Also see all Dojo4 Co-op legal documents here: https://github.com/dojo4/policy/tree/master/co-op and in the Dojo4 Concord account at concordnow.com.
(hereinafter the “Cooperative”)
Whereas, the Members hereby acknowledge and agree that (a) these Bylaws shall be deemed to supersede and exclusively govern the membership relationship among the Members; and (b) that certain Amended and Restated Operating Agreement dated as of February 2, 2015 is hereby terminated and of no further force or effect as of the date hereof;
Whereas, the mission of Dojo4 LCA is to:
Whereas, the Cooperative subscribes and commits to the core values that define our work as:
Whereas, the Cooperative adopts and subscribes to the seven International Cooperative Alliance cooperative principles:
Whereas, the Articles of Organization, as amended from time to time, are hereby incorporated by reference into these Bylaws.
Qualifications and Definition of Membership. Each of the following shall be a “Member” of the Cooperative and collectively, all classes of membership may be referred to herein as “Members.”
(also referred to as “Council Member” or a “Class A Member”)
Any natural person or entity (with no more than three beneficial owners) may apply for admission to the Cooperative as a Class A Member, who meets the following eligibility requirements.
The following eligibility requirements shall apply only to the initial Council Members as of the date these Bylaws are first adopted:
The following eligibility requirements shall apply at all times after March 4, 2017:
(also referred to as “Investor-Members” or a “Class B Member”)
Eligibility to acquire and hold Class B Units, as defined in this article, section 7, shall be determined by the Board of Directors limited to Ara Howard and Corey Kohn (and the successors, heirs, and proper assignees of each), who (i) shall have contributed by written agreement the entire membership interest in dojo4, LLC, the Colorado limited liability company validly existing prior to and converting to this Cooperative; and (ii) acknowledges that Class B Units have no voting rights in the Cooperative.
The Cooperative, through or by the Board of Directors, or such other authorized representative as it may appoint from time to time, may admit to membership any applicant who (i) applies for admission for the purpose of participating in the activities of the Cooperative and (ii) meets all the requirements for application and membership under these Bylaws, the statutes of the State of Colorado and policies established by Council Members or the Board of Directors; (iii) purchases one (1) Class A Unit, as defined in this article, section 7, in the Cooperative, as applicable; (iv) executes a Membership Agreement or such other agreement as the Board may require; and (v) has been approved by unanimous consent of all Council Members; except that a person/entity shall not be eligible for membership if the Board of Directors finds, based on reasonable grounds, which shall not include discrimination on the basis of sex, race, ethnicity, national origin, sexual orientation, or any other status protected by federal or state law, that the applicant’s admission would prejudice the interests, hinder or otherwise obstruct, or conflict with, any purpose or operation of the Cooperative. Without limiting the generality of the foregoing, the Cooperative may limit, postpone, delay or deny admission to an applicant for membership into a particular membership class if, in the discretion of Council Members or the Board of Directors, such admission would frustrate, jeopardize or in any other way adversely affect the optimal size and balance of the Council Member class, which shall be determined in the discretion of Council Members or the Board of Directors and periodically reviewed by the same.
An applicant shall be considered a member effective upon (i) acceptance of his/her/its application; (ii) payment for the Class A Unit; and (iii) full execution of such agreements as the Board may require. Without limiting the generality of the foregoing, Class A Members may pay for the Class A Membership Unit either in immediately available funds, via an installment payment plan, or via periodic deductions from payments or distributions made by the Cooperative to such Class A Member. A new member’s allocation of the cooperative’s net margins for the year in which he/she/it became a member shall be based on the relationship of the member’s patronage of the cooperative after he became a member to the total patronage of all members for that year.
The Cooperative shall not be required to issue any certificates representing memberships, capital unit, or other investments in the Cooperative. If certificates are issued, the restrictions on transfer of unit or membership shall be printed upon every certificate of unit or certificate of membership subject to the restrictions. Certificates shall also include the terms and conditions of redemption, if any.
