April 4, 2009
BYLAWS
Table
of Contents
ARTICLE 1. ORGANIZATION
Section 1.1 Ð Name............................................................................................................. 1
Section 1.2 Ð Purpose and Mission........................................................................................ 1
Section 1.3 Ð Cooperative Principles...................................................................................... 1
Section 1.4 Ð Business Office............................................................................................... 1
ARTICLE 2. SHAREHOLDER
STATUS
Section 2.1 Ð Eligibility...................................................................................................... 1
Section 2.2 Ð Admission...................................................................................................... 2
Section 2.3 Ð Rights........................................................................................................... 2
Section 2.4 Ð Responsibilities............................................................................................... 2
Section 2.5 Ð Access to Information....................................................................................... 2
Section 2.6 Ð Mediation....................................................................................................... 2
Section 2.7 Ð Termination.................................................................................................... 2
ARTICLE 3. CAPITAL STOCK
Section 3.1 Ð Issuance......................................................................................................... 2
Section 3.2 Ð Certificates..................................................................................................... 3
Section 3.3 Ð Redemption.................................................................................................... 3
Section 3.4 Ð Lien and Offset................................................................................................ 3
ARTICLE 4. SHAREHOLDER
MEETINGS
Section 4.1 Ð Annual Meeting............................................................................................... 3
Section 4.1a Ð Election Guidelines......................................................................................... 3
Section 4.2 Ð Special Meetings............................................................................................. 3
Section 4.2a Ð Issues Submitted by
Shareholders...................................................................... 3
Section 4.3 Ð Preliminary Review
Process............................................................................... 4
Section 4.4 Ð Notice............................................................................................................ 4
Section 4.5 Ð Quorum......................................................................................................... 4
Section 4.6 Ð Meeting Procedures.......................................................................................... 4
Section 4.7 Ð Decision-Making............................................................................................. 4
ARTICLE 5. BOARD OF
DIRECTORS
Section 5.1 Ð Powers and Duties........................................................................................... 4
Section 5.2 Ð Classification.................................................................................................. 4
Section 5.3 Ð Qualifications.................................................................................................. 4
Section 5.4 Ð Nomination.................................................................................................... 5
Section 5.5 Ð Election and Term............................................................................................ 5
Section 5.6 Ð Compensation................................................................................................. 5
Section 5.7 Ð Standards of Conduct....................................................................................... 5
Section 5.8 Ð Contracts for Profit.......................................................................................... 5
Section 5.9 Ð Conflicts of Interest.......................................................................................... 5
Section 5.10 Ð Termination.................................................................................................. 5
ARTICLE 6. MEETINGS OF
THE BOARD
Section 6.1 Ð Convening...................................................................................................... 6
Section 6.2 Ð Open Meetings................................................................................................ 6
Section 6.3 Ð Notice............................................................................................................ 6
Section 6.4 Ð Quorum and
Decision-Making............................................................................ 6
Section 6.5 Ð Telephone Conferences...................................................................................... 6
Section 6.6 Ð Action by Consent........................................................................................... 6
Section 6.7 Reconsideration of a Board Decision..................................................................... 6
ARTICLE 7. COMMITTEES
Section 7.1 Ð Executive Committee....................................................................................... 6
Section 7.2 Ð Other Committees............................................................................................ 6
ARTICLE 8. OFFICERS
Section 8.1 Ð Designation.................................................................................................... 7
Section 8.2 Ð Election and Term............................................................................................ 7
Section 8.3 Ð Duties............................................................................................................ 7
ARTICLE 9. FISCAL
MATTERS
Section 9.1 Ð Operating Year................................................................................................ 7
Section 9.2 Ð Fiscal Policies................................................................................................. 7
Section 9.3 Ð Accountability................................................................................................. 7
Section 9.4 Ð Bonding......................................................................................................... 7
ARTICLE 9A. PATRONAGE
DIVIENDS
Section 9A.1 Ð Distribution Obligation.................................................................................. 8
Section 9A.2 Ð Reductions................................................................................................... 8
Section 9A.3 Ð Consent of Shareholders................................................................................. 8
Section 9A.4 Ð Deferred Amounts.......................................................................................... 8
Section 9A. 5- Net Losses.................................................................................................... 8
ARTICLE 10.
