<div dir="ltr">Just a note from the peanut gallery. Generally, the executive committee isn't so much a decision making committee as a steering committee. They don't constitute a quorum, and so can't do action on their own. The executive committee is generally made up of the officers.</div><div class="gmail_extra"><br><div class="gmail_quote">On Tue, May 8, 2018 at 1:11 PM, Terran McCanna <span dir="ltr"><<a href="mailto:tmccanna@georgialibraries.org" target="_blank">tmccanna@georgialibraries.org</a>></span> wrote:<br><blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex"><div dir="ltr"><div>+1 to Ron's comments.<br><br>I'm unsure how the Executive Committee's decision-making responsibilities would differ from the overall Board's decision-making responsibilities. Can the Executive Committee consist of the entire board?<br><br></div>As for indemnity, hopefully it will never come to that, but it makes sense to me that a majority of the board would be required to determine that a director did not act in good faith.<span class="HOEnZb"><font color="#888888"><br><div><br><br></div></font></span></div><div class="gmail_extra"><span class="HOEnZb"><font color="#888888"><br clear="all"><div><div class="m_1548048757111756690gmail_signature" data-smartmail="gmail_signature"><div dir="ltr">Terran McCanna <br>PINES Program Manager <br>Georgia Public Library Service <br>1800 Century Place, Suite 150 <br>Atlanta, GA 30345 <br>404-235-7138 <br><a href="mailto:tmccanna@georgialibraries.org" target="_blank">tmccanna@georgialibraries.org</a> <br><br></div></div></div></font></span><div><div class="h5">
<br><div class="gmail_quote">On Mon, May 7, 2018 at 12:03 PM, Gagnon, Ron <span dir="ltr"><<a href="mailto:gagnon@noblenet.org" target="_blank">gagnon@noblenet.org</a>></span> wrote:<br><blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex"><div dir="ltr"><div><div><div><div><div><div><div><div>Mike,<br></div>Sorry to be late in responding...<br><br></div>We at NOBLE use email votes (sparingly) and they can be effective and leave a good audit trail. I would support that capability for Evergreen.<br><br></div>As to the Executive Committee, I would have concerns about that -- can it be larger than two for a minimum?<br><br></div>For budget, I would go along with your suggestion of 10%.<br><br></div>Email for notice is good.<br><br></div>President and Treasurer should be different persons.<br><br></div>Thanks!<br><br></div>Ron<br></div><div class="gmail_extra"><br><div class="gmail_quote">On Fri, May 4, 2018 at 11:40 AM, Mike Rylander <span dir="ltr"><<a href="mailto:miker@equinoxinitiative.org" target="_blank">miker@equinoxinitiative.org</a>></span> wrote:<br><blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex"><div dir="ltr">All,<div><br></div><div>As promised, here is the initial response from MOBIUS' lawyers to Karen's direct comments and suggestions.</div><div><br></div><div>I said before that the suggestions were mostly rejected, but that isn't quite right. The lawyers are starting from an adversarial position, which is understandable given their stated past experience, as opposed Karen's suggestions starting from a more amicable default. As a practical matter, I take Karen's suggestions as an aim to streamline and simplify communication and action in the common case, whereas the MOBIUS' lawyer's apply more structure up front in an attempt to protect against "activist directors" (their words in one case). The question before us is which do we want to enshrine in our by-laws -- my interpretation of the choice could be summed up as: do we value efficiency and assumption of good-faith over prescribed defenses against internal strife?</div><div><br></div>I can be convinced in either direction, but I tend towards the former by default.<div><br></div><div>To be clear on my position, I believe that most of Karen's suggestions (particularly on practical matters such as the use of email for certain functions) do not weaken any overall protections we have, and just avoid overhead given the way our community works. The biggest issue surrounds indemnity, which we can discuss in more detail, but the example I provided works to limit the issues raised below by restricting indemnity to only litigation that arrises from the fact that a director was, in fact, a director. Anyway, I would appreciate all input you care to provide. Thoughts?<div><br><div>Thanks again, everyone!</div><div><br></div><div><div><div dir="ltr" class="m_1548048757111756690m_3182426618930827149m_580109734089555604gmail_signature" data-smartmail="gmail_signature">--<br>| Mike Rylander<br>| President<br>| Equinox Open Library Initiative<br>| phone: 1-877-OPEN-ILS (673-6457)<br>| email: miker@EquinoxInitiative.org<br>| web: <a href="http://EquinoxInitiative.org" target="_blank">http://EquinoxInitiative.org</a></div></div><br><br><div class="gmail_quote"><div dir="ltr">---------- Forwarded message ---------<br>From: Donna Bacon <<a href="mailto:donna@mobiusconsortium.org" target="_blank">donna@mobiusconsortium.org</a>><br>Date: Thu, May 3, 2018 at 9:13 AM<br>Subject: Evergreen ByLaw Comments<br>To: Mike Rylander <<a href="mailto:miker@equinoxinitiative.org" target="_blank">miker@equinoxinitiative.org</a>><br></div><br><br>
<div text="#000000" bgcolor="#FFFFFF">
<p>Mike,</p>
<p>See the comments below from our attorneys.<br>
<span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d">
</span></p>
<p><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d">Most
of these comments relate to the committees permitted under the
bylaws. While it is standard to contemplate such committees
being formed in the corporate documents, as a practical matter,
entities of this size actually forming sub-committees is rare
and it is much more common for the whole board to oversee the
operations. Please see our comments in
</span><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#c0504d">red</span><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d">
below.</span>
</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal">Section 3:15 Actions By Board Without A Meeting<br>
<br>
Under the draft bylaws all decisions must be taken in a meeting,
or otherwise the only mechanism is by unanimous written consent.