Other than the eligibility requirements outlined in in Section 1(a), Council Members should consider the following criteria when evaluating potential Council Members. Not all of the following criteria need to be met by a potential Council Member in order to be accepted, but each is an important consideration for the health, conviviality and vitality of the Cooperative. Council Members shall ask the following questions when when evaluating potential Council Members:
No membership interest may be transferred to any person or entity not otherwise qualified to be a Member in the Cooperative or that does not patronize the Cooperative, in accordance with Section 1 above, except: to a spouse for holding in co-tenancy or joint tenancy with a right of survivorship; to a business entity controlled by such holder; or to the Cooperative upon the redemption or acquisition thereof by the Cooperative. Any purported transfer or any transfer that results from the operation of law shall be void and of no effect, unless consented to in writing by the Board of Directors and entered into the records of the Cooperative. If in the sole discretion of the Board of Directors, membership is at any time held by any person or entity not otherwise eligible to hold the same, the Board of Directors may in its sole discretion, either redeem the proceeds of such membership interest, including any unredeemed notices of allocation, or transfer such membership interest to a non-membership equity account upon written notification to the holder thereof and the person or entity shall not be entitled to vote at the membership meeting of the Cooperative.
Notwithstanding that the terms, conditions and continuation of certain obligations pursuant to such agreements as may exist between a Council Member and the Cooperative shall continue in full force and effect notwithstanding the foregoing, a Council Member may withdraw from the Cooperative by providing thirty (30) calendar days written notice of the Council Member’s intent to withdraw to the Secretary of the Cooperative or to such other representative as authorized by the Board. The form of such written withdrawal may be prescribed by the Board. A withdrawing Council Member shall be considered an active Council Member entitled to all benefits entitled and accruing thereto pursuant to these Bylaws until the withdrawal becomes effective. Unless a Council Member has withdrawn because the Member has died, dissolved its business, is no longer eligible for membership in the Cooperative, or because of a violation of any agreements, policies or procedures of the Cooperative, a Council Member who withdraws shall be eligible to reapply for membership in the Cooperative at any time following the effective date of such withdrawal. Notwithstanding a Council Member’s right to withdraw, the Board reserves the right to delay, postpone, withdraw, suspend, or otherwise decide unilaterally the timing and method by which the equity represented by a Council Member’s Membership Unit may be redeemed. The Board shall have the sole discretion to determine the timing and method of any redemption of a Council Member’s equity.
Except in circumstances where cause exists, if, following a hearing, prior to which ten (10) calendar days written notice of intention to terminate was given to a Council Member by the Cooperative, Council Members shall find that the member has: (i) ceased patronizing the Cooperative, or has failed to meet its patronage obligations as provided in the Membership Agreement for a consecutive period of twelve (12) months; (ii) has violated any other provision of the Membership Agreement or any other policy or procedures of the Cooperative; (iii) died, dissolved its business, or has otherwise ceased patronage activities; (iv) otherwise ceased to be eligible for membership in the Cooperative; (v) otherwise been disruptive to the orderly operation of the Cooperative or frustrated the Cooperative’s purpose or efforts, Council Members, by a two-thirds super-majority vote (excluding Member subject to termination) may terminate, effective immediately, the Council Member’s voting rights and membership in the Cooperative.
Cause shall be limited to acts of deception, personal unjust enrichment, or other acts customarily giving rise to summary termination. Cause shall be determined in the sole discretion of the Board of Directors.
