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Bylaws2018-10-01T20:22:22+00:00

Current bylaws, adopted September 29, 2018

Article I. Organization

Section 1.1 – Name

The name of the cooperative is Silverton Food Co-op, referred to in these bylaws as “the Co-op.”

Section 1.2 – Purposes

The Co-op is formed to provide groceries and related consumer goods to its owners and other
patrons and to engage in any other lawful activities for which cooperatives may be organized.
The Co-op is organized and shall be operated exclusively on a cooperative and nonprofit basis.
The mission of the Co-op is to provide high quality and fairly priced food and other household
goods and personal items; to offer education and information on cooperative principles and
practices, food and food sources, health, and nutrition; to serve as a model of cooperation,
democracy, and self-reliance; to invest in an environmentally and economically sustainable local
food system; to cultivate fair and trusting relationships between consumers and producers; and to
cooperate with other cooperatives whenever possible; all for the mutual benefit of its member
owners and the local, regional, and global community.

Section 1.3 – Principal office

The principal office of the Co-op shall be located in Silverton, Oregon.

Article II. Directors and Officers

Section 2.1 – Number and Qualifications of Directors

The business of the Co-op shall be controlled by a board of directors, each of whom shall be a
member of this Co-op and a natural person. Business member entities of the Co-op may not
serve on the board. Principals of business member entities may serve on the board of directors if
they themselves are individual members of the Co-op. The board shall consist of no fewer than
three (3) or more than eleven (11) directors. The number of directors serving on the board shall
be set by a majority vote of the directors each year at least 30 days before the annual meeting of
the Co-op. Neither the Manager nor any employees of the Co-op 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 Co-op serving at any
time. No person shall be eligible for the office of director if he or she has an overriding conflict
of interest with the Co-op. If a majority of the board of directors of the Co-op finds at any time
following a hearing that a director has such a conflict of interest, he or she shall be removed as a
director.

Section 2.2 – Election of Directors

Directors shall be elected at each annual meeting of members. Directors may be nominated by
the current board of directors or by petition signed by no fewer than twenty (20) members of the
Co-op. The petition shall be submitted to the board of directors no fewer than seven (7) days
prior to the commencement of the proposed election.
In an election of Directors, each member shall have the number 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

Each director shall be elected and serve a term of three (3) years. Directors shall serve staggered
terms such that, whenever possible, no more than one-third of the directors’ terms expire at any
annual election. To manage the staggered terms of directors, the board may designate a shorter
term for any director position open for election.

Section 2.4 – Termination of Directors

Directors may be removed upon a majority vote of all members voting at a duly called and
noticed 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.
Directors may resign their positions by writing to the board’s Secretary.
The board may remove directors by a two-thirds vote of all the directors on the board at a
meeting duly called and noticed to all Co-op members, provided that written reasons for the
removal are included in a notice of the board meeting to the Co-op members and provided that
the directors whose removals are sought have 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, by majority vote, elect from among the directors a president, vice president, secretary, and
treasurer (or a secretary-treasurer in the event that board consists of only three directors).
Officers shall hold office for terms of one (1) year or until election and qualification of a
successor, unless earlier removed by death, resignation, expiration of director term, or by the
board acting in the best interests of the Co-op. Employees of the Co-op 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 may appoint a member to fill the vacancy. If a vacancy would
result in a board composed of fewer than three directors, the board shall appoint a member to fill
the vacancy. Appointed directors shall serve until the next annual meeting, at which time they
may stand for election by the members.

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 or emailed 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 conspicuous place in the
Co-op’s store and on the Co-op’s website.

Section 2.10 – Action without a meeting

Any action required or permitted to be taken at a meeting of the board may be taken without a
meeting if each board member gives written consent to acting without a meeting. Both the
written consents and the votes cast, if any, shall be recorded in the minutes of the next meeting of
the board.

Section 2.11 – Compensation

The compensation, if any, of members of the board of directors and of the executive committee
shall be determined by members of the Co-op at any annual or special meeting of the Co-op. 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 Co-op.

Section 2.12 – Quorum of Board Members

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

Article III. Duties of Directors

Section 3.1 – Management of Business

The board of directors shall have general supervision and control of the business and affairs of
the Co-op. The board shall 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 Co-op. The board shall have in place an accounting system adequate for the
requirements of the business of the Co-op, and it shall be the duty of the board to require proper
records to be kept of all business transactions.

