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I concur, these seem like positive changes to support to growth and continued operations of the exchange. Thanks Richard for all of this effort. s On Thu, Feb 24, 2022 at 21:26 Reid Fishler < [log in to unmask]> wrote: > I just want to be the first to mention how much work Richard has put into > this as the person interfacing with the laywer, and personally thank him > for his dedication to it. Thanks! > > Reid > > > On Thu, Feb 24, 2022 at 11:19 PM Richard Laager <[log in to unmask]> > wrote: > >> At the last meeting, we discussed various bylaws issues. This started >> with the quorum issue. I was short on the official notice period for the >> last meeting, plus there was a desire for legal advice on certain >> questions, so we held off on voting on things. >> >> As promised, I engaged a lawyer at Moss & Barnett. I consulted with him >> on the questions, he drafted bylaws changes, I reviewed them, and then the >> board reviewed them. The results of this are below. I have numbered the >> changes for ease of reference, but the order is not significant; each >> amendment is standalone. >> >> The Board recommends adoption of all changes. >> >> The Proposed (all changes) and Current bylaws are attached. >> >> Please review and comment here on the mailing list. Out of respect for >> people's time, I would like to avoid a long interactive meeting, limiting >> that to primarily voting. "Speak now or forever hold your peace" as it were. >> >> >> *Change 1: Quorum* >> >> This is the issue that we have discussed at length before. There seemed >> to be a consensus on this previously. Our lawyer's view was that the >> proposed language was fine. But when he actually integrated it into the >> text, he did use slightly different structure, giving them "(i)" and "(ii)" >> prefixes. So this is now using the lawyer's wording. >> >> ACTION: >> >> Amend the first sentence of section 1.11 "Quorum" to insert the words, >> "the lesser of (i) ten (10) members entitled to vote or (ii)", such that it >> now reads: >> >> Members representing *the lesser of (i) ten (10) members entitled to >> vote or (ii)* ten percent (10%) of the voting power of the membership >> interests entitled to vote at a meeting of the members are a quorum for the >> transaction of business. >> >> >> *Change 2: Affiliates* >> >> As discussed at the last meeting, we wanted to add to the bylaws (where >> it belongs) the longstanding MICE policy that affiliated members (e.g. >> parent companies and subsidiaries) only get one vote. We specifically >> wanted to get a lawyer to draft the language for defining this. >> >> Originally, we were (or at least I was) thinking that we wanted >> self-executing language (e.g. if two members merge, one of the entities >> *automatically* loses membership status). The lawyer strongly advised >> against this. First off, for that to work, the language has to be >> deterministic at the point the e.g. merger happens. For example, there is >> no way for the merged entities to indicate which will be the member moving >> forward. Second, he advised this creates a risk of ultra vires actions. >> Imagine some members merge, then we elect a board member in a nearly-tied >> election, then the board makes some decisions, etc. etc. Later, we find out >> about a merger that predated the election, and that changed the result of >> the election. Now you have to try to unwind all that? While that particular >> possibility is remote, ultimately he recommended a different approach, >> which is what is taken here. >> >> This change creates an affirmative duty for members to notify MICE of >> mergers. It allows the board to refuse to admit the second entity (for new >> member scenarios) and to terminate the membership of all-but-one affiliate >> (for e.g. the merger scenario). This is the procedure we have been using. >> >> This also includes a language cleanup to clarify what "Board" means. This >> is just a cleanup. >> >> The Bylaws allow the Board to amend the membership qualifications >> section, and that was the original plan discussed at the last meeting. But >> since the members are already voting on bylaws changes, the board is >> bringing this to the members too. This also allows for the language cleanup >> in section 1.1 and the section 1.16 change. >> >> ACTION: >> >> Amend section 1.1 "Membership Qualifications" to make the existing text >> subsection "(a)". >> >> Amend section 1.1 (a) to insert the text, " of Governors of the Company >> (the “Board” or “Board of Governors”)" after the first occurrence of >> "Board", such that it reads: >> >> In order to qualify for membership, a member shall be: (i) an operator of >> an internet protocol network which has one or more direct, or approved >> indirect, connections to Midwest Internet Cooperative