INDEMNIFICATION
Section 10.1 Ð Rights.......................................................................................................... 8
Section 10.2 Ð Limitations................................................................................................... 9
Section 10.3 Ð Payments and Insurance................................................................................... 9
ARTICLE 11. NOTICE
Section 11.1 Ð Notice.......................................................................................................... 9
Section 11.2 Ð Waiver of Notice............................................................................................ 9
ARTICLE 11A. LIQUIDATION
Section 11A.1 Ð Liquidation................................................................................................. 9
ARTICLE 12. BYLAWS
Section 12.1 Ð Severability................................................................................................... 9
Section 12.1a Ð Interpretation.............................................................................................. 10
Section 12.2 Ð Amendment................................................................................................. 10
APPENDIX
Explanation of Patronage Dividend
Consent Provision............................................................. 10
ARTICLE
1. ORGANIZATION
Section
1.1 - Name. The name of this organization is Brattleboro Food Cooperative, Inc.
(referred to in these by-laws as Òthe CoopÓ).
Section
1.2 - Purpose and Mission. The Coop exists for the purpose of meeting the needs
of its shareholders, on a cooperative and nonprofit basis, with a focus on food
and related products, and supporting the larger cooperative movement.
The Coop is a consumer cooperative whose
mission is to provide quality products at a reasonable price in an environment,
which is organized fairly and honestly, for its shareholders, staff and
community. The Coop:
~
supports the active participation of its shareholders;
~
supports local and regional growers/producers, as well as other cooperatives;
and
~
strives to educate about social, political, environmental and economic issues
as they relate to food.
Section
1.3 - Cooperative Principles. The Coop shall be operated in accordance with the
International Cooperative Alliance Statement of Cooperative Identity. The StatementÕs seven principles are
guidelines by which cooperatives put their values into practice. These
principles include the following:
(a)
shareholder status is open and voluntary without gender, social, racial,
political or religious discrimination;
(b)
governance is democratic with equal voting rights among shareholders and
opportunity for participation in important decisions affecting the Coop;
(c)
shareholders contribute equitably to, and democratically control, the capital
of the Coop;
(d)
the Coop is an autonomous, self-help organization, controlled by its
shareholders;
(e)
education and training are provided for Coop shareholders, elected
representatives, managers and employees so they can contribute effectively to
the development of the Coop;
(f)
shareholders are served most effectively by strengthening the cooperative
movement through working with other cooperative organizations;
(g)
the Coop works for the sustainable development of its community through policies
accepted by its shareholders.
Section
1.4 - Business Office. The business office of the Coop shall be located at 2
Main Street in Brattleboro, Windham County, Vermont.
ARTICLE
2. SHAREHOLDER STATUS
Section
2.1 - Eligibility. Shareholder status in the Coop shall be voluntary and open
to any person who is in accord with its purpose and mission, will use its
services and is willing to accept the responsibilities of shareholder status.
Shareholder status for organizations shall be available only to incorporated or
unincorporated groups operated on a cooperative or nonprofit basis.
Section
2.2 - Admission. Applicants shall be admitted to shareholder status upon paying
or subscribing for a share of common stock at its then stated value. In the
event of questionable eligibility, admission shall be subject to approval by
the Board of Directors. On or before
admission to shareholder status each applicant shall be provided a copy of
these bylaws, including the appended explanation of the patronage dividend consent
provision, such copy indicating its date of approval or adoption.
Section
2.3 - Rights. Shareholders shall have the right to patronize the Coop at prices
generally available to shareholders and otherwise to benefit from participation
in the activities of the Coop. Shareholders may contribute labor or services
for discounts on purchases at a rate determined by the Board of Directors,
subject to ratification at the next scheduled shareholder meeting. Shareholders shall have the right to receive a copy of these
by-laws. References in these by-laws to the rights of shareholders shall be
understood as referring only to shareholders in good standing.
Section
2.4 - Responsibilities. To maintain shareholder status in good standing,
shareholders shall keep reasonably current in share payments, including
payments required by reason of an increase in the stated value of shares.
Shareholders shall abide by these by-laws, by decisions made at shareholder and
Board meetings and by the means established in these by-laws to amend such
decisions. Shareholders are expected to patronize the Coop on at least an
occasional basis and to apprise the Coop of any changes of name or address.
Section
2.5 - Access to Information. Reasonably adequate and timely information as to the
organizational and financial affairs of the Coop shall be provided or made
available to all shareholders. Shareholders shall be provided access to the
books and records of the Coop for a proper purpose and at a reasonable time,
subject to the approval of the Board of Directors in case of doubtful
propriety.
