Bylaws 2018-01-11T04:33:25+00:00

Bylaws of the Silverton Food Co-op

Article I. Name and Purpose 

Section 1.1 – Name.

Article I. Name and Purpose

The name of the Cooperative is SILVERTON FOOD CO-OP (the Cooperative).

Section 1.2 – Purpose.

The Cooperative is formed to engage in any lawful activities for which cooperatives may be organized.

Article II. Directors and  Officers

Section 2.1 –  Number and Qualifications of Directors.

The business of the Cooperative  shall be controlled  by a board of directors , each of whom shall  be a member of this Cooperative. The board shall consist of no fewer than three (3) or more than eleven (11) directors. Neither  the manager  nor any employees  of the Cooperative  who are directly supervised  by the manager shall  be eligible to serve as directors.

The board  of directors shall not  have more than one (1) employee  of the Cooperative  serving  at any time . No person shall  be eligible for the office of director  if he or she is in competition  with or is affiliated with any enterprise that is in competition with the Cooperative. If a majority of the board of directors of the Cooperative finds at any time following a hearing that a director is so engaged or affilia ted, he or she shall be removed  as a director.

Section  2.2 –  Election  of Directors.

Directors shall be elected at each annual meeting of mem bers. Directors may be nominated  by the current board of directors or by petition signed by no less than twenty (20) members of the Cooperative. The petition shall be submitted to the board  of directors  no fewer than seven (7) days prior to the commencement  of the proposed  election .

Directors shall be elected by secret  ballot of members.  Each member shall have the num ber of votes corresponding to the number of director seats to be filled. No member  may cast more than one (1) vote for any single director  seat to  be filled . The nominee  receiving  the greatest  number of votes shall be elected to the first open director seat, the nominee receiving the second greatest number of votes shall be elected to the next open director seat, and so on until each open seat has been filled.

Section 2.3 – Staggered Terms for Directors.

At the first annual election after these amended bylaws are adopted by the Cooperative, the board shall be divided , as evenly as possible, into three (3) groups. One group shall serve for one year; one group shall serve for two (2) years ; and one group shall serve a full three (3) year term. Thereafter, each director shall  be elected  and serve a term of three (3)  years.

Section 2.4 – Removal of Directors.

A director may be removed upon a majority vote of all members voting in person at a duly called member meeting if written reason for removal of the director is included  in the notice of the meeting and  the director  whose removal  is sought  has had an opportunity  to answer the reasons at the meeting .

Section 2.5 – Election of Officers.

The board of directors shall meet within twenty-one (21) days after each annual election, and shall elect a president, vice president, secretary, and treasurer (or a secretary-treasurer). Officers shall hold office for terms of two (2) years or until election and qualification of a successor, unless earlier removed by death , resign ation, or by the board acting in the best interests of the Cooperative. The president and treasurer shall be elected in alternating years. At least one principal officer shall be a director of the Cooperative. Employees of the Cooperative are not eligible to serve as principal officers.

Section 2.6 –  Vacancies.

Whenever a vacancy occurs on the board of directors , other than from expiration of a term of office, the remaining directors shall appoint a member to fill the vacancy. Such appointed director shall serve the remaining  term  of the vacant seat.

Section 2.7 –  Regular Board meetings.

Regular meetings of the board of directors shall be held monthly or at other times determined by  the board . All board meetings shall be held within  Oregon.

Section 2.8 –  Special Board Meetings.

A special meeting of the board of directors shall be held whenever called by the president or by a majority of directors . Any and all business may be transacted at a special meeting . Each call for a special meeting shall be in writing, signed by the person or persons making it, addressed and delivered  to the secretary, and shall state the time and  place of the meeting .

Section  2.9 –  Notice of Board Meetings.

Regular meetings of directors shall require no notice. Special meetings of directors shall require written or oral notice. Written notice shall be mailed to each director at least seven (7) days prior to the meeting. Alternatively , oral notice shall be given in person or by a telecommunications device at least forty-eight (48) hours prior to the meeting .

Notice of board meetings shall be posted in a timely manner and in a conspic uou s place in the Cooperative’s store.

Section 2.10 – Compensation.

The compensation, if any, of members of the board of directors and of the executive committee shall be determined  by members  of the Cooperative  at any annual  or special meeting of the cooperative. No officer or employee who is a director may take part in any vote on the compensation of the officer or employee for services rendered or to be rendered to the Cooperative.

