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HomeMy WebLinkAboutOB 2 GENL PUR FDTN 01-19-93OLD BUSINESS NO. 2 N-M, D A �j 1-19-93 Inter -Com tet, )'VkTE: JANUARY 13, 1993 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: WILLIAM A. HUSTON, CITY MANAGER SUBJECT: STATUS REPORT - GENERAL PURPOSE NON-PROFIT FOUNDATION The City Council authorized attorney John Francis to prepare the By-laws and Articles of Incorporation for a general purpose non-profit foundation. Attached is a letter from Mr. Francis regarding the draft By-laws and Articles of Incorporation. Mr. Francis will attend the City Council meeting to make a presentation regarding the draft documents and discuss with the City Council the options for handling the policy issues referred to in his letter. Mr. Francis will finalize the documents after the City Council considers the policy issues. WAH Att c ment nonprof.wah JOHN W. FRANCIS ATTORNEY AT LAW 761 WEST KIMBERLY AVENUE PLACENTIA, CALIFORNIA 92670 TELEPHONE (714) 996-3361 FACSIMILE (714) 996-1031 December 29, 1992 Mr. William A. Huston City Manager City of Tustin 15222 Del Amo Avenue Tustin, California 92680 RE: City -Related Nonprofit Corporation Matters Dear Bill: y f I found some time this week to begin work on draft Articles of Incorporation and Bylaws for the nonprofit corporation the City of Tustin is considering creating. I thought it might be useful if the members of the City Council had these materials well in advance of the meeting on January 18 where I will be in attendance. I have used the name, "The Tustin Community Foundation, " just as an example. Almost everything in the Articles of Incorporation is there to satisfy the Secretary of State, Franchise Tax Board or Internal Revenue Service. The Bylaws are the operational provisions for conducting the business of the organization. As I indicated in the discussions you and I had, the most significant decisions the City Council will need to make relate to the Board of Directors, including the number of directors, their terms of office, who will nominate directors, how many nominees will each member of the City Council have, by what vote of the City Council will such nominees be elected, can members of the City Council serve as directors, how are vacancies filled, etc.. Let me provide a couple of approaches used by other cities with whom I have worked. One city had a board of directors with five directors. Each position on the Board was linked to a particular City Council seat. The Council members each nominated one individual and then a 4/5 vote of the Council was required to elect. Three of the first five directors served four year terms and the other two served two year terms to coincide with the terms of their nominators. Another city required each Council member to nominate two Mr. William A. Huston December 29, 1992 Page 2 individuals for the Board with the election of the five directors made by a majority vote of the Council. Another city had five directors selected in the manner described first above plus two members of the City Council elected by a majority of the Council. Another city had five directors elected in that same manner plus two directors selected by the nonprofit's Board. These, of course, are only a few of the possible ways in which the Board can be constituted. I would, however, have one strong recommendation: at least a majority of the directors should be elected by the City Council under any plan that the City Council ultimately devises. I would note in passing that it is desirable to start out with a relatively small number of directors --five to seven --and, if circumstances dictate, expand the size of the Board later. For illustrative purposes, I have designated the officers as chairperson, vice chairperson and secretary -treasurer. The more traditional designations of president and vice president can also be used. The Secretary of State requires that there be a minimum of three officers, a chief executive officer, a chief financial officer (by whatever names) and a secretary. The chief executive officer cannot also be either the chief financial officer or the secretary. Any other officer can hold either or both positions. The chief financial officer can also be the secretary (secretary - treasurer) or the two positions can be separate offices held by two persons. Again, just as a place marker, I have scheduled the annual meeting of the Board on the third Tuesday in January (Article V, Section 6 and Article VI, Section 2). The only legally required business that must be transacted at the annual meeting is the election of officers. The annual meeting may be held on the same date, and immediately preceding, one of the regular Board meetings. Bill, if there is any aspect of the draft Articles of Incorporation and Bylaws that you believe I should elaborate upon or clarify in writing before I meet with the City Council, please let me know. If there is any other matter relating to the creation of a city - related nonprofit corporation that you would want me to discuss with the Council (or which the Council already has or may develop) , I would be appreciative if