The bylaws are silent as to whether email constitutes proper
written consent. You may want to make this looser so that a
majority of the board can vote by email without a meeting. This
has been a major pain point for other orgs I've worked with.</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal"><span style="color:#c0504d">Generally speaking
we do not recommend email as sufficient for unanimous written
consent due to the record keeping requirements for corporate
entities. How Evergreen has described its decision-making
process is that the board will make a decision, likely via
internet chat and without a formal meeting, and then document
that decision in a resolution that is circulated and signed by
all of the board members. That final, signed resolution then
goes into the corporate record book. This avoids questions as
to the final language that was approved, makes it easier to
ensure all signatures are obtained, and is a best practice for
the statutorily-required record keeping.</span><br>
<br>
Section 4:1 The Executive Committee.<br>
<br>
The executive committee section is very strong, which is ok if
you're careful (the board can appoint a committee of only 2 people
to do almost everything the board does). So I wanted to flag that.</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal"><span style="color:#c0504d">Does Evergreen want
to change this? Note, as written the board has discretion over
whether to even form an executive committee and which powers to
give it. There are carve-outs explicitly listed for certain
actions the board cannot designate. As written, this gives
flexibility to the board on whether to create the committee and
whether to give it very limited or very broad powers.</span><br>
<br>
Section 4:2 The Finance Committee.<br>
<br>
This says that any major change in the budget must be approved by
the Board. This is vague and is silent as to materiality. It may
be better to give the committee a little bit of clear flexibility
in case you do form a finance committee.</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal"><span style="color:#c0504d">Does Evergreen want
to change this? Note, as written the board has discretion over
whether to even form the financial committee. To keep controls
on the committee, its powers are limited to exceed or change the
budget, which is left in control of the board. This is fairly
standard.</span><br>
<br>
Section 4:5 Meetings of Committees.<br>
<br>
You may want to amend this to permit the use email for notice.</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal"><span style="color:#c0504d">We generally do not
permit email for required statutory notices as the Missouri
statutes do not specify the effective date for electronic notice
absent proving the email was received. If there is a dispute
between the corporation and a board member, this can be
difficult. With mail, the statutes specify the effective date
based on the mailing without requiring proof of receipt.
