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Bylaws of a Cooperative Association of Consumers Article I. Purpose and Authority This Association shall have the authority to buy, store, distribute, handle, process, and produce for its members and other patrons, foodstuffs, clothing, merchandise of allkinds, fuel, petroleum products, building materials, and any and all other commodities the Association may see fit to handle, and to perform such other services as the members may desire. The Association may acquire, either by purchase or lease, real estate and other properties or facilities necessary or desirable in the conduct of its business; mortgage, sell, and convey such properties; and purchase, hold, sell, assign, or transfer the shares of capital stock of other cooperative associations. It shall have all other rights and privileges consistent with its certificate of incorporation under the laws of _________________ (Name of State). Article II. Membership A. Qualifications. Membership in the Association shall be open, without restriction as to race, sex, religion, or political or other affiliation, to any consumer who can make use of its services, is in agreement with its aims and purposes, agrees to abide by its Bylaws, and has complied with the requirements of Paragraph B of this Article. B. Application for Membership. Application for membership shall be made in writing on a form provided by the Association. The applicant shall subscribe for ______ (number) shares of the capital stock of the Association and shall make an initial payment on such subscription of at least $__________, and shall pay an initiation fee of $___________. The applicant becomes a full member with voting privileges only after the applicant has paid for ______ (number) shares. Nonmember patrons of the Association's business, who have accumulated surplus savings in the form of credits toward the purchase of capital stock in the amount necessary for membership, on making application, may be accepted as members and receive the stock certificates to which they are entitled. C. Action on Application. Every application for membership shall be acted on by the Board of Directors, which, in its discretion, may refuse to sell to or refuse to accept a subscription from any person, but such right shall not be exercised unreasonably. Anapplicant rejected by the Board shall have the right of appeal to a meeting of the members, whose decision shall be final. D. Rights of Heirs. A legal heir of a deceased member, who has inherited stock in the Association, may apply for membership by making formal application, as authorized in Paragraph B of this Article, and paying the initiation fee, but the Board of Directors shall have the same rights to approve or reject as in Paragraph C of this Article. If the application is rejected, the Association shall repurchase such shares, provided the solvency of the Association is not jeopardized. In case the Association does not or cannot repurchase such shares, the heir shall have the right to dispose of them under the provisions of Paragraph C of Article 5 . E. Membership Rolls. List of the members, with their addresses and the other information called for on the membership application shall be kept by the secretary. Each member shall agree to notify the secretary within _____(number) days of any change of address. F. Presentation of Bylaws. A copy of these Bylaws shall be given to each applicant for membership before or when accepted into membership. G. Organization of Members. Cooperative societies or other organizations not operated for profit, the purposes of which are not incompatible with those of this Association, may make application for membership and, on approval by the Board of Directors, shall subscribe for the minimum amount of stock set forth in Paragraph B of this Article, or such larger amount as the Board shall determine. Such organization member, however, shall be entitled to only one voting delegate in meetings of the Association. H. Rights and Duties of Members. Every member agrees to obey the rules of the Association as set down in these Bylaws, or elsewhere, and the decisions of the general membership meeting or of the Board of Directors. The books of account, stock book, and transfer ledger of the Association shall be available for inspection daily at reasonable hours by any member of the Association who has been a member for at least ______ (number) months prior to such demand. I. Withdrawal or Expulsion. A member wishing to terminate membership shall make written application to the Board of Directors, which shall have the right to establish the terms of the repurchase of stock. In the interest of the Association, the shares of any member may be repurchased and the membership canceled, under the terms of these Bylaws. The initial fee shall not be returned to a member who withdraws or is dismissed. Article III. Meetings of Members A. Authority. The control of the Association shall be vested in the membership and shall be exercisable through regular or special meetings of the members. The Board of Directors and such special committees as may be elected at the membership meetings shall administer its affairs. Final and supreme authority is in the membership. B. Quorum. At any regular or special meeting, a quorum shall consist of ______ (number) members. If a quorum shall be lacking at any such meeting, the Board may call a second meeting, to be held within _____ (number) weeks and after due notice, and those members present at such a meeting shall constitute a quorum. C. Regular Meetings. Regular meetings of the membership shall be held (e.g., annually) _____________ on the _____ day of _____________ (month), at a time and place to be determined by the Board of Directors and specified in the call to meeting. Notice of regular meetings shall be posted prominently in the Association's places of business and shall also be sent by mail to the address of every member as registered on the books of the Association at the time the notices are sent. Notices shall be sent at least _____ (number) days before the date set for the meeting. D. Special Meetings. Special meetings of the membership may be called at any time by action of at least _____% of the Board of Directors, and must be called on petition signed by at least ______% of the members and presented to the Board. Notice of special meetings shall be given in the same manner as is provided for regular meetings, but such notices