Section  2.11 –  Quorum  of Board Member .

A majority of the  board  of directors  shall constitute  a quorum at any meeting of the board.

Article III. Duties of Directors

ection 3.1 –  Management  of Business.

The board  of directors  shall  have general supervision  and control of the business and  affairs of the         ooperative. The board sha ll make all rules and regulations  not inconsistent  with law or with these bylaws for the management of business and guidance of the members , officers employees , and agents of the Cooperat ive. The board shall have in  tailed  an accounting  system adequate for the requirements  of the business of the ooperative, and  it shall  be the duty of the board to require proper records to be kept of all business transact ions .

ection 3.2 –  Employment  of Manager.

The board of directors shall have the power to employ or to authorize employment of a manager and any other employees as may be deemed necessary , and  to fix their compensat ion. The manager shall  have charge of the business of the ooperative  under  the direction of the board of directors. No director  shall  serve as manager.

Section  3.3 –  Bonds and In urance.

The board of directors shall require the manager and all other officers , agents, and employee charged by the Cooperative with responsibility for custody of any of its funds or negotiable instruments to give adequate bond  . These bonds , unless cash security is giv en, sha ll be

furnished by a responsible bonding company and s hall be approved by the board of directors , and the cost shall  be paid by the ooperativ e.

The  board  of directors shall provide for adequate  insurance of property of the ooperativ e, and property  which may  be in the possession of the ooperative, or stored  by  it, and not otherwise adequately insured . The board shall provide adequate insurance covering li abili ty for accidents to the  public and all employees of the Cooperative.

Section  3.4 –  Examination  of Cooperative Books.

At any reasonable time, any member or sharehold er, or the agent or attorney of any member or shareholder, upon written notice stating the purpo  es ther eof, may examine for any proper purpose any books or records pertinent to the purpose specified in the notice and may make extracts therefrom, all in accordance  with any reasonable conditions  prescribed  by the board restricting the disclosure, dissemination or use by any member or sharehold er, or any agent or attorney of any member or shareholder , of any information  therein contain ed.

The board may deny a request to examine books and record if the board  determines  that the purpose is not directly related to the business or affairs of the Cooperative and is contrary to the best interests of the Cooperative.

Section 3.5 –  Agreements  with Members.

The  board of directors shall have the power to carry out all agreements of the cooperative with its members in every way advantageous to the                                                                             cooperative  representing members collectively.

Section  3.6 – Depository.

The board of directors shall have the power to select one or more banks to act as depositories of funds of the cooperative and to determine  the manner of receivin g, depositing , and disbursing funds of the cooperative and the form of checks and the person or persons by whom they sha ll be signed, with power to change the banks and the person or persons signing the checks and the form at will.

Section 3.7 –  Membership Certificate.

The board of directors shall  issue appropriate  certificates  of membership.

Article IV. Duties  of Officers

Section 4.1 –  Duties of President.

The  president shall:

  • preside over all meetings of the cooperative  and of the  board of directors;
  • call special meetings of the board of directors ;
  • appoint such committees as the board of directors may deem advi abl for the proper conduct of the Cooperative; and
  • perform all act and duties usually performed by a presiding officer.

Section 4.2 –  Duties of  Vice President.

In the absence of the pres ident, the vice president sha ll perform the duties of the president ; provided , however , that in case of death , resignation, or disability of the presid ent, the board of directors may declare the office vacant  and elect a successor.

Section  4.3 –  Duties  of  Secretary.

The secretary shall  keep a complete  record of all  meetings of the ooperative  and of the board of directors , and shall  have general  charge and supervision  of the books and records of the cooperative. The secretary shall sign papers pertaining to the Cooperative  as authorized  or directed by the board of director . The secretary shall serve all notices required  by law and  by these bylaws , and shall make a full report of all matters and business pertaining  to the office to the members at the annual meeting. The secretary shall keep correct and complete books and record of accounts , and shall keep minutes of the proceedings of its members , board , and executive committee. The secretary shall also keep record of the names and addresses of all members.

The secretary hall keep the corporate seal, if any, and all  books of blank ce rtificates, complete and countersign all certificates issued, and affix the corporate seal to all papers requiring a seal. Further, the secretary shall  keep complete stock ownership  records ; sha ll make all reports required  by law; and sha ll perform such other duties as may  be required by the ooperative or the board  of directors.

Upon the election of a successor, the secretary shall turn over all books and other property belonging to the ooperative.