Section
2.6 - Mediation. In any dispute between the Coop and any of its shareholders or
former shareholders that cannot be resolved through informal negotiations, it
shall be the policy of the Coop to prefer the use of mediation whereby an
impartial mediator may facilitate negotiations between the parties and assist
them in developing a mutually acceptable settlement. No party with a grievance
against the other shall have recourse to litigation until the matter is
submitted to mediation and attempted to be resolved in good faith.
Section
2.7 - Termination. Shareholder status may be terminated voluntarily by a
shareholder upon notice to the Coop. Shareholder status may be terminated
involuntarily for cause by the Board of Directors after a fair hearing at which
the shareholder is given the opportunity to speak and present evidence. Upon
termination of shareholder status all rights and interests in the Coop shall
cease except for rights to redemption of capital pursuant to Article 3 of these
by-laws.
ARTICLE
3. CAPITAL STOCK
Section
3.1 - Issuance. To evidence capital funds provided by shareholders, the Coop
shall issue its common stock. Shares may be issued only to persons eligible for
and admitted to shareholder status in the Coop, and no shareholder shall hold
more than one share. The stated value of shares shall be determined from time
to time by the Board of Directors, subject to ratification at the next
scheduled shareholder meeting.
Section
3.2 - Certificates. Holders of shares shall be entitled to receive a
certificate evidencing their holding. All certificates shall be signed by the
President or Vice President and by the Secretary or Assistant Secretary and
shall be numbered and registered by the Coop. Each certificate shall contain a
prominent notation that it is transferable only with the express consent of the
Coop. The Coop may issue a replacement certificate for any certificate alleged
to have been lost, stolen or destroyed without requiring the giving of a bond
or other security against related losses.
Section
3.3 - Redemption. Upon request following termination of shareholder status,
common shares shall be redeemed when replacement capital is provided by other
new shareholders. Shares shall be redeemable at the lesser of their carrying
value on the books of the Coop or their net book value, less a reasonable
processing fee, if any, as determined by the Board. To the extent of amounts
otherwise due and payable to the Coop, shares shall also be redeemable upon
filing of a bankruptcy petition by or against a shareholder. No redemption
shall be made when such payment would impair the ability of the Coop to meet
its other obligations as they become due or would impair the claims of
instruments having a higher priority than common shares. Reapplications for
shareholder status after full or partial redemption shall be subject to
repayment of redemption proceeds or a waiting period or both as determined by
the Board of Directors.
Section
3.4 - Lien and Offset. The Coop shall have a first lien on shares to the extent
of amounts due and payable to the Coop by the shareholder. Shares shall at all
times be subject to being offset by amounts due and payable by the shareholder
to the Coop.
ARTICLE
4. SHAREHOLDER MEETINGS
Section
4.1 - Annual Meeting. The annual shareholder meeting shall be held in the fall
of each year at a time and place determined by the Board of Directors and
announced no less than nine weeks before the date of the meeting. The purpose
of the annual meeting shall be to hear reports on operations and finances, to
review any important policy issues or other matters that vitally affect the
Coop, to elect directors and to conduct such other business as may properly
come before the meeting.
Section
4.1a - Election Guidelines. Shareholders whose share payments and are up to
date one week prior to the annual meeting are eligible to vote. Voting starts
at the Annual Meeting. Voting closes two weeks later. Ballots not voted at the
Annual Meeting may be returned by mail or in person during the voting process.
Section
4.2 - Special Meetings. A special shareholder meeting may be called by the
Board or by the President, and shall be called upon request of any three
directors. Subject to the preliminary review process described in Section 4.3
below, a special shareholder meeting shall also be called as soon as
practicable after receipt of written petitions signed by ten percent of all
shareholders and submitted to the Coop's business office, such petitions
stating any proper issue to be brought before the meeting.
Section
4.2a - Issues Submitted by Shareholders. Subject to the preliminary review
process described in Section 4.3 below, the notices and agenda of a shareholder
meeting shall include any proper issue submitted by written petitions signed by
five percent of all shareholders. Petitions must be received by the Coop not
less than twelve weeks before the date of the meeting at which they are to be
presented to a vote of shareholders.