you would let me know what they are so that I can adequately respond to them on January 18. Mr. William A. Huston December 29, 1992 Page 3 I am looking forward to working with you, your staff and the Council on this project. Very truly yours, JoAn W. Fr4ncia A orney at Law JF:sr Enclosure a ARTICLES OF INCORPORATION OF THE TUSTIN COMMUNITY FOUNDATION 04 The name of this corporation is: THE TUSTIN COMMUNITY FOUNDATION two This corporation is a nonprofit public benefit corporation and is not organized for the private gain of any person. It is organized under the Nonprofit Public Benefit Corporation Law for public and charitable purposes. This corporation shall never operate for the primary purpose of carrying on a trade or business for profit. III The public and charitable purposes for which this corporation is organized are to lessen the burdens of government and to promote and support the cultural, recreational and human services needs of the City of Tustin. IV This corporation is not organized, nor shall it be operated, for pecuniary gain or profit, and does not contemplate the distribution of gains, profits or dividends to its members or to any private shareholder or individual. The property, assets, profits, and net income of this corporation are irrevocably dedicated to the public and charitable purposes set forth in Article III, and no part of the profits or net income of this corporation shall ever inure to the benefit of any private shareholder or individual except that this provision shall not be construed so as to prevent the payment to directors, officers, or employees of reasonable compensation for services actually rendered to this corporation. VA No substantial part of the activities of this corporation shall consist of the carrying on of propaganda, or otherwise attempting to influence legislation, nor shall this corporation participate or intervene in any political campaign (including publishing or distribution of statements) on behalf of or in opposition to any candidate for public office. Notwithstanding any other provision of these articles, the corporation shall not carry on any other activities not permitted to be carried on (a) by a corporation exempt from Federal income tax under Section 501(c)(3) of the Internal Revenue Code of 1986 or (b) by a corporation contributions to which are deductible under Section 170(c)(2) of the Internal Revenue Code of 1986. VI The name of the agent of this corporation for service of process is John W. Francis 761 West Kimberly Avenue Placentia, California 92670 VII All of the directors of this corporation shall be selected by the Tustin City Council. Any vacancy occurring on the Board of Directors shall be filled by the Tustin City Council. The number of directors, the manner in which they shall be removed from office, their qualifications, powers, duties, compensation and 2 tenure of office, and the manner of calling and holding meetings of directors, shall be as stated in the Bylaws. VIII (1) This corporation shall have no members other than the persons constituting its Board of Directors. The persons constituting its Board of Directors shall, for the purpose of any statutory provision or rule of law relating to nonprofit corporations otherwise, be taken to be the members of such corporation and exercise all the rights and powers of members thereof. (2) The Board of Directors shall have the power: (a) to modify any restriction or condition on the distribution of funds for any specified charitable purposes or to specified organizations, if in their sole judgment (without the approval of any trustee, custodian, or agent), such restriction or condition becomes, in effect, unnecessary, incapable of fulfillment, or inconsistent with the charitable needs of the City of Tustin; (b) to replace any participating trustee, custodian, or agent for breach of fiduciary duty under the laws of the State of California; and (c) to replace any participating trustee, custodian, or agent for failure to produce a reasonable (as determined by the Board of Directors) return of net income (or appreciation when not inconsistent with this community trust's need for current income) with due regard to safety of principal, over a reasonable period of time (as determined by the Board of Directors). 3 (3) In determining whether there is a reasonable return of net income with respect to the exercise of the power described in subparagraph (c) of Paragraph (2) of this Article, (a) there shall be excluded from such determination such assets as are held for the active conduct of this community trust's exempt activities; and (b) such determination shall be made separately with respect to each restricted fund and shall be made in the aggregate with respect to the unrestricted funds of this community trust. A "restricted fund" means a fund, any income of which has been designated by the donor of the gift or bequest to which such income is attributable as being available only for the use or benefit of a named charitable organization or agency or for the use or benefit of a particular class of charitable organizations or agencies, the members of which