Special Committee on Legal Liability, June 30, 1998 Page 2

JUL-06-98 15:25 From: ICE MILLER FLR 34 13172362219 T-284 P.02/03 Job-194

HERRON-MORTON NEIGHBORHOOD ASSOCIATION

Minutes of the Meeting of the
Special Committee on Legal Liability
June 30, 1998

Members present were Kathy Shortridge, John Carter and Jan Steinhoff. Michael Beason
attended to provide technical support, as did Neighborhood Association President, Greg Hattenbach.

The meeting began by discussing its charge with Greg Hattenbach. It was decided that the
Committee would focus on the following areas:

The Committee established three general goals:

1. To determine what type of actions can expose a not-for-profit
organization to liability;

2. Determine whether recent actions by a Board member or
members may have exposed the organization to any potential
liability; and

3. Make recommendations that the organization should pursue
to limit liability with respect to any foreseeable incident which
would create a risk of legal liability.

The Committee then began discussing the general problems of potential legal liability for the
Board, individual members of the Board, and the organization as a whole. Michael Beason made a
brief presentation touching on a number of fundamental legal points. By statue, there would
generally speaking be no personal liability for a Board member or member of a non-for-profit
organization. However, the organization is liable for the authorized actions of its members, and the
assets of the organization are potentially recoverable in damages if a member speaking on behalf of
the organization commits a tort, such as libel or slander, or if there is personal injury attributable to
the organization's property.

This raises the question of what a member of the organization, or a Board member, is
authorized to do on behalf of the organization, which is the central focus of this Committee. Michael
made it clear that, even in a voluntary organization, some types of institutional controls are necessary
to protect the well-being of the organization.

The Committee decided to break into two subcommittees to focus on the two types of issues
which were raised in the general discussion. Committee SIGMA is concerned with systems and
procedures. It will be responsible for reviewing the basic legal documents concerning the conduct