO MILITARY INSTITUTE, Roswell, New

MeXIOD, but should it cot be in existence upon dissolution, the Board of Directors shall dispose of

4

Articles of hoorposation of the NM Al ritiopted by the Board of Directors on the

1993.

ATTEST:

R. Britton, Secretary

all of the useti of tho Corpdratlon exclusively for the purposes of tho Corporation in tech runner,

Cr to such organization or organizations organized and panted exclusively for charitabk

cducational purposes u shall at ON time quallBy u an exempt orpoisation or orlivitotims u.nd6I

sootier 501(c)3) of the Internal Revenue Code of 1986 tor the corresponding provisien of any

future United States bnornal Revenue Lair), as the Board of Directors shall domain*, My of

such use% nx so di:paved of shall tic disposed of by the District Court of thaeounty in which the

principal office of the Cceporatioo Is then located, exclusively fl, r such purposes or to such

orianization or organizations, as said Court emit determine, which aro organized and Tatted

exclusively fcs such purposes.

6

AMENDED BY-LAWS OF THE NMMI ALUMNI ASSOCIATION, INC.

(A NON-PROFIT CORPORATION)

ARTICLE I NAME AND LOCATION

The name of the Corporation is "NMMI Alumni Association, Inc. a non-profit Corporation, hereinafter called the "Association," Its principal office in the State of New Mexico shall be located at the NEW Mexico Military Institute, 101 West College Boulevard, Roswell, NM 88201.

ARTICLE MISSION AND PURPOSE

The objects and purposes for which the NMMI Alumni Association, Inc. (Association) ex:sts are

to support and promote the interest and welfare of New Mexico Military institute (NMMI). In

connection with the foregoing, the Association shall provide direct support to NM MI wt enever

possible; afford a permanent means of contact between NMMI and its Alumni; create, establish

and maintain scholarship for NMMI Cadets; and conduct any and all operations which may be

deemed advisable, necessary or desirable in the interest of promoting loyalty to NNIMI, its

Cadets, Faculty and Alumni.

PURPOSE

The objects and purposes for which the Association is formed are as follow:

* To promote the interest and welfare of the NMI

* To be the gateway that fosters lifelong connections between its Alumni and MINI

* To promote the distinctive values (duty, honor, achievement) of NMMI

* To provide avenues for Alumni to interact with each other and with NMMI

* To help establish and maintain scholarships, in conjunction with the New Mexico

Military Institute Foundation, for deserving Cadets to attend NMMI

* To operate in a manner that is connected with and is responsive to the positive needs

of NMMI

ARTICLE III MEMBERSHIP

Section 1. Classes of membership

A. Regular Membership. Any former member of the Corps of Cadets is eligible for membe -ship providing he/she completed two semesters at NMTvti and pays the annual membership fee set by the Board of Directors of the Association.

EXHIBIT H

B. Life Membership. Life Membership will be provided for by the payment of an amount as prescribed by the Board of Directors of the Association. Each life member shall be given a life membership certificate.

C. Honorary Life Membership. In recognition of their continued devotion and activity for the betterment and welfare of NMMI or the NMMI Alumni Association, the rules and regulations

concerning the nomination and election of persons to the classification of Honorary Life Member of the Association are set forth in the Policy and Procedures Manual of the Association by the Membership Committee of the Board of Directors of the Association.

D, Patron Membership. Any supporter of the Association who contributes an amount equal to or greater than the amount established by the Board of Directors each year for annual membership. This class of membership gives the Patron member all the privileges of a Regular member except the right to vote or become a Board member.

E. Donor Membership. Donation to the Annual Fund in an amount equal to or greater than the

amount established by the Board of Directors of the Association for a Regular member will suffice as dues, entitling the eligible, i.e. completion of two semesters at NMM1, alumnus to the privileges of membership.