are readily ascertainable and are less than five in number. (4) If it appears that there may be grounds for exercising the power described in subparagraphs (b) or (c) of Paragraph (2) of this Article with respect to any fund, the Board of Directors shall notify the participating trustee, custodian, or agent involved and provide a reasonable opportunity for explanation and/or correction. Before exercising the power granted to the Board of Directors under subparagraphs (b) or (c) or Paragraph (2) or this Article, the Board of Directors may seek advice of legal counsel as to whether a breach or failure has been committed under the laws of the State of California. The Board of Directors shall exercise a power 4 described in this Article only upon the vote of a majority of the members of the Board of Directors. (5) Upon the exercise of the power under subparagraphs (b) or (c) or Paragraph (2) of this Article to replace any participating trustee, custodian, or agent, the Board of Directors shall have the power to select a successor trustee, custodian, or agent to whose custody the fund or funds held by the former trustee, custodian, or agent shall be transferred. IX The directors shall not be personally liable for the debts, liabilities, or obligations of this corporation. X Each member of the Board of Directors shall have one vote. There shall be no proxy voting permitted for the transaction of any of the business of this corporation. XI Upon dissolution of this corporation, net assets other than trust funds shall be distributed to one or more nonprofit corporations organized and operated for the benefit of the City of Tustin, such corporation or corporations to be selected by the City Council. Such nonprofit corporation or corporations must be qualified for Federal income tax exemption under Section 501(c)(3) of the Internal Revenue Code of 1986, and be organized and operated exclusively for charitable purposes. In the alternative, upon dissolution of the corporation, net assets other than trust funds shall be distributed to the City of Tustin. In no event shall any 5 assets be distributed to any member, director, or officer of this corporation. XII The Articles of Incorporation of this corporation shall not be amended without the vote of a majority of the total voting membership of the Board of Directors. IN WITNESS WHEREOF, for the purpose of forming this nonprofit corporation under the laws of the State of California, I, the undersigned, constituting the incorporator of this corporation, have executed these Articles of Incorporation this day of January, 1992. 0 Incorporator BYLAWS OF THE TUSTIN COMMUNITY FOUNDATION ARTICLE I Name The name of this Corporation shall be the Tustin Community Foundation. ARTICLE II Principal Office The principal office of this Corporation for transaction of business is located in the City of Tustin and the County of Orange, California, at 300 Centennial Way, Tustin, CA 92680. The Board of Directors has full power and authority to change the principal office of this Corporation from one location to another in the City of Tustin, California. ARTICLE III Purpose The purposes of the Tustin Community Foundation are to lessen the burdens of government and to promote and support the cultural, recreational and human services needs of the City of Tustin. ARTICLE IV Membership This Corporation shall have no members other than the persons constituting its Board of Directors. The Board of Directors shall, under any statute or rule of law, be the members of this Corporation and shall have all the rights and powers members would otherwise have. ARTICLE V Board of Directors Section 1. Number of Directors. The number of Directors shall not be less than five (5) nor more than fifteen (15), the exact number to be specified from time to time by the Tustin City Council. Section 2. Powers of Directors. Subject to the provision of the California Nonprofit Corporation Law and any limitations in the Articles of Incorporation and these Bylaws, the business and affairs of this Corporation shall be managed, and all corporate powers shall be exercised by or under the direction of the Board of Directors. The Board of Directors may delegate the performance of any duties or the exercise of any powers to such officers or agents as may from time to time by resolution be designated. Section 3. Selection and Term of Office. The Board of Directors shall be comprised of ( ) members elected by a vote of the full City Council. Each board member shall serve for a term of four (4) years; except for the first ( ) members elected to the Board of Directors, of which ( ) members shall serve terms of four (4) years each and ( ) members who shall serve terms of two (2) years each. This section is not subject to amendment, change or alteration in any of its clauses or provisions without the consent of the Tustin City Council. Section 4. Vacancies. A vacancy in any Director position because of removal, death, resignation, expiration of term or otherwise, shall be filled by a vote of the Tustin City Council. Any person selected to fill a vacancy on the Board of Directors shall hold office