Section 3.2 – Employment of Manager

The board of directors shall have the power to employ or to authorize employment of a store
Manager (“Manager”) and any other employees as may be deemed necessary, and to fix their
compensation. The Manager shall have charge of the business of the Co-op under the direction of
the board of directors. No director shall serve as Manager.

Section 3.3 – Bonds and Insurance

The board of directors shall require the Manager and all other officers, agents, and employees
charged by the Co-op with responsibility for custody of any of its funds or negotiable
instruments to give adequate bond. These bonds, unless cash security is given, shall be furnished
by a responsible bonding company and shall be approved by the board of directors, and the cost
shall be paid by the Co-op.

The board of directors shall provide for adequate insurance of property of the Co-op, and
property which may be in the possession of the Co-op, or stored by it, and not otherwise
adequately insured. The board shall provide adequate insurance covering liability for accidents to
the public and all employees of the Co-op.

Section 3.4 – Examination of Co-op Books

Any member of the Co-op, upon written notice to the Secretary stating the purposes thereof, may
request to 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 of any information therein contained.

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

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 receiving, depositing, and disbursing
funds of the cooperative and the form of checks and the person or persons by whom they shall 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 advisable for the proper
    conduct of the Co-op; and
  • ● perform all act and duties usually performed by a presiding officer.

Section 4.2 – Duties of Vice President

In the absence of the president, the vice president shall perform the duties of the president;
provided, however, that in case of death, resignation, or disability of the president, 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 Co-op 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 Co-op 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 shall keep the corporate seal, if any, and all books of blank certificates, 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; shall make all reports
required by law; and shall perform such other duties as may be required by the Co-op or the
board of directors.

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

Section 4.4 – Duties of Treasurer

The treasurer shall be responsible for keeping and disbursing all monies of the Co-op and shall
keep accurate books of accounts of all transactions of the Co-op. The treasurer shall perform
such duties with respect to the finances of the Co-op as may be prescribed by the board of
directors. At the expiration of the term of office, the treasurer shall promptly turn over to the
successor treasurer all monies, property, books, records, and documents pertaining to the office
or belonging to the Co-op.

Article V. Executive Committee

Section 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 time, be prescribed by the board of

directors, except that the executive committee may not exercise authority over the:

  • ● apportionment or distribution of net proceeds, savings, or losses;
  • ● selection of officers; or
  • ● filling of vacancies in the board or the executive committee.

Copies of minutes of any meeting of the executive committee shall be distributed 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 Co-op, including purchasing, marketing, and
handling of all products, supplies, and equipment handled by the Co-op. The Manager shall, 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 Co-op 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 successor, the Manager shall deliver to the Co-op all money and property that
belongs to the Co-op and in his or her possession or control.

Section 6.2 – Duty to Account

The Manager shall maintain records and accounts in such a manner that the Board may ascertain
the true and correct condition of the business at any time. The Manager 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 approval of the board of directors, the Manager shall employ, supervise, and
dismiss all agents and employees of the Co-op not specifically employed by the board of
directors.

Article VII. Members

Section 7.1 – Qualification

Any natural person may apply for membership in the Co-op. Legal persons such as business
entities and nonprofit organizations or associations may also apply for membership. Such legal
person members shall designate in writing to the board a non-member natural person authorized
to cast votes for the entity. An applicant may become a member of this Co-op by completing a
board-approved membership application and purchasing one share of common stock or enrolling
in a board-approved payment plan to purchase one share of common stock. The board may reject
a membership application for any reason consistent with these bylaws or Oregon law. The terms
“member” and “owner” are used equally to refer to a member of the Co-op.

Section 7.2 – Membership Certificate

The Co-op shall issue a certificate of membership to each member which shall be in the form
prescribed by the board of directors. Certificates of membership shall not be transferable.

Section 7.3 – Member Information

The secretary shall keep a complete list of the names and postal and email addresses of all
members as given by the members. Each member shall notify the secretary within ten (10) days
of any change of address. Until the secretary receives the notice from the member, the Co-op
may treat the name and addresses appearing on the Co-op’s list as correct for purposes of giving
notices and for all other purposes.

Section 7.4 – Member Voting Rights

Each member shall be entitled to only one vote at any meeting of the members, regardless of the
number of shares held. Legal person members, that is business entities or nonprofit organizations
and associations, may cast votes only when they have designated in writing to the board a natural
person authorized to cast votes on their behalf.