Moreover, any regular meetings of the committee do not require
notice; notice only applies if there is a special meeting
outside of the normal schedule. As most decisions will likely
be made outside of official meetings, those will be evidenced by
a resolution signed by all members and waiving the notice
requirements.</span><br>
<br>
Section 5:1 Officers.<br>
<br>
The bylaws don't permit the President and Vice Chairman to be the
same person, which is I'm sure consistent with state law, but some
states require that the president and treasurer not be the same
person, so that there is some level of fiscal controls. You might
want to consider adding that in this case.</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal"><span style="color:#c0504d">There is no such
restriction as to the president and treasurer being the same
individual under Missouri law, and therefore we do not add such
a limitation in the bylaws. The authority of the president and
treasurer are controlled by the board, which is how the bylaws
address this issue. If you want to add additional restrictions,
let us know.</span><br>
<br>
Section 5:2 Appointment and Term of Office<br>
<br>
There's a 1 year term limit on officership. You might want to
leave those limits up to the board if Missouri law permits. While
you do one year terms now, that might not be convenient in the
future for some reason, and then you'd have to amend the bylaws.</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal"><span style="color:#c0504d">The term of the
directors must be specified in the bylaws or articles under
Missouri law. We typically specify the term in the bylaws
rather than the articles as the bylaws are easier to amend. The
1 year term of directors was requested by Evergreen. As the
officers are all currently board members, which is typical, we
want the terms of directors and officers to match, otherwise an
individual’s term as an officer may not be over even if their
term as director is complete. It can be changed in the future
by amending the bylaws.</span><br>
<br>
Section 6:2 Fiscal Year<br>
<br>
I would let the board fix the fiscal year, with it initially as
the calendar year.</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal"><span style="color:#c0504d">The fiscal year is
most commonly listed in the bylaws. While not a statutory
requirement, many banks and other institutions prefer it be
listed in the bylaws. The fiscal year as initially established
is the calendar year. If the board wants to change it, we can
amend the bylaws. If Evergreen wants to remove it from the
bylaws, we can add it to the consent resolution. However, any
change to the fiscal year would still need to be approved in a
resolution of the board signed by all members.</span><br>
<br>
Section 6:9 Executive Director<br>
<br>
I would beef up this section to anticipate the possibility of
other employees.</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal"><span style="color:#c0504d">This section is
intentionally left vague as the board does not anticipate hiring
any employees, but does plan to retain an outside company to
handle its operations. We do not recommend having two companies
or individuals designated to the same “executive director”
position. The board can hire other contractors (or employees)
to perform any number of functions, but we would not recommend
vesting more than one person/entity with the title “executive
director”.</span><br>
<br>
Section 6:11 Books and Records<br>
D. Inspection Procedure<br>
<br>
I would consider deleting "(c) demonstrate a direct connection
between the purpose for<br>
inspection and the requested records." I don't understand why a
Director should have to explain why they want to see the records.
It seems like an unnecessary bar - I think Directors should be
engaged with the org.</p>
<p class="MsoNormal"> </p>
<p class="MsoNormal"><span style="color:#c0504d">The bylaws also
note that the directors can inspect corporate records in
accordance with applicable law. We have the limitation
regarding connection in the documents as we have seen litigation
tactics from activist directors who are in opposition to the
corporation use their inspection rights offensively in the
litigation to cause the corporation to waste time and money.
For the most part, directors do not use the formal process
specified in the bylaws to request information if the
relationship is healthy (they just email the appropriate person
and such information is provided).</span><br>
<br>
Section 6:12 Indemnification and Liability of Directors and
Officers<br>
D.<br>
A majority of the board determines whether a Director was acting
in good faith, etc. in order for the indemnity kicks in. If we're
at the point where this section is invoked, something has gone
very wrong. Does it make sense that the majority of the board are
the ones to decide if the standard is met? I could imagine
situations that are very muddy. At least consider putting in a
limit on the discretion of the board in that case.<br>
<br>
<span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d"></span></p>
<p class="MsoNormal"><span style="color:#c0504d">This limitation is
standard in most bylaws. The limitation protects the
corporation from a director seeking to take advantage of the
indemnification section by invoking it to fund litigation
adverse to the corporation’s interest. We have seen
indemnification sections invoked by directors that use the
section to fund the director’s own litigation against the
corporation. If the majority approval is not obtained, the
indemnification section will still apply if the director obtains
a court order enforcing the section, so the board cannot
override the indemnification provided in the bylaws.</span><span class="m_1548048757111756690m_3182426618930827149HOEnZb"><font color="#888888"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d"></span></font></span></p><span class="m_1548048757111756690m_3182426618930827149HOEnZb"><font color="#888888">
<p class="MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1f497d"> </span></p>
<pre class="m_1548048757111756690m_3182426618930827149m_580109734089555604m_-6124097201823154717moz-signature" cols="72">--
Donna Bacon
Executive Director
MOBIUS
111 E Broadway, Ste 220
Columbia, MO 65203
573.268.1845</pre>
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<br></blockquote></div><span class="m_1548048757111756690HOEnZb"><font color="#888888"><br><br clear="all"><br>-- <br><div class="m_1548048757111756690m_3182426618930827149gmail_signature" data-smartmail="gmail_signature"><div dir="ltr"><div><div><div><div>Ronald A. Gagnon<br></div>Executive Director<br></div>North Of Boston Library Exchange (NOBLE)<br></div>Danvers, Massachusetts 01923<br>978-777-8844<br></div><a href="http://www.noblenet.org" target="_blank">www.noblenet.org</a><br></div></div>
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