Section 2. Voting

At all meetings of the members of the Association, each member shall be entitled to one vote. Only members shall be entitled to vote and any member may attend the Annual meeting, or an other meeting of the members. The members may vote in person, by mail or electronically, on an app..oved ballot. In the third quarter of the calendar year, an absentee ballot listing candidates for DIrectos of the Association will be sent to all members eligible to vote. The number of persons present in persol at any meeting of the Association which shall have been duly called, even though such number be less than a majority of the membership thereof, shall constitute a quorum for the transaction of all busines3 which may come before such meeting, provided, however, that there shall be In attendance at any such meeting a majority of the members of the Board of Directors of the Association. At all meetings Df the Association, a majority of members of the Association present shall control.

Section 3. Annual Meeting of Members of the Association

The annual meeting of the members of the Association shall be held at a time and place designated by the President of the Board of Directors of the Association during the annual Homecoming

activities at NMMI. Notice of each annual meeting of the members of the Association shall be given by mailing or emailing notice thereof to each member as shown by the records of the Association, at least fifteen (15) days prior to the time designated for holding said meeting. The purpose of the annual

meeting shall be the election of Directors and the transaction of such other business as may regularly come before the meeting.

Section 4. Special Meetings of the Members of the Association

Special meetings of the members of the Association may be called by the President, or the

Board of Directors, or twenty (20) percent of the members of the Association, by mailing or emailing notice of such special meeting at least fifteen (15) days prior to the time for holding said meeting to

each member of the Association shown by the books and records of the Association to be in good standing.

ARTICLE IV MANAGEMENT

Section 1. Structure and General Powers

The business affairs of the Association shall be managed by a Board of Directors. After Homecoming 2012, the voting Directors will be reduced to eleven (11) consisting of the followinx (i) nine (9) general member Directors consisting of five (5) in-state Directors and four (4) out-of-sta:e Directors ; (ii) one (1) Foundation Trustee; and one (1) NMMI Regent.

Section 2. Tenure and Qualification of Directors

A. Term. Directors shall be elected to three year terms, staggered in such a manner so that approximately one-third of the Directors terms will expire each year.

B. Qualifications

1. Three continuous years as a donor/member of the Association or if a Life member (all payments for Life Membership must be completed at least three years prior to runn ng for

the board). 2. A record of some type of involvement In Association activities (local chapter particiption,

recruiting, Trail Ride, Foundation, Board of Regents, etc.)

C. Application and Election Process

1. Application by General Members.

Members, both in-state and out-of-state, who wish to run for election to the Associations

Board of Directors must submit the following by June 30 of the year in which they choose to run

for election: (a) a letter of intent to run; (b) a resume; (c) a biography; (d) a digital color photo;

(e) two recommendations or references from an active Association member; and (f) a statement

of any prior criminal activity (a background security check, at the applicants expense, may be

requested).

2. Application by Foundation Trustee and NMMI Regent Members.

Each of the NMMI Foundation, Inc. and the NMMI Board of Regents will submit to the

Association by June 30 at least two pre-selected candidates from the Board of Trustees and the

Board of Regents, respectively, for election by the Associations membership to Its 8oarc of

Directors. Recognizing that each submitted candidate currentlyserving on either the NMMI

Foundation, Inc. Board of Trustees or the NIVIMi Board of Regents will have already beer

properly vetted and investigated by their respective organizations, such candidates are not

required to submit an Application as required by Article IV, Section C (1) above.

D. Vetting Process. It shall be the responsibility of the Associations Executive Director to compile all candidate applications as set forth above for consideration by the Board of Directors at the July Bcard

meeting. Only applications that are 100% complete and submitted by June 30 of a given

election year will be considered by the Board, The entire Board of Directors will review any negative information received along with any explanatory statements from the candidate which should accompany it.

E. Election. In the third quarter of the calendar year, an absentee ballot listing candidates for election to the Board of Directors of the Association will be sent to all members eligible to vote. Electicn of such Directors shall take place at the annual meeting of the members of the Association.

F. Term Limits No Association Board member may serve more than six consecutive years on the Board. No Association Board member may serve as President for more than two consecutive years.

F. Employment. A sitting Board member must wait at least one year from the time they vacate their boa -d seat before being considered eligible to be hired by the Association.