Section  4.4 –  Duties of Treasurer.

The treasurer shall  be responsible for keeping and  disbursing all  monies of the ooperative and shall keep accurate books of accounts of all transactions of the Cooperative. The treasurer shall perform such duties with respect  to the finances  of the  ooperative as may be pr scr ib ed by the board of directors . At the expiration of his or her term of office, the treasurer shall promptly turn over to his or her successor all monies , property , books , records , and documents pertaining to the office or belonging  to the Cooperative.

Article  V. Executive Committee

ection 5.1 –  Powers  and Duties.

The board of directors may in its discretion appoint an executive committee of three (3) or more directors. The executive committee shall have and  may exercise all the authority  of the board  in the management powers and duties as may , from time to tim e, b prescribed by the board of directors , except that the executive committee may  not exercise authority over  the:

  • apportionment or distribution of net proceeds , savin gs, or losses;
  • selection of officers; or
  • filling of vacancies in the board  or the executive comm itt

Copies of minutes of any meeting of the executive committee shall be mailed to all directors within   seven (7) days following the  meeting.

Article  VI. Duties of Manager

Section 6.1 –  In General.

Under the direction of the board of directors , the manager shall  have general charge of the ordinary and usual business operations of the Cooperative, including purchasing , market in g, and handling of all products , supplies, and equipment hand led by the Cooperat ive. The manager

sha ll, so far as practicable, endeavor  to conduct  business  in a manner that the members  will receive just and  fair  treatment.  The manager  shall  deposit  all  monies  belonging  to  the Cooperative  in the name of the cooperative in a bank selected  by the board  of directors and, if authorized to do so by the board of directors, shall make all disbursements by check for the ordinary and necessary expenses of the business in a manner and form prescribed by the board of directors. Upon appointment of a succ essor, the manager shall deliver all money and property belonging to the cooperative in his or her possession or control.

Section 6.2 –  Duty to Account.

The manager shall be required to maintain records and  accounts  in such a manner  that the true and correct condition of the business may be ascertained  at any  time. He or she shall render annual and periodical statements in a form and  in a manner prescribed  by the board of directors and shall carefully preserve all books, documents, correspondence, and records pertaining to the business.

Section 6.3 –  Control of Employees.

Subject to the approva l of the board of directors,  the manager shall employ, supervise, and dismiss all agents and employees of the Cooperative not specifically employed by the board of directors.

Section  7.1 –  Qualification .

Article  VII. Members

The members of the    ooperative shall consist  of all present  members and  all persons admitted as members. An applicant  may  become a member of this                          ooperative  by applying for membership and paying for at least one  hare of common  stock. The secretary shall  present  the application  to the board of directors for approval. An applicant  or member  hall  pay for the share or shares of stock in cash. As used in these bylaws , ” member ” means a sharehold er.

Section 7.2 –   Stock Certificate.

This Cooperative shall issue a certificate of membership to each member which shall be in the form prescribed  by the board of directors.                                                                      ertificate of member  hip shall not  be transferable.

Each stock certificate shall bear the member’s name, the signatures of the president  and secretary , the imprint of the corporate seal, if any, and  the number of shares  represented.

Section  7.3 –  Member Information.

The secretary shall keep a complete list of the names and addresses of all members as given  by the members . ach member shall notify the secretary within ten (10) days of any change of address. Until  the secretary  receives the notice from the member , the ooperative  may treat th name and address appearing on the Cooperative’s li s t as correct for purposes of giving not ices and for all other purposes.

Section  7.4 –  Member  Voting Rights.

ach member shall be entitled to only one vote at any meeting of the members , regardless of the number  of shares held.

ection 7.5 –  Transfer of Membership Stock.

Membership  in this association  is per  onal and not a property  right and is not transferable.

ection 7.6 –  Suspension  or Termination.

If, following a hearing , the board of directors finds that any member has failed to patronize the Cooperative for a period of two (2) years , the directors may use the reserve funds to recall all of the member ‘ s hold ings, and he or she shall cease to b a member.  Upon termination  of membership in the ooperative, all of the rights and  interests of the member  in the cooperative shall by that act be cancelled , and the member shall be ent itled only to payment or credit for the equitable appraised  valu e of the property  rights and interests in the ooperative, as conclusively determined  by the board  of directors.

