RBCC Concerned Members Request For Special Meeting
Hello RBCC Member,
Gary Talley and I along with many concerned members have initiated this petition campaign to request a Special Meeting of the Club’s Stockholders to discuss the Board’s recent decision to indemnify defendants’ Krausz and Berl in a lawsuit alleging conduct outside the scope of their official duties as Club directors.
We don’t think that it is fair to ask the Club’s membership to bear the cost of paying the defendants’ legal expenses since neither the Club nor our membership are a party to the lawsuit.
Equally disconcerting to us is the state of the Club’s finances. At a time when we are paying increased dues and will be asked to pay increased assessments to fund the Club’s Capital Improvement Plan, the Club is not in a position to assume the risk of an open-ended indemnification agreement.
We urge you as RBCC Stockholders to sign our petition as a constructive means of having an important conversation within our membership. Thank you for your consideration.
Beth, Gary & Concerned Members of RBCC
Stockholder Request for Special Membership Meeting
Whereas, the By-laws of Rehoboth Beach Country Club, Inc., Article III, Section 2, Special Meetings, specifically provides that a meeting of the stockholder members may be called by the President on request in writing by stockholders, such a meeting is hereby requested by the stockholders who have signed this petition for the purpose of membership discussion and allowing the stockholders to vote on the following two motions.
Whereas, the Club President is a party with an interest in the outcome of the motions to be offered by the stockholders, we respectfully ask that the President recuse himself from involvement in this matter. Further, we request that the Special Membership Meeting be conducted by disinterested Board members who are neither plaintiffs nor defendants in the pending Lawsuit amongst shareholders that is the subject of the motions to be offered at the Meeting nor individuals who would be directly impacted by the outcome of the Lawsuit as to their Board standing and membership.
Whereas, The Club’s Board in a meeting held on March 29, 2019 voted to indemnify Daniel E. Krausz and Richard E. Berl, Jr., as defendants in a lawsuit brought against them personally in the Chancery Court of the State of Delaware on behalf of Club members and stockholders Tom Cariota, Bob Dathe, and Denis O’Toole for their “wrongful” suspension/termination from membership in the Club and breach of their contractual stockholder rights (the “Lawsuit”); and
Whereas, the Lawsuit brought against Krausz and Berl did not sue the Rehoboth Beach Country Club nor seek any monetary damages from the Club; and
Whereas, the Lawsuit brought against Krausz and Berl sued them alleging conduct that is outside the scope of their official club duties, and was not brought against any other Club members, officers, or directors; and
Whereas, the action taken by the Club’s Board of Governors at its March 29, 2019 meeting authorizing the indemnification of Krausz and Berl for their legal fees in connection with the Lawsuit appears contrary to the best interest of the Club or its general membership, who are not otherwise parties to the lawsuit, and thus unnecessarily puts at risk the Club’s assets.
Now therefore be it resolved that by vote of the membership assembled in special meeting on _____, 2019 hereby direct that any and all indemnification and any other legal fees being paid for by Director Krausz and Director Berl be immediately withdrawn and that it not be reinstated in any form whatsoever by the Board or any committee of the Board.
Now therefore be it Resolved to address the situation, the remaining disinterested Board members, that is those Board members who are neither plaintiffs nor defendants to the suit nor individuals who would be directly impacted by the outcome of the litigation as to their Board standing and membership, be directed to exercise their fiduciary duty of oversight to determine if any actions were taken by the Board or any Board members that were in violation of their Duty of Loyalty to the Club. To assist in this review, the Board is directed to obtain an advisory opinion from an independent law firm selected by the remaining disinterested Board members. The review will cover the period starting as of Sept. 2, 2018 and continuing through the convening of this special meeting on _____, 2019 the result of this review is to be reported by the law firm directly to the membership no later than one month prior to the start of the Club’s next nominations process.