G In-State or Out-of-State Alumni Association Candidate or Board Member Defined,

1, General-Member Candidate Declaration. A general-member candidate for the Association Board of Directors must declare their intent to run as an In-State or Out-of-State, candidate at the time of the submission of their application to run for the Board of Directors, Cnce a

candidate declares a residency status, a candidate cannot change their status before the election polls close. The In-State or Out-of-State status of the Foundation and Regent candidates submitted by their respective organizations will not be taken into consideration for election to the Associations Board; as a result, the Foundation and Regent member candidates require no such declaration of status.

2. Residency Defined. Residency is determined by a majority of the following factors; the candidates actual place of residence; home ownership; legal residence; actual place of employment; where the candidate pays taxes; registers their vehicles; has their drivers license; business license{s); voter registration; declaration of legal state of residence in ones will; etc.

3. Status Defined. An In-State candidate for the Alumni Board, Directors must reside Nithin the geographical limits of the State of New Mexico on the date of the election to the Alumni Association Board. An Out-of-State candidate for the Alumni Board of Directors must reside outside the geographical limits of the State of New Mexico on the date of election to the

Alumni Association Board. 4. Change of status at the time of the election. If a candidate changes residency status after

their declaration but before the election polls close, that candidate must immediately inform the Alumni Association Executive Director, and will be automatically disqualffed for that election. If at the time of election, a candidate does not meet the criterion of their declared status as an In-State or Out-of-State candidate, that candidate would be disqualified from taking office. In such a case, the Board would certify and swear in the next

highest vote count recipient of the category of the disqualified candidate. If no other candidate qualifies, the Board will not certify anyone for that seat. If the candidate ices not inform the Executive Director immediately of the change of status, or at all, they will automatically be disqualified for that election, and if discovered after the candidate is sworn

in, they must resign the seat Immediately. Such a candidate will be permanently barred from running for the Board In the future.

5. Maintaining status upon election. Following a valid, certified election and oath of cffice as an In-State or Out-of-State Board member, that member must maintain their In-Sta:e or Out-of-State status throughout their elected term. if during a Board members term of office, they switch from in-State to Out-of-State, or vice-versa, that candidate maintains their seat only until the next election (regardless of how much time remains on thei term) at which time they must re-run for the Board under the proper status.

Section 3. Regular Meetings of the Board of Directors.

A regular meeting of the Board of Directors shall be held during each quarter and notice thereof shall be given to each member of the Board.

Section 4. Special Meetings of the Board of Directors.

A. Special meetings of the Board of Directors may be called by or at the request of the President or any three (3) Directors. The person or persons authorized to call special meetings of the Board of Directors may fix the time and place for holding any special meeting of the Board of Directors called by them.

B. The President may call for a telephone/teleconference or video conference meeting when the following conditions have been met.

1, Every Board member has been notified in an appropriate amount of time with the date of the meeting, time and the order of business to be stated with at least forty-eight (4E) hours

. notice.

2. A quorum of the Board is present. 3. All Board members are in a location/position where they can mutually debate the m3tter

that constituted the meeting. (teleconference or video conference room).

4. Minutes must be taken by the Secretary or a designated individual.

5. A person will be recognized and gain the floor in the same manner as they would at any other normal meeting of the Board of Directors. All other typical meeting procedures will be

followed. 6. If a vote is taken on a matter then it must be ratified at the next Regular Board Meeting.

C. The President may, if he/she deems It an emergency, call for a telephone or e-mail vote on any issue. All Board members shall have twenty-four (24) hours from the time first called or e-mailed by the Secretary, to respond and cast their vote.

Section 5, Quorum. A majority of the Board of Directors In person shall constitute a quorum for the transaction of

business at any meeting of the Board of Directors of the Association. The action of the majority of the Directors at a meeting at which a quorum is present shall be the action of the Board of Directors.

Section 6. Vacancies.