for the unexpired term of his or her predecessor in office, subject to the power of removal contained herein. Section 5. Voting. Each member of the Board of Directors shall have one vote. There shall be no proxy voting permitted for the transaction of any of the business of this Corporation. ARTICLE VI Meetings of Board of Directors Section 1. Annual Meeting There shall be an annual meeting of the Board of Directors on the third Tuesday in January each year. Such meeting shall be for the purpose of electing Directors and for the transaction of such other business as may come before the meeting. Section 2. Regular Meetings. Regular meetings of the Board of Directors for any purpose or purposes shall be called at any time by the Chairperson. The Chairperson shall be required to call a meeting upon the joint request of any ( ) members of the Board. All meetings of the Board of Directors shall be governed by Robert's Rules of Order, including such revisions thereof as may from time to time be published, except insofar as such rules are inconsistent with these Bylaws, with the Articles of Incorporation, or with applicable law. Section 3. Place of Meetings. Meetings of the Board of Directors shall be held at any place within this State which has been designated from time to time by resolution of the Board or by written consent of all members of the Board. In the absence of such designation, meetings shall be held at the Tustin City Hall. Section 4. Notice of Meetings. (a) Written notice of every regular meeting shall be given each Director at least seven (7) days before each meeting. Notice may be delivered personally or by mail to the last known address of the addressee and, if mailed, is complete upon mailing. Written notice of any meeting shall also be given pursuant to this subsection to any person who requests such notice in writing. K (b) An agenda listing the matters to be considered at each meeting shall be given to each Director, and to any person so requesting, at least seven (7) days before the meeting. (c) Notwithstanding anything in the section to the contrary, the Chairperson may call an emergency meeting of the Board without giving the normal notice if such a meeting is necessary to consider any unforeseen emergency condition. An emergency condition for the purpose of this subsection is any condition that, if not addressed by the Board promptly, may result in a detriment to this Corporation or to the City of Tustin. Notice of any emergency meeting may be delivered personally, by telephone or mailed, and shall be received at least twenty-four (24) hours before the time of such meeting. Section 5. Open Meetings. All meetings of the Board shall be open and public, and all persons shall be permitted to attend any meeting of the Board, provided, however, that the Board may hold closed sessions during any meeting to consider those matters that may lawfully be considered in such sessions under Chapter 9 of Part 1 of Division 2 of Title 5 of the Government Code, commencing with Section 54950. Section 6. Quorum. A majority of the total number of voting Directors who are presently holding office shall constitute a quorum for the transaction of business at every meeting. Every act or decision done or made by a majority of the Directors present at a meeting at which a quorum is present shall be regarded as the act of the Board of Directors. Section 7. Minutes of Meetings and Conduct. Regular minutes of the proceedings of the Board of Directors shall be kept in a book provided for that purpose. The Chairperson shall preside at meetings of the Board of Directors. The Board of Directors may adopt its own rules of procedure insofar as such rules are not inconsistent with, or in conflict with, these Bylaws, the Articles of Incorporation of the Corporation or with the law. Section 8. Resignation and Removal of Directors. Any Director may resign from the Board of Directors at any time by giving written notice to the Chairperson or the Secretary -Treasurer. The acceptance of such a resignation shall not be necessary to make it effective. Directors of this Corporation may be removed at any time without cause by the vote of the Directors, subject to the approval by a vote of the City Council. This section is not subject to amendment, change or alteration in any of its clauses or provisions without the consent of the Tustin City Council. Section 9. Compensation of Directors. No Director shall receive any salary or other similar compensation for any services as a Director, however, the Board of Directors may authorize the 3 reimbursement of actual and necessary expenses incurred by individual Directors performing duties as Directors. Section 10. Inspection by Directors. Each Director shall have the right at any reasonable time to inspect all books, records, and documents of every kind and the physical properties of the Corporation for a purpose reasonably related to such person's interest as a Director, provided that such Director shall not have the right to inspect those books, records or documents made privileged or confidential by law. This inspection must be made by the Director