Section
4.3 - Preliminary Review Process. A petition of shareholders to call a special
shareholder meeting or to add an issue to a scheduled shareholder meeting shall
first be submitted to the Coop's business office with the signatures of ten
shareholders for preliminary review and advice by the Board. A submission for
preliminary review shall include the proposed language of the petition and a
written description of the perceived effects and benefits of the subject of the
petition. The Board shall complete the preliminary review process within a
period of time that is reasonable under the circumstances but not later than
120 days after submission. Unless the Board states otherwise, a copy of its
letter of advice with respect to the petition shall be made available to each
shareholder who is solicited to sign the petition, and the petition shall state
that the undersigned shareholders have been shown a copy of the Board's letter
of advice.
Section
4.4 - Notice. Notice of the time and place of any shareholder meeting, together
with the proposed agenda of the meeting, shall be delivered to all shareholders
not less than two weeks nor more than four weeks prior to the date of the
meeting. Notice shall also be posted conspicuously at the Coop. Decisions on
issues not included in the notice of a meeting shall be of an advisory nature
only.
Section
4.5 - Quorum. The presence in person at the opening of the meeting or the
presence by absentee ballot of at least two percent of all shareholders shall
be necessary and sufficient to constitute a quorum for the transaction of
business at any shareholder meeting.
Section
4.6 - Meeting Procedures. A shareholder meeting may include a meeting conducted
in whole or in part by absentee ballots. The agenda of all meetings of
shareholders shall be determined by the Board of Directors except as otherwise
provided in these by-laws. The conduct of shareholder meetings shall be guided
generally by RobertÕs Rules of Order.
Section
4.7 Ð Decision-Making. Shareholders may, as determined by the Board of
Directors, vote in person or by absentee ballot or by either of such methods.
In voting for directors, each shareholder may cast as many votes as there are
positions to be filled, but no more than one vote may be cast for any one
candidate. Otherwise each shareholder shall have one vote in all matters
submitted to a vote of shareholders. Organizational shareholders may be represented by any authorized person.
Proxy voting shall not be permitted. All issues shall be decided by a majority
of shareholders voting except where otherwise required by law or by these
by-laws.
ARTICLE
5. BOARD OF DIRECTORS
Section
5.1 - Powers and Duties. Except as to matters reserved to shareholder by law or
by these by-laws, the business and affairs of the Coop shall be directed and
controlled in the interests of shareholders by a Board of Directors (sometimes referred to in these by-laws
as Òthe BoardÓ). The powers and duties of the Board shall include, but not be
limited to, engaging a general manager and monitoring and evaluating his or her
performance, overseeing the operations of the Coop, establishing budgets and
fiscal controls, securing good conditions of employment and assuring that the
purpose, mission and principles of the Coop are properly carried out.
Section
5.2 - Classification. The Board shall consist of eleven directors. A minimum of
one and no more than two directors shall be staff shareholders; the remaining
shall be patron directors. The number of patron directors may be decreased to
no less than five by action of a shareholder meeting.
Section
5.3 - Qualifications. To be qualified as a director, a person shall be a
shareholder of the Coop, at least eighteen years of age, and shall not be
associated with interests adverse to the Coop. No person regularly employed by
the Coop shall be qualified to serve as a patron director.
Section
5.4 - Nomination. Candidates for patron directors shall be nominated by the
Board, by a nominating committee of the Board, by petition signed by at least
ten shareholders or, in the event that voting by absentee ballot is not used,
by nomination from the floor at a shareholder meeting. Candidates for staff
directors shall normally be nominated by shareholders who are regularly
employed by the Coop, but they may be nominated by any of the means available
for nomination of patron directors.
Section
5.5 - Election and Term. All directors shall be elected by plurality vote at
the annual shareholder meeting or by a specified date, not to exceed two weeks
following the annual meeting. Directors shall be elected to serve for terms of
three years or until election of their successors. The terms of directors shall
be staggered so that approximately one-third of the terms of both patron and
staff directors shall expire in each year. Directors may serve no more than
three consecutive terms.
Section
5.6 - Compensation. Patron directors shall be compensated by being accorded
working shareholder status. Staff directors shall be compensated by being
accorded the right to transfer working shareholder status to any other
shareholder of the Coop, contingent upon fulfillment of responsibilities as a
director. Directors may receive such other remuneration as is determined at a
shareholder meeting.
Section
5.7 - Standards of Conduct. Directors shall be responsible at all times for
discharging their duties in good faith, in a manner that they reasonably
believe to be in the best interests of the Coop and with the care that an
ordinarily prudent person in a like position would use under similar circumstances.