Any vacancy occurring in the Board of Directors may be filled by a majority vote of the Directors at any regular meeting of the Board in one of the following manners;

A. The Board will leave the vacancy or vacancies open until the next October election cf directors, and the person or persons receiving the next most votes after the primary seats have been filled would fill the vacancy or vacancies for the remainder of the term or terms. If more than one additional vacancy, they will be filled in order of most votes to longest terms, OR

B. The Board will appoint a qualified alumnus to the vacancy (Qualified Alumnus must comply with the same requirements as any Alumnus desiring to run for the Board as outlined in Article IV, Section 2, B and C) to the vacancy or vacancies to serve until the next October

election of directors, and vacancy or vacancies filled as stipulated in A, above, OR C. The Board will appoint a qualified alumnus to the vacancy or vacancies for the rema nder of

the vacated Board member or members term (Qualified Alumnus must comply with the same requirements as any Alumnus desiring to run for the Board as outlined in Artict IV, Section 2, B and C), OR

D. The Board will leave the position or positions vacant for a period of time no greater .:han the

duration of the vacated Board member or members term.

Section 7. Absence from Meetings. Any Director, who, without reasonable cause, fails to attend two (2) consecutive regular

meetings of the Board, may be removed by majority vote of the Directors and that Director position

shall be declared vacant.

Section 8. Miscellaneous.

A. All Association Board Members must be Alumni.

B. All Board members must sign a confidentiality statement as well as a code of conduct

statement, as contained in the Policy and Procedures Manual, at the beginning of each board year. Violations of the code of conduct will be grounds for action by the Board and due process for such violations Is outlined In the Policy and Procedures Manual.

C. Only the duly elected Board members of the Association will be eligible to serve as President. The Foundation Trustee and the NMMI Regent serving on the Board are not eligible to serve as the President of the Board of Directors of the Association. A Board member serving in his/her first year as a member of the Board of Directors of the Association may not serve as President.

ARTICLE V OFFICERS

Section 1. Number. The officers of the Association shall be the President, Vice President, and Treasurer.

Section Z. Election and Term of Office.

The officers of the Association shall be elected annually by the Board of Directors follow ng the completion of the Board of Directors Election process. The officers so elected shall serve at the pleasure of the Board of Directors. Vacancies may be filled or new offices created and filled at any meeting of the Board of Directors. Each officer shall hold office until his successor shall have been duly elected and qualified or until his death or resignation.

Section 3. Vacancies of an Officer of the Board of Directors. A vacancy in any office because of death, resignation, disqualification, or otherwise will be

addressed by majority vote of the Board of Directors. The Directors will select an existing duly elected Board member to fill any vacancy. The Regent member and the Foundation member are not elig ble to hold an officer position on the Board of Directors and may not be appointed or voted to fill the position. The procedure outlined in Article IV, Section 6 will be followed to fill the resulting vacancy.

Section 4. President. The President shall be the principal executive officer of the Association and shall in gene al

supervise and control all of the business and affairs of the Association. He/she must have served for at least one previous year as a Director before becoming eligible to serve as the President. He/she shall preside at all meetings of the Association and of the Board of Directors, until his/her successor is elected. He/she may sign with the Secretary, or any other officer dulyauthorized by the Board of Directors, certificates, deeds, mortgages, bonds, contracts, or other instruments which the Board of Directors has authorized to be executed, and in general shall perform all duties incident to the office of President of the Board of Directors and such other duties as may be prescribed by the Board of Cfrectors from time to time, including the appointment of members of the standing committees as called for in Article VII of these Sy-laws, or other such committees as designated by the President or recommended by the Board of Directors.

Section 5. Vice-President. In the absence of the President, the Vice President shall act and be empowered to perform all of

the duties assigned to the President.

Section 6. Treasurer. If required by the Board of Directors, the Treasurer shall give a fidelity bond for the faithful

discharge of his/her duties in such form and with such surety or sureties as the Board of Directors shall determine. The cost of this bond shall be paid for by the Association. He/she shall:

A. Have charge and custody of and be responsible for all funds and securities of the Association; receive and give receipts for gifts and monies due and payable to the Association from any source whatsoever, and deposit all such monies or securities in the name of the Association in such banks or other institutions as may be designated by :he Board of Directors;

B. In general perform all the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him/her by the President or by the Board of Directors;

C. All disbursements written and signed by the Treasurer In excess of FIVE THOUSAND znd NO/100 DOLLARS ($5,000.00) shall be countersigned by the President, a duly appointed board member, or a former board member with the concurrence and approval of the Alumni Board of Directors.