Section 7.5 – Transfer of Membership or Member Share

Membership in the Co-op is a personal and not a property right and is not transferable. With the
approval of the board and the written agreement of the terminated member, a member’s shares
may be transferred to a new owner who completes a membership application.

Section 7.6 – Suspension and Termination of Membership

The board of directors may, by majority vote of the directors present at a meeting, suspend the
membership of any member who fails to make monthly payments toward the purchase of a
membership share, who fails to patronize the Co-op in any 12-month period, or who fails to
notify the board of a change of address. The board shall give a member written notice of the
suspension at the last known email or postal address. Suspended members lose the privileges and
benefits of membership in the Co-op until the reasons for the suspension have been cured and the
board has reinstated the membership. If suspended members do not cure the suspension within
30 days of the date of the suspension notice or give the board notice that they do not intend to
cure the suspension, the board may, by majority vote of the directors present at a meeting,
terminate the member’s membership at any time following the expiration of 30 days from the
date of the suspension notice.

Section 7.7 – Expulsion of Member

A member may be expelled from the Co-op for breach of contract, for failure to abide by these
bylaws, or for acts injurious to the Co-op. The board shall notify the accused member, in writing,
of the charge at least fifteen (15) days before the date of a proposed hearing when the charges
shall be considered by the board. Upon the affirmative vote of two-thirds of the directors present
and constituting a quorum, the person accused shall be denied further benefit of membership
privileges except to conclude unfinished transactions.

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

Section 7.8 – Withdrawal of Member

Any member may withdraw from the Co-op 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 email or postal mail, and payment of all sums due and owing between the member
and the Co-op, membership of the member withdrawing shall cease and all membership rights
and privileges shall automatically terminate.

Section 7.9 – Member Share Redemption

Upon written request to the board by a former member following termination of membership, the
board shall redeem the share of the requesting former member only after replacement capital has
been secured by the Co-op from other owners and not before the Co-op opens a store. The Board
need not redeem shares on demand and may schedule share redemptions to proceed on a periodic
basis: monthly, quarterly, or annually. Shares may also be redeemed under other compelling
circumstances as determined and approved by the Board.

Shares shall be redeemable at the lesser of their purchase price or, in the case of the Co-op’s
dissolution, their net book value. Shares do not increase in value and do not accrue interest.
Reapplication for ownership after redemption shall be subject to full repayment of redemption
proceeds and a reasonable processing fee, if any, as determined by the Board.

Payments toward the purchase of a member share made by members on a board-approved share
payment plan are deposits toward the purchase of a share. Such deposits may be refunded to a
terminated member upon written request, less a reasonable processing fee, if any, as determined
by the board. Deposits toward the purchase of a share do not increase in value and do not accrue
interest.

Section 7.10 – Member Complaint

If any member has any complaint to make of the goods or services of the Co-op or the conduct of
any of the employees of the Co-op, he or she shall send the complaint first to the Manager. If not
satisfied, he or she may appeal to the board of directors. The board of directors shall investigate
the complaint, decide upon it, and enter its decision in the minutes. If the member still is not
satisfied, he or she may appeal to a general or special meeting of the members.

Section 7.11 – Nonmember Business

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

Article VIII. Meetings

Section 8.1 – Annual Meeting of Members

The annual meeting of members of this Co-op 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 Co-op 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 special meeting of members shall be prepared and
mailed or emailed to the last-known 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 Coop
is located. No business shall be transacted at special meetings other than that referred to in the
notice.

Section 8.4 – Absentee Voting

Voting by proxy shall not be permitted, but absent members may vote on specific questions by
ballots transmitted to the secretary by mail or electronic means. 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 Co-op 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 determined by the board.

Article IX. Capital

Section 9.1 – Revolving-Fund Certificates

The Co-op 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 Co-op. The Co-op 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 Co-op. These certificates shall be issued in annual series, each
certificate shall on its face be identified by the year in which it is issued; and each series shall be
retired fully or on a pro rata basis, only at the discretion of the board of directors of the Co-op, 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 Co-op may from time to time prescribe without
any obligation on the part of the board of directors and Co-op to pay interest on the certificates.

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

Upon dissolution or winding up of the Co-op 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 un-exhausted 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 Co-op shall be operated so that active patrons of the Co-op, members and nonmembers
alike, will currently furnish money through their patronage for capitalizing the Co-op 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 Co-op will operate on a nonprofit basis
relative to all of its transactions with its patrons, the Co-op is obligated to account on a patronage
basis to all of its patrons, members and nonmembers.