On the date a Council Member’s withdrawal becomes effective or upon the termination of the Council Member’s membership in the Cooperative by Council Members or the Board of Directors, all rights and interests of the Council Member in the Cooperative shall cease and the Council Member shall be entitled only to payment for the value of the Council Member’s equity interest in the Cooperative, as defined in this Section 3. The equity interest of a Member is limited to the value of that Member’s Capital Account (the “Terminated Member Redemption Price”). For purposes of calculating that Member’s Patronage Allocation, as defined in this article, section 7, a Council Member shall be entitled to a Patronage Allocation to be pro-rated from the start of the fiscal year up to the effective date of withdrawal or termination, as defined herein. Within ninety (90) days after the effective date of the Council Member’s withdrawal or termination, the Cooperative shall consider distributing to the Council Member the Terminated Member Redemption Price, either in cash, by issuing a promissory note, or some combination thereof, to be decided in the sole discretion of the Board of Directors. Notwithstanding the foregoing, the Board shall have the sole discretion to delay, withhold, modify or otherwise control the timing of any redemption or equity distribution if it would impair the financial health of the Cooperative.
The property rights and interest of Investor-Members are limited to the original purchase price paid for the Class B Units, plus any declared but undistributed allocations.
If a Member of the Cooperative is other than a natural person, the Member shall be represented by any individual, associate, officer, Manager, or Member thereof duly authorized by the Member in writing delivered to the Secretary of the Cooperative.
Each Member who hereafter applies for and is accepted as a Member in this Cooperative and each Member of this Cooperative as of the effective date of these Bylaws, who continues as a Member after such date shall by such act alone consent that the amounts of any allocation or distributions with respect to (i) his/her/its patronage occurring on or after such effective date, if of a Council Member; or (ii) his/her/its Capital Account balance on or after such effective date, if by an Investor-Member, shall be made in accordance with the Internal Revenue Code Subchapter K, which governs entities taxed as partnerships but based upon the amounts a Member patronizes the Cooperative (as hereinafter defined). Members shall receive annual Schedule K-1 partnership returns reflecting all income and loss from the Cooperative for the prior taxable year. Each Member further agrees to account fully for all allocated profit/loss income of the Cooperative on his/her/its personal income tax filings to the extent reported on an annual Schedule K-1, which may include income generated in multiple states and for which Member agrees to declare and pay tax in such states, notwithstanding that Member may not reside in the states in which the Cooperative’s business income was generated.
A record of the Members and their full names, addresses, and social security or tax identification numbers shall be kept by the Cooperative. Each Member shall notify the Secretary immediately of any change in the Member’s address, social security number, or tax identification number.
(a) Class A Units
The aggregate number of voting units which the Cooperative is authorized to issue is one hundred (100) Class A Units, no par value (the “Class A Unit” or “Council Membership Units”). Each unit of Class A Units shall have one and only one vote on all matters for which a vote may or is to be taken as defined in the Bylaws, and when issued shall be fully paid, non-assessable and may not be sold, assigned or otherwise transferred, voluntarily or involuntarily, by operation of law or otherwise, except for a transfer to the Cooperative under the redemption provisions set forth in the Bylaws of the Cooperative.
(b) Class B Units
The aggregate number of Class B Units which the Cooperative is authorized to issue is one thousand (1,000) units of Class B Unit, no par value (the “Class B Unit” or “Investor Membership Units”). Units of Class B Units will be issued in one class. Units of Class B Units shall have no voting rights, except as may be required by law. Class B Units, when issued shall be fully paid, non-assessable, and may not be sold, assigned or otherwise transferred, voluntarily or involuntarily, by operation of law or otherwise, except for a transfer to the Cooperative under the redemption provisions set forth in the Bylaws of the Cooperative or except as otherwise provided in the Bylaws.
(c) The respective preferences, voting powers, qualifications and special or relative rights or privileges of or applicable to Class A and Class B Units are as follows:
Restricted eligibility for the ownership of units of Class A Units shall be in accordance with the Cooperative’s Bylaws.
Rights and Privileges
The holders of Class A Units are entitled to no more than a single vote per unit on any matter for which a vote by Class A Members may or is to be taken as prescribed in the Cooperative’s Bylaws. Each Class A Membership Unit shall entitle the holder thereof to one (1) vote.
No Allocations are paid on units of Class A Units, however, all or part of the net earnings or losses of the Cooperative shall be allocated to the holders of Membership Units on the basis of each Class A Member’s patronage, as determined by the Board of Directors on an annual basis and in accordance with the Bylaws (“Patronage Allocation”).