Section 7. Executive Director

The Executive Director, who is not an officer of the Association and is non-voting, shall he responsible for the duties and responsibilities of Secretary:

A. Keep the minutes of the meetings of the members of the Association and of the Board of Directors;

B. See that all notices are duly given in accordance with the provisions of these By-Lay. s; C. Be custodian of the corporate records and of the Seal of the Corporation; D. Keep a register of the post office address of each member of the Association; E. Follow the guidelines as set out in the current "MEMORANDUM OF AGREEMENT", it any, by

and between the New Mexico Military Institute and the New Mexico Military Institute Alumni Association, Inc.; and

F. In general perform all duties incident to the office of the Secretary and such other duties as from time to time may be assigned to him/her by the President or by the Board of Directors.

Section 8. Residency. The offices of the President and the Vice-President shall be filled by either an in-state or out-of-

state member, but both positions may not be held by out-of-state members for the same term. f the President is not an in-state member, then the Vice-President may, in consultation with the Presi lent, perform such duties as are necessary in conducting the business affairs of the Association when the President is absent from the state of New Mexico. If action is taken by the Vice-President without prior consultation with the President, then the President shall be informed of such action as soon as conveniently possible.

ARTICLE VI

SEAL

The Board of Directors shall provide a corporate seal which shall be in the form of a circia and shall have inscribed thereon the name of the Corporation and the words "Corporate Seal,"

ARTICLE VII COMMITTEES

Section 1. Executive Committee.

A, General, There shall be an Executive Committee of the Board of Directors, which shall consist of the President, vice-President, Treasurer and the Immediate Past President of the Association, The President may include other members of the board at his/her discretion. The Executive Director will serve on the committee as an ex-officio member. The Exe cutive committee shall meet at the call of the President.

B. Purpose. The powers of the Executive Committee shall be limited to those decisions necessitated by circumstances when it is not feasible to call a meeting of the Board of Directors. The Executive Committee shall keep the Superintendent and the Board of Regents

of NivIMI advised as to the actions and general feeling of the Association on a contin

basis. Minutes of the meetings of the Executive Committee will be kept and provided to the Board at the earliest time possible, but not later than the next quarterly meeting.

Section 2. Standing Committees. The President shall appoint a chairman and members of the following standing committns:

A. NMMI Alumni Hall of Fame Committee. The NMMI Alumni Hall of Fame Committee shall receive all nominations for the NNIMI Alumni Hall of Fame, consider such nominations, and determine which of the recommendations should be recommended to the Board of Directors of the Association for approval or disapproval.

B. Honorary Lifetime Membership. The NMMI Alumni Membership Committee in consonance with the Hail of Fame Committee will also consider nominations for the Honorary Life Member of the Association status to determine which of the nominations should be forwarded to the Board of Directors of the Association for approval.

C. Membership Committee, The Membership committee shall be responsible for maintaining and increasing members of the Association, consider nominations for Honorary Lifetime Membership and forward its recommendations to the Board of Directors for approval.

D. Finance Committee. The Finance Committee shall be responsible for oversight and management of the Associations investment a nd financial requirements. It shall be chaired by the Treasurer.

Section 3. Other Committees. The President shall appoint a chairman and members of any special committees with the

purpose and length of service deemed necessary by the Board of Directors, The President may a so appoint, at his/her sole discretion, "Ad-Hoc" committees for special purposes which he/she feel!: necessary.

Section 4. Committee Assignments. The President will appoint the members to the specific committees. Each Board member may

request any specific committee assignment they desire. Any Director may serve on any committee in addition to the assigned committees so long as it does not interfere with their work on assigned committees,

Section 5, Ex-officio Members of Committees. The President may appoint any member of the Alumni Association to serve as an ex-officio

member of any committee of the Board,

ARTICLE VIII FINANCIAL MANAGEMENT

Section 1. Annual Audit. An Annual audit of the books and affairs of the Association shall be made by an established and

recognized certified public accountant as set out in the Memorandum of Agreement between the Association and the Institute. The auditor shall be reviewed for change every three (3) years,

Section 2. Fiscal Year.