The Co-op shall account for:

  • all amounts received on account of the rendition of services;
  • the sale or disposition of commodities furnished by patrons, members or nonmembers, to
    the Co-op; and
  • the purchase of commodities from the Co-op by patrons, members or nonmembers.

The Co-op shall account for all amounts received over and above costs or outlays relative to the
commodities and the costs and expenses of the Co-op in handling commodities and in furnishing
services, and the fair part of the general operating costs and expenses of the Co-op properly
chargeable to each type of commodity or service, including valuation reserves and interest on
capital, if any, not to exceed eight percent (8%) per year.

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

All of the amounts at the moment of receipt by the Co-op are received with the understanding
that they are furnished by patrons as capital, and that any part of the amounts received by the Coop
that are not capital shall be repaid in cash within a reasonable time after the close of each
fiscal year. The board of directors each year shall prescribe the amount of capital, to be
evidenced by revolving-fund certificates, and the amount as restricted to be evidenced by credits
to patrons in capital reserve accounts for that year. All amounts shall have 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 cooperative. Revolving-fund certificates may be held for safekeeping
by the Co-op 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 contributions of patrons shall be reduced on account of any loss so that it
will be borne by patrons as equitably as 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 accounts of the Co-op, and the
revolving-fund certificates and credits shall be subject in all respects to provisions of the bylaws
regarding such certificate and credits.

Section 9.3 – Revolving Capital

In order to further the cooperative character of this Co-op, the Co-op 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 cooperative.

Notwithstanding any other provisions of these bylaws, the board of directors at its discretion
shall have the power at any time to pay off, retire, or secure a release or satisfaction of any
revolving-fund certificates and capital reserve credits to compromise or settle a dispute, or for
the purpose of facilitating settlement of an estate in bankruptcy or otherwise, or on account of
removal from the trade territory of Co-op of a former patron.

Section 9.4 – Set-Off

The Co-op may set off any claims it may have against any patron not to exceed the amounts
which the Co-op may owe the patron.

Article X. Allocation of Net Savings

Section 10.1 – Definitions

All sums received (1) for supplies, 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 Co-op for its patrons. Gross receipts are subject to the
following deductions:

  • the actual cost of all supplies, 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 losses.

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 Co-op, the net savings are
received with the understanding that they are furnished by the patrons as capital 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 allocate the net savings of the Co-op consistent 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, called 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 paidup
capital.

The Co-op 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 Co-op on a patronage basis, or in lieu thereof; the books
and records of the Co-op shall afford a means for doing so, in order that upon dissolution, or
earlier if deemed advisable, the general reserve may be returned to the members who have
contributed it.

Section 10.4 – Members’ Equity Reserve

An additional portion of the net savings may be placed in a reserve account called the Members’
Equity Reserve. The amounts placed in it shall be allocated on the books on a patronage basis to
the members who have contributed it. All amounts evidenced by credits to the Members’ Equity
Reserve shall have the same status as though the Co-op had paid them in cash to the members in
pursuance of a legal obligation to do so and the members had then furnished corresponding
capital to the cooperative.

One or more years of the Members’ Equity Reserve may be returned to the members, provided
that:

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

No amounts shall be held in the Members’ Equity Reserve more than twenty (20) years. If a
member withdraws from the Co-op as provided by law and the bylaws of the cooperative, his or
her portion of the Members’ Equity Reserve shall be returned. The board of directors shall
determine the use or distribution of any proportionate amount of the Members’ Equity Reserve
of unidentified members.

Section 10.5 – Patronage Savings Return

The remainder of the net savings shall be deemed to be patronage savings returns, and shall be
allocated at the same uniform rate to all members of the cooperative in accordance with the ratio
which each member’s patronage during the period involved bears to the total patronage by all
members during that period. Notwithstanding any of the above provisions, any cash savings
returns payable to members shall apply first on account of debts, if any, due from the respective
members to the cooperative. After the members have allocated the net savings, the secretary shall
notify each member by mail or email to his or her last-known address of the amount of savings
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 cooperative, and each member
of the cooperative on the effective date of these bylaws 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.C. § 1388) and are
received from the cooperative, will be taken into account at their stated dollar amounts in the
manner provided in I.R.C. § 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 discharge 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 like position would
exercise under similar circumstances and in a manner the director reasonably believes to be in
the best interests of the cooperative.

