Anyone experience with Board Observers?

Board observers have no rights or responsibilities to the company. They are there simply because a stakeholder in the company (typically a minority investor or debt providers) want to be able to monitor their investment more closely. It really depends what kind of setup you want to have and hard to give advice without a concrete example, but if you want to have control but some of your investors want board seats you can (try to) argue that all they need is an observer seat. Often times, if it's a debt provider, you won't have a choice anyway. Important that if you do have observers to make sure they really don't have any powers, not just to vote but to frustrate your board meetings (e.g., they need to be present to have a quorum, they need to be invited x days in advance, etc.)