Exchange LLC’s (the >> “Company”) switches; or (ii) an operator of equipment providing approved >> indirect connections; or (iii) an operator of a colocation data center in >> which the Company’s switches are located. A member may be elected by the >> membership or appointed to membership by the Board* of Governors of the >> Company (the “Board” or “Board of Governors”)*. Members may have such >> other qualifications as the Board may prescribe by amendment to this >> Operating Agreement. >> >> Add a subsection 1.1 (b) that reads: >> >> Each member shall have an affirmative duty to disclose the identity each >> of its Affiliates that is a member of the Company. “Affiliate” means, with >> respect to any entity, (i) any other entity directly or indirectly >> controlling, controlled by, or under common control with such specified >> entity, or (ii) any other person or entity owning or controlling fifty >> percent (50%) or more of the outstanding voting securities of such entity. >> For purposes of the foregoing, the term “control” (including, with >> correlative meanings, the terms “controlled by” and “under common control >> with”), as applied to any entity, means the possession, directly or >> indirectly, of the power to cause the direction of the management and >> policies of such entity, whether through the ownership of voting or other >> securities, by contract or otherwise. The Board may refuse to admit any >> entity that is an Affiliate of a member or may condition such admission on >> the acknowledgment that such entity and each of its Affiliates, will only >> have one member vote which may only be exercised by one of the affiliated >> members. >> >> Amend section 1.16 "Resignation, Expulsion or Suspension of Members" to >> add a subsection (d) that reads: >> >> Notwithstanding the foregoing, the Board may terminate the membership of >> one or more members who are Affiliates, such that such Affiliates shall >> only have one member vote. The intention of this provision is to prevent >> the concentration of voting power in members who are under common ownership >> or common control. >> >> >> *Change 3: Action Without a Meeting* >> >> This cleanup was proposed by the lawyer, when reviewing the bylaws. The >> first sentence says that we can do things without a meeting by *every >> single member* consenting to it. As a practical matter, that would never >> happen. It's also duplicative, since the second sentence says we can do >> things without a meeting with a *majority* of all members. >> >> ACTION: >> >> Amend section 1.13 "Action Without a Meeting" to strike the first >> sentence, "Any action required or permitted to be taken at a meeting of the >> members may be taken by written action signed, or consented to by >> authenticated electronic communication, by all the members entitled to vote >> on such action." >> >> >> *Change 4: Removal of Board Members* >> >> The lawyer found a number of concerns in the existing language (drafting >> errors, referencing the wrong statute, etc.) and procedure. He basically >> felt that it needed to be thrown out and completely redrafted. >> >> The current bylaws allow the members to remove a governor, with or >> without cause, by a "[two-thirds] majority" (drafting errors per original). >> At our current size, this is effectively impossible. The proposed change >> allows the members to remove a governor, with or without cause, by a >> majority (of *all* members, not just those voting on the issue), which >> is still a very high bar, but far more possible should the need arise. >> >> The current bylaws allow the board to remove a governor only if the board >> appointed that governor in the first place. The proposed change allows the >> board to remove a governor for cause (which is defined in quite a bit of >> detail) or disability (also defined). >> >> The Board had significant discussion on this change. There are two >> directly opposite concerns here, and any solution is going to involve some >> compromise. First, it is desirable to be able to remove a governor, >> promptly, when this is legitimate. Second, it is desirable to slow down or >> prevent removing a governor when this is illegitimate. >> >> We ultimately went back to the lawyer asking him to provide a mechanism >> by which a removal could be reviewed by the members. This ended up raising >> the question of notice to the removed governor. Initially notice was >> required by implication; this was made explicit. As part of this, section >> 1.14(d) "Notice to Members" was then copied, with s/member/governor (and >> the "(1)" and "(2)" labels removed), as 2.11(c). >> >> ACTION: >> >> Amend section 2.11 to add a subsection (c) which reads: >> >> Any notice to governors given by the Company or the Board by a form of >> electronic communication consented to by the