In determining property rights and in terests , all amounts allocated to each member or evidenced by certificates of any kind shall be exclu ded , and those amounts shall be account ed for to the member in accordance with  the applicable  terms and conditi ons. No action shall impair obligations  or liabilities of either party  under any contract with the cooperative, which may be terminated  only as provided.

ection 7.7 –  Expulsion of Member.

A member may be expelled  from the ooperative for  breach of contract or for acts injurious to the ooperative. Three (3) members of the  board  of directors or any officer shall  notify the accused member , in writin g, of the charge at least fifteen (15) days b fore the date of a proposed meeting  when  the charges shall  be considered  by the  board  of directors.  Upon  the affirmative vote of two-thirds of the members present and constituting a quo rum , the person accused shall be denied further  benefit of membership privileges except to conclude unfinish  d  transactions.

Whenever a member is expelled from membership or the member’s agreement is canceled, all membership  rights and privileges shall automatically terminate.

ection 7.8 –  Withdrawal  of Member.

Any member  may withdraw from the    ooperative  by giving ten (10) days’ written  notice to the board of directors at any time. Upon expiration of the ten (10) days from the delivery of notice in person or by registered  ma il , and  payment  of all sums due and owing  between  the memb  rand the    oop  rative, membership of the member  withdrawing shall cease and all  marketing contracts signed  by the member sha ll be cancelled and returned.

Section  7.9 –  Member  Complaint .

If any member has any complaint to make of the goods or services of the Cooperative or the conduct of any of the employees  of the ooperative, he or she sha ll send the complaint first to the manager. If not satis fied, he or she may appeal to the board of d irectors. The  board of directors shall investigate the complaint, decide upon it , and enter its decision in the minutes . If the member still is not satis fied, he or she may appeal to a general or special meeting of the members.

Section  7.10 –  Nonmember Business.

The cooperativ e, if it elects to do business with nonmembers  , shall deal with nonmember patrons in all respects on the same basis as members , but the Cooperative may not conduct over fifty percent (50%) of its marketing business with or for nonmember producers , and the amount of busines that it may do with or for patrons who are neither members nor producers , in farm business services or in furnishing of supplies and eq uipm ent, may not exceed fifteen percent (15%) of all business.

Article VIII. Meetings

ection 8.1 –  Annual  Meeting  of Member .

The annual  meeting of members of this Cooperative shall  be held  in Oregon, at a location and on a date, that the board  of directors shall fix.

Section 8.2 – Special Meeting of Members.

Special meetings of members of the Cooperative may be called at any time by order of the president or the board of directors , and shall be called by the secretary at any time on written request of at least ten percent (10%) of members. The request shall state the time, place, and business  of the meeting.

Section 8.3 – Notice of Meetings.

Written or printed notice of every regular and specia l meeting of members shall be prepared and mailed to the last-known mailing address of each member not less than seven (7) days before that meeting.  The  notice shall state the purpose , time, and  place of meeting  and, in  the discretion  of the board of directors , may  be given by publishing at least seven (7) days prior to the meeting in    a newspaper of general circulation in the town where the principal place of business  of the Cooperative  is  located.  No  business  shall  be transacted  at special  meetings  other  than  that referred  to in the notice.

For this section, ” Written” includes a communication that is transmitted or received by electronic means.

Section 8.4 – Absentee Voting.

Voting  by proxy shall not  be permitted,  but absent  members  may vote on specific questions , other than removal of directors ,  by ballots transmitted  to the secretary  by mail. These  ballots shall be counted only in the meeting at the time in which the vote is taken , provided that all members have been notified in writing, pursuant to action by the board of directors , of the exact wording of the motion or resolution upon which  the vote is taken, and a copy is forwarded  with and  attached  to the vote of the member voting.

Section 8.5 –  Quorum  of Members.

Those members present at any annual  or special member  meeting shall constitute a quorum for   the transaction of business of the Cooperative  except for  business  transactions  concerning  which a different quorum is specifically provided  by law or these  bylaws. However,  in the event a quorum is not present, the meeting may be adjourned from time to time by those present until a quorum  is obtained.

Section 8.6 – Order of Business.

The order of  business at the annual  meeting  shall be:

  • Roll call
  • Proof of due notice of meeting
  • Reading and approval of minutes
  • Annual reports of officers  and committees
  • Election of directors
  • Unfinished business
  • New business
  • Announcements
  • Adjournment

Article IX. Capital

Section 9.1 – Revolving-Fund Certificates.