The fiscal year of the Association shall commence on July 1 and shall terminate on June 30 of each year.

ARTICLE IX INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 1. Indemnification, The Corporation shall indemnify, to the full extent then permitted by applicable law, any person

who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a Director, Officer, Employee, or Agent of the Corporation; provided, however, that the Corporation shall indemnify any such agent (as opposed to any Director, Officer, or Employee) of the Corporation to an extent greater than that required by statute only if and to the extent that the Board of Directors may, in its discretion, so determine.

Section 2. Other indemnification Provisions.

The rights of indemnification provided by this Article (1) shall not be deemed exclusive of, or to In any way limit, any other rights to which any person who may be indemnified hereunder may be entitled;

(2) shall continue as to a person who has ceased to be a Director, Officer, Employee or Agent; ar d (3)

shall inure to the benefit of such persons heirs and legal representatives.

Section 3. Insurance.

The Corporation, by authorization of the Board of Directors, may purchase and maintain insurance on

behalf of any person who is or was a Director, Officer, Employee or Agent of the Corporation, or who is

or was serving at the request of the Corporation as a Director, Officer, Employee or Agent for any other

Corporation, domestic or foreign, non-profit or for profit, partnership, joint venture, trust or other

enterprise, against him and his status as such, whether or not the Corporation would have the power to

indemnify him against such liability under this Article.

Section 4. Advancement of Funds.

The Board of Directors, whether a disinterested quorum exists or not, may advance to any individual

who may be entitled to indemnification under this Article an amount sufficient to pay expenses incurred

by such individual with respect to any claim, action, suit or proceeding listed in Section 1. Before the

Corporation may make such an advance, however, the individual who Is to receive the advance must

agree, in signed writing, to repay the Corporation the amount advanced the amount of indemnircatIon,

if any, which the Board of Directors ultimately authorized to be paid to said individual.

Section 5. Nepotism.

Board members and members of their Immediate family may not be employed by the Association.

Members of the immediate family of the Executive Director may not be employed by the Association.

The term "immediate family" is defined as: husband and wife, father and mother, son and daughter,

brother and sister,

Section 6. Validity.

If any provisions or portions thereof of this Article shall be found, in any action, suit or proceeding, to be

invalid or ineffective, the validity and effect of the remaining portions shall not be

ARTICLE X DISSOLUTION

Upon the dissolution of the Corporation, the Board of Directors shall, after paying or making provision

for the payment of all of the liabilities of the Corporation, dispose of all of the Corporation asset:;, to

such organization or organizations organized and operated exclusively for charitable, educational,

religious, or scientific purposes as shall at the time qualify as an exempt organization or organizations under Sec. 501(c)3 of the Internal Revenue Code of 1954 (or the corresponding provision of any uture

United States Internal Revenue Law), as the Board of Directors shall determine, Any such assets lot so

disposed of by the Directors in connection with the dissolution of the Corporation shall be dispmed of

by the District Court of the county in which the principal office of the Corporation is then1ocatec,

exclusively for such purposes or to such organization or organizations, as said Court shall determine,

which are organized and operated exclusively for such purposes.

ARTICLE XI AMENDMENTS

The By-Laws may be altered, amended or repealed and new By-Laws may be adopted at any revlar

meeting of the Board of Directors of the Association or at any special meeting of the Board of Directors,

by a majority vote of the Directors at the meeting. Written notice of any changes must be mailed or

emailed to the Directors at least fifteen (15) days prior to any scheduled or special meeting where

alterations, a dments or repeal and adoption of new By-Laws will take place.

Executive Director

MEMORANDUM OF AGREEMENT

THIS MEMORANDUM OF AGREEMENT (M0A) is made by and between NEW MEXICO MILITARY INSTITUTE and the NEW MEXICO MILITARY INSTITUTE ALUMNI ASSOCIATION, INC.