shall be sent at least ______ (number) days before the date set for the meeting. Notice of special meetings shall state the time, place, and purpose of such meeting and the business to come before it, and no business other than that specified shall be transacted. E. Particular Duties. The membership has the responsibility to: 1. Elect Directors or members of committees, and remove them from office if and when they are derelict in their duties; 2. Hear and pass on the reports of officers and the manager of the Association and of any committees responsible to it; 3. Determine the method of providing the net surplus or earnings; 4. Make the final decision regarding any substantial changes in the financial policy of the Association; 5. Act as final arbiter in any disputes or disagreements that may arise between the Board of Directors and any committees or individual members; 6. Determine what amendments shall be made in the Bylaws; and 7. Exercise its final authority in all other matters vitally affecting the Association. F. Participation. Every member who has met full obligations in regard to share capital, as specified in Paragraph B of Article 2 , and who has not in other respects been judged at a membership meeting to be delinquent or acting contrary to the interest of the Association, shall be qualified to vote and to participate in the meetings of the Association. G. Voting Rights. Election of Directors and members of committees shall be by ballot unless unanimous consent is given to a vote by show of hands. Action on all other matters shall be by ballot, by yes or no vote, as the majority of members present may decide. Each member shall have only one vote on all voting occasions, and there shall be no voting by proxy. At the discretion of the Board of Directors, or on the presentation of a petition signed by _____% of the membership, the secretary, along with the notice of meetings, shall include a copy of any specific proposal to be acted on by the meeting. A member unable to be present at any meeting shall have the right to cast a vote on such specific measure by mail, provided that the vote has been signed by the member and received by the secretary in time to be counted at the meeting. H. Referendum. Whenever, in the opinion of at least ______ (number)members of the Board of Directors or of ____% of the members of the Association, the vote taken at any meeting is not representative of the views of a majority of the members, and at their written request made within _____days of such meeting, the Board of Directors shall provide for a referendum vote to be taken by mail, by which members not present at the meeting may vote on specific questions; provided, however, that in case of a vote on the removal of a director or officer, the referendum must be authorized by vote of the members. Article IV. Directors and Officers A. Board of Directors. The management of the Association shall be vested in a Board of Directors consisting of _____ (number) members, a majority of whom shall constitute a quorum. The Directors shall serve for terms of _____ (number) years, half of the Board members being elected at each annual meeting. Directors shall be eligible to serve until the election of their successors. The Board is authorized to fill the position of a member who resigns before the term expires, such appointee to serve until the next regular election only. B. Officers and Committees. The Board of Directors shall elect a president, vice- president, secretary, and treasurer. The offices of secretary and treasurer may be combined in one person, in which event an extra member shall be elected to the Boardto provide an odd number. The Board shall also be authorized to appoint an executive committee. C. Disqualification. Any director or officer shall vacate the office if he or she holds any other office or place of profit in the Association; if such person becomes bankrupt or insolvent; or if such person participates in the profits of any outside business with the Association. An employee of the Association or person supplying the Association with goods shall not hold office as a director on any account whatever. A director shall not engage in business that competes with the business of the Association. Credit shall not be extended on the books of the Association to any director. D. Duties of Directors. The Directors shall administer all business carried on by or on account of the Association, subject to the control and direction of any regular or special meeting of the members. Directors shall have the following duties: 1. To convene the meetings of the Association. ____% of the Directors may call a special meeting by giving at least ______ (number) weeks' notice in writing to the secretary, specifying the object of the meeting; 2. To supervise the financial condition of the Association and its business, and to take proper action in its regard; 3. To appoint the following officials and assign their duties and determine their salaries: a. A manager or general manager to assume administrative control of the business; b. An auditor or auditing agency, as soon as the affairs of the Association require and the finances permit the employment of a paid auditor. The Board will consult the auditing committee in making this appointment, but the paid auditor shall be appointed by and be directly responsible to the Board. c. Nothing in this provision shall be interpreted to prevent the Board from making other appointments if and when the welfare of the Association makes this necessary. d. To require the manager, and all officers and employees charged with responsibility for custody of any of the Association's funds or property, to give adequate bonds; 4. To provide adequate insurance of the property of the Association and adequate insurance against liabilities; 5. To determine and supervise the more important policies of the Association, insuring the conduct of its affairs in accordance with the Bylaws, with fairness to members and employees, and providing the best possible conditions of labor consistent with other requirements of these Bylaws while demanding equivalent results in efficiency and faithfulness; 6. To decide on the major steps in business activity and expansion, including the investment of reserve funds, borrowing money, making important financial commitments, and entering into new fields of business enterprise; and 7 To maintain at all times an active program of cooperative publicity, education, and relations