The Cooperative is authorized to issue and sell to members and others revolving-fund certificates for the purpose of raising capital funds with which  to engage  in  business and  in order to further the cooperative character of this Cooperative. The Cooperative is further authorized to issue revolving-fund certificates to evidence capital furnished by patrons. Funds arising from issue of certificates  shall  be used  for creating a revolving fund  for the purpose of  building  up an amount of capital as may  be deemed  necessary  by the board  of directors and for revolving capital.

These certificates shall contain terms and conditions as may  be prescribed  from time to time  by the board of directors of the Cooperative. These certificates shall be issued in annual series, each certificate shall on its face be identified by the year in which it is issu ed; and each series shall be retired fully or on a pro rata  basis , only at the discretion of the board of directors of the Cooperativ e, in order of issuance  by years as funds are available for that  purpose.

These revolving-fund certificates may bear rates of interest (in no event to exceed  eight percent (8%) per year) as the board  of directors of the Cooperative  may from time to time prescribe  without any obligation on the part of the board of directors and Cooperative to pay interest on the certificates.

A record of all holders of revolving-fund certificates shall be kept and maintained by the Cooperative, and the certificates shall be transferable  only on  the books of the Cooperative, and no transfer of certificates shall be binding on the Cooperative unless so transferred.  All debts of the Cooperative, both secured and uns ecured , shall be entitled to priority over all outstanding revolving-fund certificates .

Upon dissolution or winding up of the Cooperative in any manner, after the payment  of all debts , all outstanding  revolving-fund certificates  shall first  be retired  in full or on a pro rata basis without priority , and second, all unexhausted  credits in capital  reserve accounts shall  be paid  in full or on a pro rata basis before any liquidation  dividends are declared  on account of property rights and interests.

Section  9.2 –  Patronage Capital.

This Cooperative shall be operated so that active patrons of the Cooperative, members and nonmembers alike, will currently furnish money through their patronage for capitalizing the Cooperative and with a view of revolving the capital furnished in earlier years by the patrons and others.

In order to induce patronage and to assure that this Cooperative will operate on a nonprofit basis relative to all of its transactions with its patrons, the Cooperative is obligated to account on a patronage  basis to all of its patrons, members , and nonmembers.

The Cooperative  shall account for:

  • all amounts received on account of the rendition  of services;
  • the sale or disposition of commodities furnished by pat rons, members , or nonmembers to the Cooperative; and
  • the purchase of commodities from the Cooperative by patrons, members , or no nmembers .

The Cooperative shall account  for all amounts  received  over and above costs or outlays relative to the commodities  and  the costs and expenses of the ooperative  in handling commodities and in furnishing services, and the fair part of the general operating costs and expen es of th Cooperative properly chargeable  to each type of commodity or service, in clu ding valuation reserves and  interest on capital not to exceed  eight percent (8%) per year.

The Cooperative is obligated  to pay all amounts to the patrons in cash, in r  volving-fund certificates , or credits, not to exceed ten percent (10%) of the amounts  in any one year , to patrons in the capital  reserve accounts of the ooperative.

All of the amounts at the moment of receipt by the Cooperative are received with the  understanding that they are furnished by patrons as capital , and that any part of the amounts received by the Cooperative that are not capital shall be repaid in cash within a reasonable  time after the close of each fisca l year. The board of directors each year shall prescribe the amount of capital, to be evidenced by revolving-fund certificates , and  the amount as re  tricted  to be evidenced  by credits to patrons in capital  reserve accounts for that year. All amounts sha ll hav the same status as though they had  been paid  to patrons in cash and  that  patrons had  then furnished  corresponding  amounts for capital for the ooperative. Revolving-fund certificates may be held for safekeeping by the Cooperative subject to orders of the patrons, who shall be notified  that the certificates are being held.

In the event the cooperative suffers a loss in any  year , the board  of directors shall prescribe a basis on which capital con tr ibutions of patrons shall be reduced on account of any loss so that it will be borne by patrons as equitably a the  board  of directors finds practicable.  All capital furnished by deductions or otherwise under specific contracts with patrons shall be evidenced by revolving-fund certificates or credited to patrons in capital  reserve account s of the Cooperativ e, and the revolving-fund certificates and credits shall  be s ub ject in all  respect  to provisions of the bylaws  regarding such certificate   and credits.

Section  9.3 –  Revolving Capital.