in person, and the right of inspection includes the right to copy and make extracts of documents. ARTICLE VII Officers Section 1. Officers. The officers of this Corporation shall be a Chairperson, Vice Chairperson, and Secretary -Treasurer. Section 2. Election. The Board of Directors shall elect all officers of this Corporation for terms of one year, or until their successors are elected and qualified. The annual election shall be held on the third Tuesday in January. All officers shall be drawn from the Board membership. Section 3. Chairperson. Subject to the control of the Board of Directors, the Chairperson shall preside at all meetings of the Board, and shall have such other powers and duties as may be prescribed from time to time by the Board of Directors. The Chairperson shall have a vote on all matters. Section 4. Vice Chairperson. In the absence or disability of the Chairperson, the Vice Chairperson shall perform all the duties of the Chairperson. The Vice Chairperson shall have such other powers and perform such other duties as may be prescribed from time to time by the Board of Directors. Section 5. Secretary -Treasurer. The Secretary -Treasurer shall assist the Chairperson in the preparation of the agendas for the meetings, shall keep a full and complete record of the proceedings of all meetings of the Board of Directors, shall keep the seal of this Corporation and affix the same to such papers and instruments as may be required in the regular course of business, shall provide such notices as may be necessary and proper, shall supervise the keeping of the books of this Corporation and shall discharge such other duties as pertain to the office or as prescribed by the Board of Directors. The Secretary -Treasurer shall be the chief financial officer of this Corporation and, if so required by the Board of Directors, shall give a bond for the faithful discharge of his or her duties in such sum and with such surety as the Board of Directors shall deem appropriate. The Secretary -Treasurer shall submit an annual report to the Board on or about the first Monday 4 in October of each year. In case of the absence or disability of the Secretary -Treasurer, or his or her refusal or neglect to act, such notices may be provided by the Chairperson, or by the Chairperson or by any person thereunto authorized by the Chairperson or by the Vice Chairperson, or by the Board of Directors. ARTICLE VIII Committees Section 1. Committees. The Board may appoint one or more committees, each consisting of two or more Directors, and delegate to such committees any of the authority of the Board except with respect to: (a) The filling of vacancies on the Board or on any committee; (b) The fixing of compensation of the Directors for serving on the Board or on any committee; (c) The amendment or repeal of Bylaws or the adoption of any new Bylaws; (d) The amendment or repeal of any resolution of the Board which by its express terms is not to amendable or repealable; (e) The appointment of other committees of the Board or the members thereof; or (f) The approval of any self-dealing transaction, as such transactions are defined in Section 5233(a) of the California Nonprofit Public Benefit Corporation Law. Any such committee must be created, and the members thereof appointed, by resolution adopted by a majority of the Directors then in office, provide a quorum is present. Any such committee may be designated an Executive Committee or by such other name as the Board shall specify. The Board may appoint, in the same manner, alternate members of any committee who may replace any absent member at any meeting of the committee. The Board shall have the power to prescribe the manner in which proceedings of any such committee shall be conducted. In the absence of any such prescription, such committee shall have the power to prescribe the manner in which its proceedings shall be conducted. Minutes shall be kept of each meeting of each committee. ARTICLE IX Indemnification of Directors, Offices, and Other Agents Section 1. Right of Indemnity. To the fullest extent permitted by law, this Corporation shall indemnify its Directors, Officers, employees, and other persons described in Section 5238(a) of the 5 California Corporations Code, including persons formerly occupying any such position, against all expenses, judgments, fines, settlements and other amounts actually and reasonably incurred by them in connection with any "proceeding," as that term is used in that Section, and including an action by or in the right of the Corporation, by reason of the fact that the person is or was a person described in that section. "Expenses," as used in this bylaw, shall have the same meaning as in Section 5238(a) of the California Corporations Code. Section 2. Approval of Indemnity. On written request to the Board by any person seeking indemnification under Section 5238(b) or Section 5238(c) of the California Corporations Code, the Board shall promptly determine under Section 5238(e) of the California Corporations Code whether the applicable standard of conduct set forth in Section 5238(b) or Section 5238(c) has