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

  • one or more officers or employees of the cooperative 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 confidence.

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 liable 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 Co-op shall indemnify an individual against liability
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 Co-op, or at least was not opposed to the Co-op’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 unlawful.

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 itself, determine that the director did
not meet the standard of conduct described in this Section.

The Co-op may not indemnify a director under this Section in connection with:

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

Indemnification permitted under this Section in connection with a proceeding by or in the right
of the Co-op is limited to reasonable expenses incurred in connection with the proceeding.
The Co-op 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 subjects 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 Incorporation, the Co-op shall indemnify a director who was
wholly successful, on the merits or otherwise, in the defense of any proceeding to which the
director was a party because of being a director of the Co-op, against reasonable expenses
incurred by the director in connection with the proceeding.

Section 11.4 – Advance for Expense

The Co-op shall pay for or reimburse the reasonable expenses incurred by a director who is a
party to a proceeding in advance of final disposition of the proceeding if:

  • the director furnishes the Co-op a written affirmation of the director’s good faith belief
    that the director has met the standard of conduct described under Section 11.1; and
  • the director furnishes the Co-op 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 conduct. The undertaking required by this section 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 Co-op may not amend or rescind the Articles of Incorporation, these Bylaws, or the
resolution that authorizes the payments so as to eliminate or impair a director’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 Co-op may not indemnify a director under Section 11.1 unless 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 permissible must be made:

  • by the board of directors by majority vote of a quorum consisting of directors who are not
    at the time parties to the proceeding;
  • if a quorum cannot be obtained under this Section, by a majority vote of a committee
    duly designated by the board of directors, consisting solely of two or more directors not
    at the time parties to the proceeding;
  • by special legal counsel selected by the board of directors or its committee in the manner
    prescribed under this Section or, if a quorum of the board cannot be obtained and a
    committee cannot be designated, the special legal counsel will be selected by majority
    vote of the full board of directors including directors who are parties to the proceeding;
    or
  • if the Co-op is a mutual benefit corporation, by the members, but directors who are at the
    time parties to the proceeding may not vote on the determination.

Authorization of indemnification and evaluation as to reasonableness of expenses will be made
in the same manner as the determination that indemnification is permissible, except that if the
determination is made by special legal counsel, authorization of indemnification and evaluation
as to reasonableness of expenses will be made by those entitled under this Section to select
counsel.

Section 11.6 – Indemnification of Officers, Employees, and Agents

Unless the Articles of Incorporation provide otherwise:

  • an officer of the Co-op is entitled to mandatory indemnification under Section 11.3 to the
    same extent as a director; and
  • the Co-op may indemnify and advance expenses under this Section to an officer,
    employee or agent of the Co-op to the same extent as to a director.

Section 11.7 – Non-Exclusivity of Rights

The indemnification and provisions for advancement of expenses provided in this Section 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 otherwise, and will continue as to a
person who has ceased to be a director, 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 Co-op indemnifies or advances expenses to a director under this Section in connection with
a proceeding by or in the right of the Co-op, the Co-op 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 – Fiscal Year

For accounting purposes this Co-op shall follow the calendar year.

Section 12.2 – Writing and Notice

Any reference in these bylaws to written communication or notice shall mean any writing in
electronic or paper form. Written communication or notice may be given in electronic or paper
form, that is, by email, text message, postal mail, or any other electronic or paper form, and
written notice may be given by electronic notification, that is, by provision of an electronic link
to a writing.

Section 12.3 – Bylaws Posted

After adoption, these bylaws shall be posted on the Co-op’s website and be available for viewing
and downloading.

Section 12.4 – Dissolution of the Co-op

Upon the dissolution or winding up of the Co-op 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 12.5 – Severability

In the event that any provision of these bylaws is determined to be invalid or unenforceable
under any statute or rule of law, such provision shall be deemed inoperative to such extent and

shall be deemed modified to conform with such statute or rule of law without affecting the
validity or enforceability of any other provision of these bylaws.

Section 12.6 – Disputes

The Co-op and its current and former members agree to submit all manner of disputes,
controversies, differences, claims, or demands of any kind relating to or arising out of the
patronage of, or membership in, the Co-op (collectively, “claims”) to a dispute resolution process
administered by an unbiased, neutral mediator. The board of directors shall have the authority to
hire a mediator to resolve claims. No party shall have recourse to litigation (in court or before a
private arbitrator) until after the mediation process has concluded.

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.