In order to further the cooperative character of this Cooperative, the Cooperative shall revolve its capital as funds are determined  by the board  of directors to be available for  that purpose . Capital that is to be retired in a given year, in whole or on a pro rata basis , shall be the oldest outstanding and unexhausted  type of capital of the ooperative.

Not withstanding any other provisions of these by laws, the board of directors at its discretion shall have the power at any time to pay off, retire, or ecur a release or satisfaction of any revolving-fund certificates and capital reserve credits to compromise or settle a dis pute, or for the purpose of facilitating settlement of an estate in bankruptcy or otherwise, or on account of removal  from  the trade territory  of Cooperative of a former patron.

Section 9.4 –    Set-Off.

The Cooperative may set off any claims it may hav e against any patron not to exceed the amounts which  the Cooperative  may owe the patron.

Article X. Allocation  of Net Savings

Section  10.1 – Definitions.

All sums received (1) for suppl ies, commodities , equipment and other property procured for patrons; (2) for services performed by patrons; (3) as patronage savings returns from other cooperative associations; and (4) from any other source shall be deemed to be gross receipts and shall be received and held by the Cooperative for its patrons. Gross receipts are subject to the following deductions:

  • the actual cost of all supp lies, commodities , equipment, and other property procured for patrons;
  • the actual cost of all services performed for patrons;
  • all taxes , except income taxes and other obligations and  necessary expenses; and
  • amounts for reserves for any necessary operating purpose, including but without being limited to, provision for depreciation for physical property , doubtful accounts, and other possible

The balance of gross  receipts remaining after deductions , calculated  upon a fiscal-year  basis , shall be deemed  to be net savings. At the moment of receipt  by the Cooperative, the net savings are received with the understanding that they are furnished by the patrons as capita l and are to be used as capital  until they are allocated  as provided below.

Section 10. 2 –  Allocation  to Net Savings.

Each year, as soon as practical after the books reflect the fiscal year’s operation, the board of directors shall make recommendations, and the members shall allocate the net savings of the Cooperative  not inconsistent  with state law and these bylaws.

Section  10.3 –  General Reserve.

Ten percent  (10%) of the net savings shall  be placed  in a reserve fund, entitled  the general reserve , until the general reserve shall equal at least fifty percent (50%) of the paid-up capital. After that, amounts not greater than ten percent (10%) of the net savings shall be placed in the general reserve only to the extent necessary to keep it equal to fifty percent (50%) of the paid-up capital.

The Cooperative may use the general reserve  in the general  conduct of the  business and  may reduce  it by the amount of any operating loss in any fiscal  year. The amounts  placed  in the general reserve shall be allocated on the books of the Cooperative on a patronage basis, or in lieu thereof; the books and records of the Cooperative shall afford a means for doing so, in order that upon  disso lution, or earlier if deemed  advisable, the general  reserve may  be  returned  to the patrons who have contributed  it.

Section 10.4 –  Patrons’  Equity Reserve.

An additional portion of the net savings may be placed in a reserve account to be known as the patrons’ equity reserve. The amounts placed in it shall be alloc ated on the books on a patronage basis to the patrons who have contributed it. All amounts evidenced by credits to patrons’ equity reserve accounts shall  have the same status as though  the Cooperative  had  paid them in cash to the patrons in pursuance of a legal obligation to do so and the patrons had then furnished corresponding  capital to the ooperative.

One or more years of the patrons’ equity  reserve may be returned  to the members , provided  that:

  • all amounts credited in any one fiscal year be paid out at the same  tim e;
  • the amounts credited in the earliest year be returned first;  and
  • the proportionate amount shall  be returned  in ca h.

No amounts shall be held in patrons’ equity reserve more than twenty (20) years. If a member withdraws from the Cooperative as provided  by law and  the bylaws of the ooperative, his or her portion of the patrons’ equity reserve shall be returned. The board of directors shall determine the u e or distribution of any proportionate amount of the patrons’ equity reserve of unidentified patrons .

Section  10.5 – Patronage   Savings   Return .

The remainder of the net savings shall be deemed to be patronage savings retu rns, and sha ll be allocated at the same uniform rate to all patrons of the ooperative in proportion to their individual patronage. Notwithstanding any of the above provisi ons, any cash savings returns payable to members shall apply first on account of debts , if any, due from the respective members to the ooperative. After the members have allocated the net sav in gs, the secreta ry shall notify each member by mail to his or her last-known address of the amount of savin gs credited and payment shall be made in those amounts due to members.

