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
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.