Subject to preferential liquidation rights of the holders of Class B Units as provided in the Bylaws of the Cooperative, Class A Units shall be entitled to distributions of residual proceeds resulting from a Liquidation Event (as hereinafter defined) on a pari passu basis (“Liquidation Rights”).
One transaction or a series of related transactions including a plan duly approved in accordance with the Cooperative’s Articles of Organization and Bylaws for (A) the closing of the sale, transfer or other disposition of all or substantially all of the Cooperative’s assets, (B) the consummation of the merger or consolidation of the Cooperative with or into another entity (except a merger or consolidation in which the holders of capital units of the Cooperative immediately prior to such merger or consolidation continue to hold at least 50% of the voting power of the capital units of the Cooperative or the surviving or acquiring entity), or (C) the closing of the transfer (whether by merger, consolidation or otherwise), in one transaction or a series of related transactions, to a person or group of affiliated persons (other than an underwriter of the Cooperative’s securities), of the Cooperative’s securities if, after such closing, such person or group of affiliated persons would hold 50% or more of the outstanding voting unit of the Cooperative (or the surviving or acquiring entity) (“Liquidation Event”); provided, however, that a transaction shall not constitute a Liquidation Event if its sole purpose is to change the state of the Cooperative’s incorporation or to create a holding Cooperative that will be owned in substantially the same proportions by the persons who held the Cooperative’s securities immediately prior to such transaction. Notwithstanding the prior sentence, the sale of units of Class B Units in a bona fide financing transaction shall not be deemed a Liquidation Event.
Issuance of Class B Units may be limited in the sole discretion of the Board of Directors.
No Voting Rights
The Class B Units shall not be entitled to voting rights, except as required by law.
When and as declared by the Cooperative’s Board and to the extent permitted under C.R.S. Title 7, Article 58; Class B Units shall be entitled to receive variable, non-cumulative annual dividends out of the net earnings of the Cooperative available therefor. The target dividend rate shall be 5%, which shall not be guaranteed, and shall be declared and distributed in the sole discretion of the Board.
Class B Units shall be entitled to priority with respect to the distribution in a Liquidity Event, as set forth in these Bylaws. Class B Units shall be entitled to distributions of residual proceeds resulting from a Liquidation Event on a pari passu basis.
Class B Unitholders shall have put and call rights as provided in the Bylaws of the Cooperative.
Holders of Class B Units shall have the right, beginning two (2) years from the date of purchase or grant Class B Units, to request that the Cooperative redeem such Units at a redemption price equal to the original purchase price plus any declared but unredeemed allocations (the “Redemption Price”) as follows:
The Board of Directors shall have the right from time to time to modify the above timing and percentages applicable to the put right of holders of Class B Units. The Cooperative may redeem the Class B Units at the Redemption Prices described above by payment in cash or the issuance of promissory notes having a five-year term with annual interest in an amount that is not less than the applicable federal rate of interest, or any combination of the foregoing.
Requests for redemptions shall be made in writing.
In the event the Board of Directors grants the request for redemption, the Cooperative shall tender the Redemption Price to the holders of Class B Units who requested redemption within thirty (30) days after receipt of such request in the form of cash, a promissory note with interest not less than the applicable federal interest rate.
If at any time the Board determines that it is not in the best interests of the Cooperative to redeem equity, the Board of Directors determines that the payment of the aggregate Redemption Price payable pursuant to requests for redemption will impair the ability of the Cooperative to operate effectively, the Board of Directors shall have the discretion to limit, postpone or refuse requests for redemption.
Meetings of Council Members of the Cooperative, as previously determined by the Board of Directors, may take place in person, by telephone conference, by internet conference, by video conference, or by any other electronic or telecommunications means by which the Council Members can effectively communicate, following the notice procedures prescribed in these Bylaws.