with other cooperative societies, federations, and leagues to promote the best interests of the Association and of the cooperative movement. E. Duties of President and Vice-President. The president shall act as chairman at all meetings of the Association and of the Board of Directors, and in the presidents absence the vice-president shall so act. If the vice-president is also absent, the officers and Directors present shall elect one from among themselves to act as chairman on that occasion. The president, acting president, or chairman, shall sign all contracts. F. Duties of Secretary. The secretary shall attend all meetings of the Association and of the Board of Directors, and shall record the names of all the Directors present and the minutes of their proceedings. The secretary shall also countersign all contracts entered in to by the Directors, receive all proposals for admission into the Association, attend to all correspondence, and keep the accounts, documents, and papers of the Association in such manner and for such purposes as the Directors may appoint. The secretary shall prepare the regular statement of the Association's affairs. The secretary, on all occasions in the execution of duties, shall act under the control and direction of the Board of Directors. G. Duties of Treasurer. The treasurer shall attend all regular meetings of the Association and of the Directors. The treasurer shall be responsible for such sums of money as may from time to time be delivered by the secretary or by any other person on account of the Association, and for the investment of the funds under the authority of the Directors. The treasurer shall be responsible for having adequate financial reports presented to the Board at regular periods or as the Board may direct. H. Election and Duties of Auditing Committee. An auditing committee of _____ (number) members shall be elected by the members of the Association. Auditors shall each serve for _____ (number) years, and shall at all times have access to the books, vouchers, and accounts of the Association. Auditors shall examine and audit the accounts and every balance sheet of the receipts and expenditures and effects of the Association at least every ______ (number)month, and shall report to the membership meeting, with recommendations. The auditors shall be responsible for the daily and perpetual accounting system kept by the manager and shall check the system periodically. Article V. Shares and Shareholders A. Stock Certificates. A numbered certificate of shares in the Association shall be issued to each member on the full payment of the subscription to the capital stock, and for subsequent shares as paid for. B. Limitation on Shareholding. A shareholder shall not hold, either directly or indirectly, more than ______ (percentage)of the total shares outstanding. The record of shareholders and the outstanding stock shall be kept by the secretary in a book for that purpose. C. Transfer or Repurchase of Shares. 1. The Association shall have the first option on any shares of stock offered for sale. Shareholders desiring to withdraw from membership or to dispose of surplus shares must first offer their shares to the Association, throughits Board of Directors. 2. The amount to be paid for the stock of a withdrawing member shall be computed by the Board of Directors as follows: The par value of paid-up stock, minus the proportionate share of the deficit, if any, based on total stock outstanding, or plus the proportionate share in the surplus, if any, based on stock outstanding, exclusive of the general surplus reserve, the educational reserve, or any other special reserves. These computations shall be made as of the end of the fiscal year nearest to the acceptance of the member's withdrawal. The surplus or deficit figure used in this computation shall be that figure found in the annual report of the fiscal year used, after the Board of Directors has taken action in accordance with this Agreement. 3. If the Association, through its Board of Directors, is unable or refuses to redeem such shares, the shareholder shall then have the right to dispose of them to any person eligible to membership in the Association. 4. Transfers of the shares of this Association shall not be binding until made on the books of the Association with the approval of the Board of Directors, and transfers shall not be completed until the old certificate or certificates have been indorsed and surrendered and a new certificate issued in the name of the purchaser. 5. The Board of Directors shall at all times have the authority to repurchase the shares of stock and to cancel membership of any shareholder: a. who has died; b. who has ceased to patronize the business of the Association to the minimum amount of $_________ per year; c. who has failed to meet payments on stock subscriptions within the specified period of time; or d. who for any other reason has been judged unfit for membership; provided, however, that such member shall have the opportunity to appear in defense before the next regular or special meeting of the Association and that the Board of Directors is sustained in its action by a majority vote of the members present at such meeting. 6. After a shareholder's whereabouts have been unknown for a period of _____ (number) years, and in accordance with the laws of ______________ (state) regarding due notice, the Board of Directors shall have the right to cancel such membership and transfer such share capital to the reserve fund. D. Reducing Capital by Repurchase of Shares. Whenever the share capital of the Association, in the judgment of the Board of Directors, shall be in excess of current needs, the Board shall have the right to repurchase on a pro rata basis from all shareholders who have shares in excess of the minimum requirements of _________(number) shares, as many such shares as it shall consider necessary to the best interests of the Association. The Board of Directors shall not repurchase the shares of any withdrawing member or of any other member when in its judgment such reduction of the Association's capital would in any way endanger the financial condition of the Association. E. Lien on Capital. The Association shall have an absolute lien on the share or loan capital, and on the interest due on the same, of any member or subscriber to share capital, for debts owed to the Association. F. Loan Capital. The Association may accept loans from its members or from nonmembers when in the