Article I Definitions and Recitals

1.1 Definitions: As used in this Agreement, each of thc following terms shall have the respective meanings set forth in this paragraph.

(a) "Alliance Agreement" shall mean the Third Amended Alliance Agreement, dated July 1, 2009, between the Association, Foundation, and the Board of Regents, and any subsequent revisions or amendments to such Agreement.

(h) "Alumni" shall mean airy student that has graduated from either or both the high school and the junior college or who has completed one full year of attendance at the Institute.

(c) "Articles" shall mean the Articles of Incorporation of the Association.

(d) "Association" shall mean the New Mexico Military Institute Alumni Association,

(c) "Board of Directors" shall mean the Board of Directors of the Association.

(1) "Board of Regents" shall Mean the Board of Regents Hie Institute..

(g) "Bylaws" shall mean the Bylaws of the Association.

(h) "Chief of Staff shall mean the person holding the office of Chief of Stall- for the

Institute.

(i) "Database" shall mean a repository of information identifying the Alumni of the Institute.

(j) "Executive Secretary" shall mean the person holding the office of Executive Secretary of the Association.

(k) "Foundation" shall mean New Mexico Military Institute Foundation, Inc.

(I) "Institute" shall mean New Mexico Military Institute.

(m)"Policy Manual" shall mean the policy manual atilt Association adopted by its

Board of Directors.

(n) "See. 501 (c) (3)" shall mean Section 504 (c) (3) of the Internal Revenue Code.

(o) "Superintendent" shall mean the- Superintendent of the Institute.

E2 Recitals: The facts and circui sumees giving rise of this Agreement are as follows:

(a) The Institute is a designated State Educational Institution under Sccticm 11 of Article XII oldie Constitution of New Mexico.

(b) The Association is a nonprofit corporation organized and existing under the laws of the State of New Mexico.

(c) The primary purpose of the Association is:

(I) To promote the interest and welfare of the New Mexico Military institute (2) To he the gateway that fosters lifelong connections between its alumni and New

Mexico Military Institute (3) To promote the distiuctive values (duty, honor, achievement) of New Mexico

Military Institute (4) To provide avenues for alumni to interaet with each other and with the New Mexico

Military Institute (5) To help establish and maintain scholarships, in conjunction with the New Mexico

Military institute Foundation, for deserving cadets to attend New Mexico Military Institute

(6) To operate in a mariner that is connected with and is responsive to the positive needs of Nev Mexico Military Institute

(d) The Institute recognizes that the Association is a separate corporate entity. (e) The Institute and the Association each desire to enter into this Agreement, to be in

compliance with NM Statute (i-5AL, and to more clearly define their working relationship and undertakings with respect to each other.

Article II. Undertakings of the Association 2,1 Affirmative Covenants: The Association agrees that, unless the Institute shall

have otherwise consented in writing, during the term of this Agreement the Association will:

(a) Maintain its existence as an exempt organization under Section 501 (c) (3).

(h) Conduct its business according to the Articles, Bylaws and Policy Manual so long as such conduct is not inconsistent with the provisions of this MOA.

(c) Abide by the terms and provisions of the Alliance Agreement, including, but not limited to, those sections and provisions regarding fundraising.

(d) Maintain the composition of the membership of the Board of Directors in accordance with the Bylaws, unless it is determined that such composition would jeopardize the Associations status as an exempt organization under Section 501 (c) (3).

(e) Employ as Executive Secretary a person selected by the Board of Directors, in conjunction with the Institute through the Board of Regents representative on the Alumni Board.

(I) Organize its staff and retain such advisory and other professional services as it deems necessary to perfOrrn its primary purpose as stated in paragraph 1.2 (c), hereof.

(g) Operating in connection with the Institute, serve as thc primary records repositor), and single point of information relating to Alumni of the Institute. Such information shall be inemporated by the Association into a Database with accessibility for constant use by all authorized parties. In fulfilling these functions, the Association will update and maintain the information relating to the Institutes Alumni, on behalf of the Institute. It is fully understood by the Association and the Institute that the Database developed and maintained as a result of combining information related to cadet attendance at the Institute with information gathered by the Association relative to a former cadets alumni status shall become the property of the Insti lute.