governor to whom the notice is >> given is effective when given. The notice is deemed given by: >> >> (i) facsimile communication, when directed to a telephone number at >> which the governor has consented to receive notice; >> >> (ii) electronic mail, when directed to an electronic mail address at >> which the governor has consented to receive notice; >> >> (iii) a posting on an electronic network on which the governor has >> consented to receive notice, together with separate notice to the governor >> of the specific posting, upon the later of: (i) the posting; and (ii) the >> giving of the separate notice; and >> >> (iv) any other form of electronic communication by which the governor >> has consented to receive notice, when directed to the governor. >> >> Consent by a governor to notice given by electronic communication may be >> given in writing or by authenticated electronic communication. The Company >> and the Board is entitled to rely on any consent so given until revoked by >> such governor, provided that no revocation affects the validity of any >> notice given before receipt by the Company or the Board of revocation of >> the consent. >> >> Replace the contents of section 2.17 "Removal of Governors" entirety with: >> >> (a) *Removal for Cause or Disability by the Governors*. The Board >> may remove a governor for Cause or Disability by the unanimous vote of the >> governors, excluding the governor to be removed (the “*Voting Governors*”). >> “*Cause*” shall exist if the Voting Governors determine in good faith >> that the governor to be removed (i) has failed to discharge his, her, or >> their duties as governor in good faith, (ii) has breached his, her, or >> their fiduciary duties to the Company or its members, (iii) has committed >> theft, embezzlement or conversion of Company property, (iv) has engaged in >> any illegal activity or fraud in connection with the Company, (v) has been >> convicted of a felony or other crime involving moral turpitude, while a >> governor; (vi) has engaged in a conflict of interest without complying with >> Section 5.1 and 5.2 of this operating agreement or (vii) has engaged in >> acts or omissions which the Board reasonably deems to be materially >> damaging to the name, reputation, or business of the Company or which could >> jeopardize the good will or relationship with its member or other persons >> and entities important to its mission. “*Disability*” a physical or >> mental impairment which prevents the governor from performing his, her, or >> their duties as a governor for a period of not less than 6 months. The >> Board shall send a written notice to the removed governor stating the basis >> for their removal under this Section 2.17(a), within three (3) business >> days following a Board vote removing a such governor. >> >> (b) *Retention Vote by Members*. In the event the Board has removed >> a governor solely for the reasons stated in Section 2.17(a)(i) or (vii) >> (and not for any other reason constituting Cause or Disability), the >> removed governor within ten (10) business days following the dispatch of >> the notice of removal may provide a notice of disagreement with such >> removal and a request to submit such matters to the vote of the Members. >> The Board shall call a meeting of the Members to vote on the retention of >> such governor to be held within 30 days. Prior to such meeting, the >> governor shall continue to be removed subject to later reinstatement by the >> Members by affirmative vote. If the governor is not reinstated by >> affirmative vote, the position shall be filled by a vote of the Members. >> If notice by the removed governor is not given within ten (10) business >> days, the removed governor shall have waived his or her right to challenge >> the removal. No governor shall have the right to appeal or challenge a >> removal by the Board under Section 2.17(a), except as expressly set forth >> in this Section 2.17(b) >> >> (c) *Removal by Members*. Any one or all of the governors may be >> removed at any time, with or without cause, by the affirmative vote of a >> majority of the voting power of all membership interests entitled to vote >> at an election of governors. >> >> -- >> Richard >> >> >> ------------------------------ >> >> To unsubscribe from the MICE-DISCUSS list, click the following link: >> http://lists.iphouse.net/cgi-bin/wa?SUBED1=MICE-DISCUSS&A=1 >> > > > -- > Reid Fishler > Senior Director > Hurricane Electric > +1-510-580-4178 > > ------------------------------ > > To unsubscribe from the MICE-DISCUSS list, click the following link: > http://lists.iphouse.net/cgi-bin/wa?SUBED1=MICE-DISCUSS&A=1 > -- Shaun Carlson Director of R&D and Continuous Innovation 218.346.8673 | [log in to unmask] | Schedule a meeting Arvig | 150 Second Street SW | Perham, MN 56573 | arvig.com