Section
5.8 - Contracts for Profit. Except for fair compensation for services actually
rendered, a director shall not during his or her term of office be a party to a
contract for profit with the Coop differing in any way from the business relations
accorded shareholders generally or upon terms differing from those generally
current among shareholders.
Section
5.9 - Conflicts of Interest. Directors shall be under an affirmative obligation
to disclose their actual or potential conflicts of interest in any matter under
consideration by the Board of Directors. Directors having such an interest
shall absent themselves from discussion and decision of the matter unless
otherwise determined by the Board.
Section
5.10 - Termination. The term of office of a director may be terminated prior to
its expiration in any of the following ways:
(a)
voluntarily by a director upon notice to the Coop;
(b)
automatically upon termination of shareholder status in the Coop;
(c)
involuntarily, with or without cause, by action of a shareholder meeting;
(d)
involuntarily for cause by a two-thirds vote of the Board after a fair hearing
at which the director is given the opportunity to speak and present evidence,
provided that such person is accorded a right of appeal at a shareholder
meeting.
Section
5.11 - Vacancies. Any vacancy among directors occurring between annual
shareholder meetings may be filled by the Board for the balance of the
unexpired term.
ARTICLE
6. MEETINGS OF THE BOARD
Section
6.1 - Convening. The Board of Directors shall meet on a regular basis. Meetings
of the Board may be called by the Board or by the President and shall be called
by the Secretary within seven days of a request by any two directors.
Section
6.2 - Open Meetings. Meetings of the Board shall be open to shareholders unless
closed by the Board as to a particular issue of a sensitive nature. Such closed
session shall be for purposes of discussion only and no votes shall be taken at
such session.
Section
6.3 - Notice. Meetings called by resolution of the Board shall require no
notice to directors other than such resolution. For all other meetings of the
Board actual notice, either written or oral, of the time and place of the
meeting shall be provided to all directors. Written notice shall be delivered
not less than five days before and oral notice given not less than two days
before the date of the meeting. Notice of each meeting shall also be posted
conspicuously at the Coop as soon as practical after the date of the meeting is
set.
Section
6.4 - Quorum and Decision-Making. The presence in person at the opening of the
meeting of a majority of directors shall be necessary and sufficient to
constitute a quorum for the transaction of business at any meeting of the
Board. Decisions of the Board shall be made by majority vote of directors
present.
Section
6.5 - Telephone Conferences. Meetings of the Board may be conducted by means of
a telephone conference or other communications equipment whereby all persons
participating can hear each other at the same time.
Section
6.6 - Action by Consent. Any action required or permitted to be taken at a
meeting of the Board or of any committee may be taken without a meeting if a
written consent to the action is signed by all directors or committee members
and filed with the minutes of meetings.
Section
6.7 - Reconsideration of a Board Decision. Any action taken by the Board or by
a committee exercising any authority of the Board shall be reconsidered by the
Board upon receipt of written petitions signed by three percent of all
shareholders and submitted to the Coop's business office. The petition shall be
acted upon within a period of time that is reasonable under the circumstances.
If the action at issue is not reversed as a result of the reconsideration, the
Board shall issue a written statement of its reasons for denying the petition.
ARTICLE
7. COMMITTEES
Section
7.1 - Executive Committee. The Board may designate an Executive Committee
composed only of directors. Such committee may act on any urgent business when
it is impractical to assemble the whole Board except that it may not enter into
any contractual relationships with parties outside the Coop. Actions of the
Executive Committee shall be reported to, and subject to the approval of, the
Board at its next following meeting. Action by the Executive Committee shall
require notice to all of its members and a quorum of not less than three
persons to transact business. Such committee shall not operate to relieve the
Board of its legal responsibilities in the oversight of the Coop.
Section
7.2 - Other Committees. The Board may designate other committees, consisting
only of shareholders of the Coop, to perform other designated functions.
ARTICLE
8. OFFICERS
Section
8.1 - Designation. The officers of the Coop shall consist of President, Vice
President, Treasurer, Secretary and such other officers or assistant officers
as is determined by the Board. The offices of Treasurer and Secretary may be
held by the same person. All officers shall be directors.
Section
8.2 - Election and Term. Officers shall be elected annually by the Board at its
first meeting following the annual shareholder meeting. Officers shall serve
for terms of two years or until election of their successors. Officers may be
removed at any time, with or without cause, by the Board.