Section 10.6 –  Member Consent to Distribution.

Each person who applies for and  is accepted  to membership in the ooperative, and each member of the   ooperative  on  the effective date of this  bylaw who continues as a member after that date shall, by such act alone consent that the amount of any distributions with respect to patronage which are made in written notices of allocation (as defined in I.R. . § 1388) and are received from the       ooperative, will  be taken into account at their   tated dollar amounts  in the manner provided in LR. . § 1385(a)  in the taxable year in which  the written  notices of allocation are received.

Article XI. Indemnification

Section 11.1 –  Standards of Conduct.

A director shall di charge the duties of a director , including the duties as a member of a committee, in good faith, with the care an ordinarily prudent person in a li ke position would exercise under similar circumstances and in a manner the director  reasonably  believes to be in the best interests of the ooperative.

In discharging the duties of a director, a director is entitled to rely on in formation, opinions, reports, or statements including financial statements and other financial data , if prepared or presented by:

  • one or more officers or employees of the   ooperative  whom the director reasonably believes to be reliable and competent in the matters  presented:
  • legal counsel, public accountants or other persons as to matters the director reasonably believes are within the person’ s professional  or expert  competence; or
  • a committee of the board of directors of which the director is not a member if the director reasonably believes the committee  merits

A director is not acting in good faith if the director has knowledge concerning the matter in question  that makes such  reliance unwarranted.

A director is not liabl e for any action taken as a director , or any failure to take any action, if the director performed  the duties of the director ‘ s office in compliance  with this section.

Section 11.2 –  Authority  to Indemnify.

Except as provided in this Section, the Cooperative shall indemnify an individual against liabili ty incurred  in a proceeding  to which  the individual  was made a party  because the individual  is or was a director if:

  • the conduct of the individual was in good faith ;
  • the individual reasonably believed that the individual ‘ s conduct was in the best interests of the Cooperative, or at least was not opposed to the Cooperative’s best interests ; and
  • in the case of a criminal proceeding , the individual did not have reasonable cause to believe the conduct of the individual was

A director ‘ s conduct with respect to an employee benefit plan for a purpose the director reasonably believed to be in the interests of the participants in and beneficiaries of the plan is conduct  that satisfies the requirement  of this Section.

Terminating a proceeding by judgment, order, settlement , or conviction or upon a plea of nolo contendere or the equivalent of nolo contendere does not, of itse lf, determine that the director did not meet the standard  of conduct described  in this Section.

The Cooperative  may not indemnify a director  under this Section  in connection with:

  • a proceeding by or in the right of the Cooperative in which the director was adjudged liable to the Cooperative; or
  • a proceeding that charged the director with and adjudged the director liable for improperly receiving a personal

Indemnification permitted under this Section in connection with a proceeding by or in the right of the Cooperative is limited to reasonable expenses incurred in connection with the proceeding.

The Cooperative may not amend the Articles of incorporation or these Bylaws so as to eliminate or impair a director ‘ s right to indemnification after an act or omission occurs that subject s the director to a proceeding or to liability for which the director seeks indemnification under the terms of the Articles of Incorporation or these Bylaws.

Section  11.3 –  Mandatory Indemnification.

Unless limited  by the Articles of Inco rporation, the    ooperative shall  indemnify a director who was wholly successfu l, on the merits or otherwis e, in the defense of any proceeding to which the director was a party  because of being a director  of th  ooperative, against reasonable expenses incurred  by the director in connection  with the proceeding.

Section 11.4 – Advance for Expense .

The Cooperative shall pay for or reimburse  the reasonable expen  es incurred  by a director who is  a party  to a proceeding  in advance of final  disposition  of the proceeding if:

  • the director furnishes the ooperative a written affirmation of the director ‘ s good faith belief that the director ha   met the standard  of conduct described  under    ection 11.1; and
  • the director furnishe  the   ooperative a written undertaking  , executed  personally or on the director’s behalf , to repay the advance if the director is ultimately determined  not to have met the standard of The undertaking required by this ection must be an unlimited general obligation of the director but need not be secured and may be accepted without reference  to financial ability to make  repayment.

An authorization of payments under this Section may be made by resolution of the board of directors or by contract.

The Cooperative  may not amend  or rescind  the Articles ofl ncorpo ration, these Bylaws, or the reso lution that authorizes the payments so as lo eli minate or impair a dir ector’ s right to payments after an act or omission occurs that subjects  the director  to a proceeding for which  the director seeks payment.