A regular annual membership meeting of Council Members shall be held annually on May 1 of each year, or within one hundred eighty (180) days after the close of the fiscal year on a date and at such time and place in the area served by the Cooperative as may be determined by the Board of Directors and specified in the proper notice of the meeting. At all regular meetings of Council Members, any and all lawful business may be brought before the meeting regardless of whether stated in the notice of the meeting; except that amendments to the Articles of Incorporation or the Bylaws of the Cooperative or other action required to be stated in the notice of the meeting shall not be subject to action unless notice thereof is stated in the notice of the meeting. The Secretary shall prepare and post the Membership List (as defined herein) in a conspicuous location during a regular annual membership meeting.
Special meetings of the Council Members of the Cooperative may be called at any time by order of the Board of Directors, by such officer(s) as may be designated in these Bylaws, or upon a written petition of at least twenty five percent (25%) of the Council Members, such petition delivered to the President or the Secretary of the Cooperative stating the specific business to be brought before the meeting and shall state the time, date, and place of the meeting. The petition shall specify a date for such Special Membership Meeting that is no less than ten (10) days and no more than sixty (60) days from the date of the petition. The place stated in the petition shall be a place reasonably convenient for the general membership. At all special meetings of the members of the Cooperative, business brought before the meeting shall be limited to the purpose stated in the notice. The Secretary shall prepare shall post the Membership List in a conspicuous location during a special membership meeting.
Written notice of every regular and special meeting of the Council Members shall be prepared and mailed or electronically mailed to the last known U.S. Post Office or email address of each Member not less than ten (10) days before the meeting. The notice shall state the time and place, and the business to come before the meeting. Class B Members shall be entitled to notice of all regular annual membership meetings, and those special membership meetings as determined by the Board.
When any notice is required to be given to any Council Member of the Cooperative by law or under the provisions of the Articles of Incorporation or these Bylaws, a waiver thereof shall be equivalent to the delivery of proper notice, provided such waiver is in writing signed by the Member entitled to the notice, whether before, at, or after the time stated in the notice.
By attending a meeting, a Council Member: (i) waives objection to lack of notice or defective notice of the meeting unless the Council Member, at the beginning of the meeting, objects to the holding of the meeting or the transacting of business at the meeting; and (ii) waives objection to consideration at the meeting of a particular matter not within the purpose or purposes described in the meeting notice unless the Council Member objects to considering the matter when it is presented. “Attendance” shall include attendance in person at any meeting, participating in a telephonic meeting, or participation by signing into a tele-conference or other form of internet on-line meeting format as prescribed by the Board of Directors for that particular meeting.
At all membership meetings, each qualified Class A Member holding one (1) unit of voting Class A Units for each current membership, provided such Council Member is in good standing in accordance with all policies duly adopted by the Board, shall be entitled to one (1) vote for each unit of voting Class A Units held. Provided quorum exists, all matters shall require an affirmative vote of a two-thirds super-majority of the Council Members present and entitled to vote, except as otherwise specifically provided by law, the Articles of Organization or these Bylaws. Votes shall only be counted among Council Members present and entitled to vote, including proxy votes.
Voting by proxy is permitted at all meetings, provided the proxy authorization is memorialized in writing, signed by both Members. Cumulative voting is prohibited at any and all meetings of the Cooperative. For purposes of this subsection (b), all duly prepared and delivered powers of attorney shall be considered to be proxies.
For any meetings of Council Members, the Board of Directors, at its election, may submit motions, resolutions, or other matters to be voted upon to all Council Members for vote by ballots transmitted by mail through the U.S. Postal Service. In addition, the Board of Directors, at its election, may submit motions, resolutions, or other matters to be voted upon to all Council Members for vote by any electronic means (including, but not limited to, email ballots, internet drop box voting, electronic voting systems, etc.) that the Board deems reasonable and that will allow all of the Council Members to vote. Email ballots shall be deemed properly delivered when transmitted by sender. The ballots may be returned to the Cooperative by mail, by email, or by any other reasonable means, as directed in instructions to be delivered with the ballots. The ballots shall be counted only in the meeting at the time at which the vote is taken, provided that all Council 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 of the motion or resolution is forwarded with and attached to the vote of the Council Member voting. If a matter, for which mailed or emailed ballots have been delivered and received by the Cooperative, must be amended at the meeting, the meeting shall be adjourned with respect to that matter until a new vote can be solicited by mail or email with respect to the amended matter. Notwithstanding the foregoing, if a quorum is present at such meeting and a simple majority vote of the Council Members approves the matter as amended, the meeting need not be adjourned with respect to that amended matter.