Section
8.3 - Duties. Officers shall have the following duties and such additional
duties as is determined by the Board:
(a)
the President shall preside at all Board and shareholder meetings, shall
present a report to the annual shareholder meeting on the organizational
affairs of the Coop and shall, as authorized by the Board, sign formal
documents on behalf of the Coop;
(b)
the Vice President shall perform the duties of President in his or her absence
and shall, as requested, assist the President in the performance of his or her
duties;
(c)
the Treasurer shall monitor the financial affairs of the Coop and the filing of
all required reports and returns, shall present a report to the annual
shareholder meeting on the financial affairs of the Coop and shall, as
authorized by the Board, sign
formal documents on behalf of the Coop; and
(d)
the Secretary shall oversee the issuance of required notices and the keeping of
minutes of all Board and shareholder meetings and shall, as authorized by the
Board, sign or attest to formal documents on behalf of the Coop.
ARTICLE
9. FISCAL MATTERS
Section
9.1 - Operating Year. The operating year of the Coop shall be July to June.
Section
9.2 - Fiscal Policies. The Coop shall be operated according to sound business
practices insofar as they are consistent with cooperative principles and with
the purpose and mission of the Coop.
Section
9.3 - Accountability. Thorough financial statements of the Coop for each
operating year shall be prepared and made available to the Board of Directors
and to shareholders. The Board shall arrange for an audit or review of the
financial statements of the Coop by an independent public accountant selected
by the Board at least every five years. This review or audit shall include a
financial management review and report to the Board concerning management
performance, adherence to governing policy, adequacy of operating controls and
procedures, and other matters as is determined by the Board.
Section
9.4 - Bonding. The general manager shall be covered by a bond of indemnity for
faithful performance of duties in such amounts and on such terms as may be
determined by the Board. The Board may require such bonds of any other
employees or officers who handle funds or property of the Coop. Premiums on all
such bonds shall be paid by the Coop.
ARTICLE 9A. PATRONAGE DIVIDENDS
Section
9A.1 - Distribution Obligation. The realized net earnings of the Coop
attributable to the patronage of shareholders shall be allocated and
distributed among shareholders in proportion to their purchases from the Coop
and in such a manner and at such a time as to constitute patronage dividends
within the meaning of federal income tax law. Operations of the Coop which
encompass more than one allocation unit shall be netted so that a single amount
of distributable net earnings is allocated to all shareholders of the Coop.
Section
9A.2 - Reductions. Any distributable net earnings of such a nominal amount as
not to justify the expenses of distribution may, as determined by the Board, be
excluded from distribution. Net earnings may be reduced by such reasonable
reserves for necessary business purposes as is determined by the Board.
Section
9A.3 - Consent of Shareholders. By obtaining or retaining shareholder
status in the Coop, each shareholder shall thereby consent to take into
account, in the manner and to the extent required by Section 1385 of the
Internal Revenue Code, the stated dollar amount of any qualified written notice
of allocation in the taxable year in which such notice is received.
Section
9A.4 - Deferred Amounts. Payment of a portion of patronage dividends, not to
exceed eighty percent of the allocation, may be deferred as determined by the
Board. Such amounts shall be credited to revolving capital accounts in the
names of recipient shareholders and shall accrue no dividend or other monetary
return on contributed capital. They may be redeemed when determined by the
Board to be no longer needed for business purposes. At that time they shall be
redeemed in the order of the oldest outstanding amounts and on a pro rata basis
among such amounts, except that redemptions shall be payable only to
shareholders who are then in good standing or become so within a six-month
period of time. Deferred amounts may also be redeemed under compelling
circumstances as determined by the Board. They shall be subject at all times to
being offset by amounts otherwise due and payable to the Coop.
Section 9A.5 - Net Losses. In the event the Coop shall
incur a net operating loss in any fiscal year, the portion of such loss
attributable to the patronage of shareholders shall be carried forward to
offset income of the same character in subsequent years, and any remaining loss
shall be carried back and forward to offset income of the same character in
prior and subsequent years as required or permitted under federal income tax
law. The foregoing shall not limit the full carryback of net operating losses
to years in which the Coop was not under a legal obligation to distribute
patronage dividends.
ARTICLE
10. INDEMNIFICATION
Section
10.1 - Rights. Subject to the limitations in this Article, the Coop shall
indemnify its current and former directors and officers against all losses and
expenses, including reasonable attorneyÕs fees, to which they may become subject by reason of their
positions with the Coop or their service in its behalf. Such indemnification
shall apply whenever such person is a party or is threatened to be made a party
to any threatened, pending or completed action, suit, or proceeding, whether
civil, criminal, administrative or investigative. Such indemnification shall
include direct payment or settlement of liabilities and potential liabilities.