Section 11.5 –  Determination  and Authorization  of Indemnification.

The    ooperative may not indemnify  a director under   ection 11 .1 unl ess authorized in the specific case after a determination has been made that indemnification of the director is · permissible in the circumstances  because the director  has met the standard  of conduct set forth in Section 11.1.

A determination  that indemnification of a director is p  rmis  ible must  be made:

  • by the board of directors by majority vote of a quorum consisting of directors not at the time parties to the proceed ing;
  • if a quorum cannot  be obtained  under this   ection,  by a majority vote of a committee duly designated by the board of directors , con  isting solely of two or more directors not at the time parties to the proceeding ;
  • by special legal coun el selected by the board of directors or its committee in the manner prescribed under this ection or, if a quorum  of the board cannot  be obtained  and a committee cannot  be designated  , the special legal coun sel will  be select ed by majority vote of the full  board of directors includ ing directors who are partie   to the proceeding;  or
  • if the Cooperative is a mutual benefit corpo ration, by the members , but directors who are at the time parties to the proceeding may not vote on the

Authorization of indemnification and evaluation  as to reasonableness of expenses  will  be made in the same manner as the determination that indemnification is permissibl e, except that if the determination is made by spec ial legal couns el, authorization  of indemnification and evaluation as to reasonableness of expenses will be made by those ent itled under  this  ection  to select counsel.

Section 11.6 – Indemnification of Officer , Employees, and Agents.

Unless  the Articles of Incorporation  provide otherwise:

  • an officer of the ooperative is entitled to mandatory indemnification under ection 11 .3 to the same extent as a director; and
  • the ooperative  may  indemnify and advance expenses  under this  ection to an officer, employee or agent of the ooperative  to  the same extent as to a

Section  11.7 –  Non-Exclu  ivity of Rights.

The indemnification and  provisions for advancement  of expenses  provided  in this    ection  will not be deemed  exclusive  of any other  rights  to which directors , officer  , employees, or agents may be entitled under the Articles of Incorporation or these Bylaws, any agreement, general, or specific action of the board of directors , vote of members or otherwis e, and will continue a to a person  who has cea  ed  to be a d irector, officer, employee, or agent and  will  inure to the benefit of the heirs, executors , and administrators of such a person.

Section  11.8 –  Report  to Members and Other Persons  of Indemnification.

If the Cooperative indemnifies or advances expenses to a director under  this Section  in connection  with a proceeding  by or in the right of the ooperative, the Cooperative  will report the  indemnification or advance  in writing to:

  • the members with or before the notice of the next meeting of members ; and
  • any person having the right to designate or appoint the director no later than 90 days after the first  indemnification  or advance.

Article XII. Miscellaneous  Provisions

Section 12.1 –  Fi  cal Year.

The fiscal  year of this    cooperative shall commence on  the first day of July , and end on the last day of June.

Section  12.2 –  Bylaws Printed.

After adoption, the  e bylaws  hall  be printed  and a copy shall be delivered  to each member and to each  person who may later become a member  of the                                                   ooperative a   shown  on the book  of record.

Section 12.3 – Dissolution of the Cooperative.

Upon the dissolution or winding up of the Cooperative in any manner , after the payment of all debts and the retirement at par of the outstanding capital stock, any balance remaining shall be distributed proportionately to the members .

Section 12.4 – Severability.

In the event that any provision of  these  bylaws  is determined  to  be  invalid  or  unenforceable under any statute or rule of la w, such provision shall be deemed inoperative to such extent and shall be deemed modified to conform with such statute or rule of la w wit hout  affecting  the validity  or enforceability of any  other  provision  of these bylaws.

Section 12.5 – Disputes.

The Cooperative and its current and former members agree to submit  all manner  of disputes , controvers ies, differences, claims , or demands  of any  kind  relating  to or arising  out of the patronage of the Cooperative to a dispute resolution process administered by an unb iased, neutral mediator.  The  board  of directors  shall  have  the authority  to  hire a  mediator  as  they see fit. No party shall  have recourse  to litigation until after the matter  is submitted  to mediation.

Article XIII. Amendments

Section 13.1 – Amendment of Bylaws.

These bylaws may be amended at any special or annual meeting of members upon the affirmative vote of two-thirds of the members present and constituting a quorum , provided that the proposed alteration or amendment is fully described in the notice of the meeting.