(1) Information to be shared and incorporated into the Database shall include:

a. the Alumnus record of attendance at the Institute;

b. that generated by subsequent contacts between an Alumnus and the Association. Intbrmation regarding an Alumnus made available to the institute or the Foundation will be provided to the Association for incorporation, as necessary, into the Database.

c. that relating to donations by an Alumnus to the Association, and

d. that relating to the life-time achievements of the Alumni of the Institute.

(2) The information contained in the Database shall be easily retrievable and capable of generating lists, including mailing lists in the followingprimary categories:

a. All dual (high school and junior college) graduates of the institute.

b. Al] high school graduates.

C. All junior college graduates. 3

d. All other categories of Alumni, to include Patrons and Friends.

(3) The Database will be accessible by and available at all times to the Institute and the Foundation.

(11) Operating in coordination with the Institute, produce and distribute to Alumni and Patrons, the following publications on a frequency basis as indicated:

(1) Sally Port -- a magazine publication distributed on a quarterly basis to all current members of the Association and to all high school graduates and junior college graduates, whether or not members of the Association. The quarterly distribution will occur during the following months after the beginning of the Institutes academic year: October, January,

April, and July. (2) Monthly c-news teller-- to all Alumni and Patrons no later than the 5s, working

day of each month. (i) Operating in conjunction wiM the Institute, manage the Institutes Alumni 1-tall of

Fame. Management shall include the nomination of potential inductees, in accordance with the criteria adopted by the Association and the Insulate. The nominations, with supporting documentation, will be forwarded by the Hall of Fame Committee of the Alumni Association to the Hall of Fame Committee of the Board of Regents through the Board. of Regents representative on the Alumni Board no later Man 60 days prior to the beginning of thc Homecoming activities. The final selection of those to be inducted into the Institutes Alumni Hall of Fame will be a coordinated effOrt made between the Alumni Association 13oard of Directors and The Institute.

(j) Operating in connection with the Institute, plan and execute the annual Alumni Homecoming activities. The Institute shall have supervisory authority over the planning and execution of the overall event. The Association will use the Database to invite all Alumni to return to the Institute for Homecoming.

(1c)Obtain and maintain such insurance and fidelity bonds as the Board of Directors may determine are appropriate to enable the Association to maintain its 501 (c) (3) status and to comply with the provisions of this agreement.

(I) Maintain a financial accounting system considered adequate under customarily and currently accepted governmental accounting standards, or such other standards as may be required by law, in staff coordination with the Institute and its internal and external auditors.

(m) Cause its financial operations to be audited annually in accordance with generally accepted governmental auditing standards by an independent professional auditor approved by the Institute. The Institute and the FOLUIdation are required by New Mexico statute to utilize, the same independent auditor for their annual audits. Although not required by statute, the Instimic and Foundation recommend that the Association utilize the sante audit firm.

(n) Cause a copy of the annual audit, conducted in accordance with Article 2.1 (p), hereof, to be furnished to the Institute, with the understanding that such audit, exclusive of the names of Association donors and the amount of any donations, shall be a public record.

The Association will maintain the working papers associated with such audit available for review by the Institute, upon its written request, for a period offline years post audit report date. Under no circumstances will the addresses or other personal information relative to Association donors, or the amount of their donations, become a matter of public record. 4

Article ii Undertakings of "flic Institute 3.1 Affirmative Covenants: hi furtherance of the purpose of this Agreement and in consideration of the above described services and undertakings to he provided and performed by the Association, the Institute agrees that, during the term of this Agreement, it will:

(a) Provide for the Associations use office and meeting space, together with the necessary utilities, repairs, property insurance (but not contents insurance), and maintenance and janitorial support services.

(b) Recognize the Association as the Alumni Association for the Institute, and assist the Association to accomplish its mission by:

(I) Providing to the Association Cadet attendance infomiation, as required; and

(2) Providing to the Association any updated addresses, telephone numbers, or other information about a former Cadet which the Institute may receive; to be thereafter maintained and updated by the Association on behalf of the Institu