Payment of expenses incurred in defending a suit or proceeding in advance of
its final disposition may be made only upon receipt by the Coop of a
contractual undertaking by or on behalf of such person to repay such amounts
unless the person shall be determined to be entitled to indemnification under
this Article.
Section
10.2 - Limitations. No indemnification shall be provided unless the person is
determined to have acted in good faith and in the reasonable belief that his or
her action was in the best interests of the Coop, or, in regard to criminal
actions, that such person had no reasonable cause to believe that his or her
action was unlawful. If such determination is not made in a legal proceeding
related to the claim, it may be made by a quorum of disinterested directors or
by independent legal counsel selected by such quorum. If not made or able to be
made by either, the determination shall be made by independent legal counsel
selected at a shareholder meeting. In any action by or in the right of the Coop
or in which such person is charge with receiving an improper personal benefit,
indemnification shall be provided only as to reasonable expenses and only if
the person is not adjudged liable to the Coop on such basis.
Section
10.3 - Payments and Insurance. Indemnification payments and advances of
expenses shall be made only in such increments and at such times as will not
jeopardize the ability of the Coop to pay its other obligations as they become
due. All such payments made shall be reported in writing to shareholders with
or before the notice of the next shareholder meeting. The Coop may purchase and
maintain insurance on behalf of its directors and officers against any liabilities and expenses
related to their position with, or service on behalf of, the Coop irrespective
of whether the Coop could have indemnified them under this Article against such
liabilities and expenses.
ARTICLE
11. NOTICE
Section
11.1 - Notice. Any notice required under these by-laws shall be deemed
delivered when deposited in the United States mail with names and addresses as
they appear in the records of the Coop.
Section
11.2 - Waiver of Notice. Any notice of a meeting required under these by-laws
may be waived in writing at any time before or after the meeting for which
notice is required. The attendance of any person at a meeting shall constitute
a waiver of notice of the meeting except where the person attends for the
express purpose of objecting to the transaction of business because the meeting
is not lawfully convened.
ARTICLE 11A. LIQUIDATION
Section 11A.1 -
Liquidation. Upon
liquidation and dissolution of the Coop, its assets shall be distributed in the
following manner and order: (i) by paying or making provision for payment of
all liabilities and expenses of liquidation; (ii)
by redeeming any deferred patronage dividends which, if they cannot be paid in
full, shall be paid in the order of the oldest outstanding amounts and on a pro
rata basis among all such amounts for each fiscal year; (iii) by redeeming
common shares at their carrying value on the books of the Coop which, if they
cannot be paid in full, shall be paid on a pro rata basis among all outstanding
amounts; and (iv) by distributing any remaining assets among current and former
shareholders in proportion to their patronage during the five years immediately
preceding the date of dissolution, or, if so determined at a meeting of
shareholders, to one or more cooperative or nonprofit that may best further the
purposes and mission of the Coop.
ARTICLE
12. BY-LAWS
Section
12.1 - Severability. In the event that any provision of these by-laws is
determined to be invalid or unenforceable under any statute or rule of law,
then 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 by-laws.
Section 12.1a - Interpretation. The
Board of Directors shall have the power, with or without advice of legal
counsel, to interpret these by-laws, apply them to particular circumstances,
and adopt policies in furtherance of them, provided that all such actions are
reasonable and consistent with these bylaws.
Section
12.2 - Amendment. These by-laws may be amended or repealed only by action of a
shareholder meeting, provided that proposed amendments are stated or fully described in the notice of the
meeting at which the amendments are to be adopted.
APPENDIX
EXPLANATION OF PATRONAGE DIVIDEND CONSENT PROVISION
The
Coop has been advised by legal counsel that the general rule as to taxability
of patronage dividends is subject to an exception that is applicable to
consumer cooperatives. Under that exception, a patronage dividend is not
required to be included in taxable income if the shareholder's purchases from
the Coop related to "personal, living or family items." Patronage
dividend would thus be taxable only if the shareholder is an organization or
if, in the case of a shareholder who is an individual, his or her purchases
related to the operation of a trade or business or other income-producing
activities. When it is so taxable, patronage dividends are includible in the
gross incomes of recipient shareholders in the taxable year in which it is
received.