been met and, if so, the Board shall authorize indemnification. Section 3. Advancement of Expenses. To the fullest extent permitted by law and except as otherwise determined by the Board in a specific instance, expenses incurred by a person seeking indemnification under these Bylaws in defending any proceeding covered by those Sections shall be advanced by the Corporation before final disposition of the proceeding, on receipt by the Corporation of an undertaking by or on behalf of that person that the advance will be repaid unless it is ultimately determined that the person is entitled to be indemnified by the Corporation for those expenses. Section 4. Insurance. The Corporation shall have the right to purchase and maintain insurance to the full extent permitted by law on behalf of its Officers, Directors, employees, and other agents, against any liability asserted against or incurred by any Officer, Director, employee, or agent in such capacity or arising out of the Officer's, Director's, employee's or agent's status as such. ARTICLE X Contracts, Loans, Checks, Deposits and Gifts Section 1. Contracts. The Board of Directors may authorize any officer or agent of the Corporation, in addition to the Officers so authorized by these Bylaws, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances. Section 2. Loans. The Board of Directors shall not make any loan of money or property to or guarantee the obligation of any Director or officer, C.1 Section 3. Borrowing. No loan shall be contracted on behalf of the Corporation and no evidence of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors. Section 4. Checks, Drafts, Etc. All checks, drafts, or other orders for payment of money, and all notes or other evidence of indebtedness issued in the name of the Corporation shall be signed by such officer or officers, agent or agents of the Corporation and in such manner as, from time to time, shall be determined by the resolution of the Board of Directors. Section 5. Deposits. All funds of the Corporation shall be deposited from time to time to the credit of the Corporation in such banks, trust companies, or other depositories as the Board of Directors may select. Section 6. Gifts. The Board of Directors may at their discretion accept ,on behalf of the Corporation any contribution, gift, bequest, or devise for the general purposes or for any specific purpose of the Corporation. ARTICLE XI Conflict of Interest No member of the Board of Directors shall be financially interested in any contract or other.transaction entered into by the Board of Directors, and any contract or transaction entered into in violation of this is void. No Director may utilize information obtained by reason of Board membership for personal gain, and the Board of Directors may recover any such gain realized. ARTICLE XII Miscellaneous Section 1. Fiscal Year. The fiscal year of the Corporation shall begin on the first day of July and end on the last day of June in each year unless otherwise determined by resolution of the Board of Directors. Section 2. Rules. The Board of Directors may adopt, amend, or repeal rules not inconsistent with these Bylaws for the management of the internal affairs of the Corporation and the governance of its officers, agents, committees, and employees. Section 3. Books and Records. The Corporation shall keep correct and complete books and records of the account and minutes of the proceedings of the Board of Directors and committees. Copies of 7 the minutes of the Board of Directors and of the committees shall be regularly distributed to each member of the Board of Directors. Section 4. Corporate Seal. The Board of Directors may provide a corporate seal, which shall be in the form of a circle and shall have inscribed thereon the name of the Corporation, the date of its incorporation, and the word "California." Section 5. Waiver of Notice. Whenever any notices are required to be given under the provisions of the Nonprofit Corporation Act of the State of California, or under the provisions of the Articles of Incorporation of the Corporation, or these Bylaws, a waiver thereof in writing signed by the persons entitled to such notice, whether dated before or after the time stated herein, to the extent permitted by law, shall be deemed equivalent to the giving of such notice. ARTICLE XIII Amendment of Bylaws These Bylaws maybe amended at any regular meeting of the Board of Directors by a majority vote of the total voting membership of the Board of Directors, providing that the amendment has been submitted in writing at the previous regular meeting. CERTIFICATE OF SECRETARY -TREASURER I, the undersigned, do hereby certify under penalty of perjury. 1. That I am the duly elected and acting Secretary -Treasurer of the Tustin Community Foundation, a California corporation; and 2. That the foregoing Bylaws comprising of eight (8) pages, including this page, constitutes the Bylaws of said Corporation as duly adopted at a meeting of the Board of Directors thereof duly held on the day of , 1993. IN WITNESS WHEREOF, I have hereunto subscribed my name on this day of , 1993. Secretary -Treasurer 8