Insurance, Indemnification, and Dissolution

The Commonhaus Foundation (CF) is committed to protecting its team—councilors, officers, employees, and agents—against legal expenses and liabilities they might face while performing their duties in good faith for the Foundation. In simple terms, if individuals are acting with the Foundation's best interests in mind and within the bounds of the law, the Foundation aims to support them.

Below are the detailed policies that outline this support, including the circumstances under which it applies, the process for claiming indemnification, and the Foundation’s rights to procure insurance for further protection. Additionally, the Foundation's approach to dissolution is outlined, ensuring any remaining assets are used to further open source projects in alignment with our mission.

• Insurance
• Indemnification
  • Scope of Indemnification and Standard of Conduct
  • Authorization by the Council
• Dissolution and Asset Distribution
  • Dissolution Steps
  • Procedures for Dissolution

Relevant Florida Statute:

• 607.0850 Definitions.

Insurance

The CF Council (CFC) shall assess the Foundation's risks and evaluate whether to procure insurance coverages, such as Directors and Officers (D&O) Liability insurance, to protect against those risks.

Relevant Florida Statute:

• 607.0857 Insurance.

Indemnification

Scope of Indemnification and Standard of Conduct

Subject to the limitations set forth in this Section, the Foundation shall, to the fullest extent permitted by applicable law, indemnify and hold harmless any person (a “Covered Person”) who is made a party to, or threatened to be made a party to, any action, suit, or proceeding, whether civil, criminal, administrative, or investigative (other than an action by or in the right of the Foundation) (a “Proceeding”), by reason of the fact that they are or were a council member (acting as a director) or officer of the Foundation, against all liability and loss suffered and expenses (including attorneys' fees) reasonably incurred by that person.

The Foundation may, at the discretion of the CF Council (CFC), extend indemnification to employees, committee members, and other agents of the Foundation as determined appropriate by the CFC.

Standard of Conduct.

This indemnification extends to all reasonable expenses (like legal fees), judgments, fines, and settlement amounts that a person may have to pay in connection with a legal action, so long as the person:

1. acted in good faith and in a manner they reasonably believed to be consistent with the best interests of the Foundation, and
2. had no reason to believe their conduct was unlawful, in the case of criminal matters.

This indemnification does not extend to a person who is found liable to the Foundation in an action brought by the Foundation, or to enforce the Foundation's rights. Otherwise, the outcome of an action will not alone create a presumption that a person did not act in good faith, in the best interests of the Foundation, or with lawful intent.

Relevant Florida Statutes:

• 607.0851 Permissible indemnification.
• 617.0831 Indemnification and liability of officers, directors, employees, and agents.
• 617.0834 Officers and directors of certain corporations and associations not for profit; immunity from civil liability.

Authorization by the Council

The Foundation will only indemnify a person if the CF Council (CFC) first determines that indemnification is proper under the circumstances because the person has met the standard of conduct.

This determination must be made by (a) a majority vote of Councilors who were not party to the action, even if less than a quorum, or (b) the members of the Foundation.

Indemnification: Advance Payment. The Foundation shall pay the expenses (including reasonable attorneys' fees) actually and reasonably incurred by a Covered Person in defending any Proceeding for which the Covered Person is entitled to indemnification under this section in advance of its final disposition, upon (a) written request from such person and (b) receipt of an undertaking^[1] by or on behalf of such person to repay all amounts advanced if it is ultimately determined that he or she is not entitled under applicable law to be indemnified by the Foundation.

Indemnification: Non-Exclusivity. A person’s rights to indemnification and advance expenses under this Section are not exclusive of any other right to indemnification or advance expenses that the person may be entitled to.

Indemnification: Continuation; Advancement of Expenses. A person’s right to indemnification and advancement of expenses under this Section shall continue after the person has ceased to be a Councilor, Officer, employee, or agent of the Foundation, and shall inure to the benefit of the heirs, executors and administrators of that person.

Indemnification: Severability. If any part of this Section or any award made hereunder is determined to be invalid, the other provisions remain in full force and effect.

Relevant Florida Statutes:

• 607.0852 Mandatory indemnification.
• 607.0853 Advance for expenses.
• 607.0854 Court-ordered indemnification and advance for expenses.
• 607.0855 Determination and authorization of indemnification.
• 607.0858 Variation by corporate action; application of ss. 607.0850-607.0859.
• 607.0859 Overriding restrictions on indemnification.

Dissolution and Asset Distribution

In the unfortunate event that the Commonhaus Foundation must dissolve, we commit to a responsible and lawful closure process, prioritizing the continuity and integrity of our open source projects. Given that CF projects represent collaborative effort of individual contributors, the dissolution process will respect the unique structure and community-driven nature of each project.

Relevant Florida Statutes:

• 617.1401 Voluntary dissolution of corporation prior to conducting its affairs.
• 617.1402 Dissolution of corporation.
• 617.1403 Articles of dissolution.
• 617.1404 Revocation of dissolution.
• 617.1405 Effect of dissolution.
• 617.1420 Grounds for administrative dissolution.
• 617.1422 Reinstatement following administrative dissolution.
• 617.1423 Appeal from denial of reinstatement.
• 617.1430 Grounds for judicial dissolution.

Dissolution Steps

1. Settling Liabilities: All outstanding debts or obligations incurred by the Foundation will be paid off.
2. Prioritizing Project Continuity: Before distributing any remaining assets, we will first seek to ensure the continuity of CF projects. Preference will be given to transferring projects, including associated trademarks and other intellectual property, to entities capable of supporting the ongoing mission of these projects. This could include other nonprofit groups classified under Section 501(c)(3), business leagues under 501(c)(6), or similar entities aligned with our goals. Our primary aim is to preserve the projects' integrity and purpose, rather than liquidating assets for debt repayment.
3. Asset Distribution: Only after all efforts have been made to secure a future for our projects will remaining assets be distributed in accordance with legal requirements and our mission.
4. Compliance and Court Involvement: Asset distribution will comply with Section 501(c)(6) of the Internal Revenue Code, with a court’s involvement if necessary, to decide on the recipients aligned with our mission, should no suitable organization be identified.

Relevant Florida Statutes:

• 617.1406 Plan of distribution of assets.
• 617.1407 Unknown claims against dissolved corporation.
• 617.1408 Known claims against dissolved corporation.

Procedures for Dissolution

• Decision to Dissolve: The decision to dissolve the CF must be approved by a supermajority vote of the CF Council (CFC).
• Notification: Upon the decision to dissolve, members, stakeholders, and relevant authorities must be notified.
• Asset Distribution: Assets will be allocated in accordance with the dissolution clause and any legal requirements.
• Finalization: All final legal steps required to complete the dissolution will be taken, including filing necessary documents with the appropriate authorities.
• Record Keeping: Records of the dissolution process will be maintained for legal and historical purposes, following the same procedures as outlined in the CF Record Keeping Policy.

Relevant Florida Statutes:

• 617.1421 Procedure for and effect of administrative dissolution.
• 617.1431 Procedure for judicial dissolution.