judgment of the Board this is to the best interest of the Association, provided, however, that the total amount of such loan capital at no time shall exceed _____% of the total paid-in share capital; provided further, that any loans to finance new types of business must first be authorized by vote of the membership; and provided further, that such loans shall not be for a period of less than _____ days. Notes or other evidences of indebtedness shall be given by the Association for such loans. G. Returns on Share and Loan Capital. Any return on share capital shall not exceed _____ _% per year and shall be paid only from earnings. Such returns shall not be cumulative. Returns shall not be paid on shares until the subscription has been paid in full. Loaned capital shall receive interest at a rate fixed by the Board of Directors, but shall not exceed )_____% per year, and such interest may be cumulative. Article VI. Surplus and Reserves A. General Surplus Reserve. At the end of the fiscal period, the Board of Directors shall allocate a sum not less than _____% of the net surplus remaining after expenses have been met to the general reserve account until such account is equal to the amount of paid in capital, and then a sum not less than ____% of such surplus. The general surplus reserve shall consist of money especially allotted to it from net savings or earnings of the business, initiation fees, fines, and contributions from individuals, confiscated capital of removed or deceased members, and any other funds appropriated to it by action of the Board of Directors or the membership. This reserve shall be used to absorb operating deficits for the extension of the Association as a consumers' cooperative, or for other developments directly associated with the cooperative movement, on vote by a general meeting of the membership. The general surplus reserve shall be the indivisible property of the Association as a whole. B. Educational Fund. From the net surplus, a sum not less than ____% of the net surplus shall be allocated by the Board of Directors to an educational fund. In addition, this fund shall receive the amounts of patronage refunds standing to the credit of nonmembers who have failed to become members within the period specified in this Article. This fund shall be placed at the disposal of the educational committee of the Association, to be used for purposes of education among the members and the public. C. Patronage Refunds. Subject to determination by the membership, the sum remaining after paying the return on share capital and after providing for the reserve and educational fund, as provided in Paragraphs A and B of this Article, shall be used collectively for social purposes or be divided among the members who have paid in full for their shares of stock or who are not in arrears, in proportion to the amount of their patronage during the fiscal period on the following terms and conditions: 1. Savings returns or patronage refunds may be paid immediately in cash, or in certificates of indebtedness, or may be placed on the books of the Association to the credit of the patron members, to be paid at some future date at the discretion of the Board of Directors; 2. In the case of a patron who is not the owner of shares sufficient to qualify for membership in the Association, patronage refunds shall be credited to the payment of such stock; 3. If an eligible nonmember fails to become a member within ____________ ____________ (time period), the amount to such member's credit shall be transferred to the educational fund; and 4. Patronage refunds shall not be paid for any period in which there was an operating deficit, or as long as the Association has a general deficit. Article VII. Fiscal YearThe fiscal year of this Association shall begin on __________________ (month and day) of each year and end on _________________ (month and day). Article VIII. PricesThe prices to be charged patrons of the Association for goods and services shall be, as nearly as possible, competitive with the prices charged for similar goods and services by profit-making businesses in the territory served by the Association. Article IX. Merger with Another Association On affirmative vote by the membership, the Board of Directors may arrange for the merger of the Association with another recognized cooperative in the same or nearby territory if it appears that such action would prevent duplication of activities, promote efficiency, or otherwise be in the interest of the cooperative movement and the Association. Article X. Amendments These Bylaws may be amended, repealed, or otherwise changed by a ____ % vote of the members at any regular or special membership meeting, due notice of which has been given in advance; provided, however, that change shall not be made in the provisions pertaining to payment of patronage dividends and membership voting rights except by unanimous vote of the members present at the meeting who shall constitute not less than _____% of the entire membership. Article XI. Dissolution A. Vote of Membership. At any regular or special meeting, due notice of which has been given in advance, this Association may be dissolved by a _____% vote of the entire membership, present or voting by mail. B. Disposal of Reserves. On such dissolution, any reserves of the Association in excess of the outstanding financial obligations shall be turned over to such recognized cooperative organization as the membership may determine or to some government or other public agency, to be used for some social purpose; or be distributed among those patrons who have been members or subscribers at any time during the past ____ years, on the basis of their patronage during that period. The foregoing By-Laws of ________________________ (Name of Association) containing Articles I through XI, are hereby certified to be a true copy of the By-Laws adopted by the Members of _______________________ (Name of Association), effective as of _________________ (date). ________________________________(Printed Name of Director)________________________________(Signature of Director)Director ________________________________ (Printed Name of Director)________________________________(Signature of Director)Director ________________________________ (Printed Name of Director)________________________________(Signature of Director)Director Attest: ________________________________ (Printed Name of Secretary)________________________________(Signature of Secretary)Secretary