A simple majority of the Council Members, present and voting in person or in any other manner authorized by these Bylaws, shall constitute a quorum for the transaction of business at any meeting of the Council Members, except for the transaction of business concerning which a different quorum is specifically provided by law. In the event a quorum is not present or is lost during the meeting, the meeting may be recessed or adjourned from time to time without further notice by a majority of those present until a quorum is obtained. Any business may be transacted at the resumption of the recessed meeting that might have been transacted at the originally called meeting. In the event a quorum is not present or is lost during the meeting, the meeting may be recessed or adjourned from time to time without further notice by a majority of those present until a quorum is obtained. Any business may be transacted at the resumption of the recessed meeting that might have been transacted at the originally called meeting.
All membership meetings of the Cooperative shall be presided upon in accordance with these Bylaws. The officer presiding over membership meetings shall have the discretion to adopt and enforce formal governance procedures and rules. The following order of business shall be used as a guide insofar as is applicable and desirable:
Actions of the Council Members may be taken without a meeting if the action is agreed to by all Council Members eligible to vote on such matter, and approval to take such action is evidenced by one or more written consents or electronically transmitted approvals, signed by all Council Members entitled to vote on such matter and filed with the corporate records reflecting the action taken.
In addition to those matters for which Council Member approval is required as a matter of custom or law, the following matters are so integral to the ethos and operations of the Cooperative that they shall require the approval of the Council Members:
Each Council Member shall attend and participate in at least 30% of membership meetings, matters presented for electronic voting or actions proposed to be taken without a meeting, as defined in this Article (collectively the “Membership Activities”). If a Member fails to attend at least 30% of Membership Activities within the prior one year, the Board may, but shall not be required to, suspend that Council Member’s economic and/or voting privileges or suspend that Member’s membership in the Cooperative.
The initial Board of Directors shall consist of the Council Members, and who shall each serve until the sooner of (i) such time as the number of Council Members exceeds seven (7); or (ii) annual meeting of the Council Members in 2018 (“Initial Board”)
Thereafter, the Board of Directors shall consist of no fewer than three (3) and up to a maximum of five (5) natural persons, who are each at least eighteen (18) years of age. The Board may include non-member Directors as permitted by law, however, all Directors shall be elected by the Council Members, in accordance with these bylaws:
Persons from the Initial Board who are Council Members shall be eligible for re-election to serve on succeeding boards, on such terms as are prescribed herein. A vacancy on the Board of Directors may be declared at the discretion of the Board of Directors after any Director fails to attend three (3) consecutive regular Board meetings without cause and a replacement Director may be appointed as provided in Section 7 of this Article.
At any time no more than ninety (90) days and no fewer than thirty (30) days prior to the annual meeting during which Directors are to elected, Council Members may submit written nominations for prospective Directors, specifying whether such Director is a Council Member Director or an External Director. Each nominee shall have agreed to accept the directorship and its responsibilities if elected. Each nominee must be willing to accept all the responsibilities of Directors of the Cooperative, to attend the Directors’ meetings and other training and informational meetings to better serve as Directors and to become familiar with the Cooperative’s Articles of Incorporation, Bylaws, organizational structure, objectives, policies and procedures.
Each Board Seat shall be filled separately and election shall be as prescribed by the Board of Directors in person, or by mail or e-mail ballots. Newly elected Directors shall become members of the Board at the first meeting of the Board of Directors following their election. To be elected, a nominee for a Board Seat shall either (i) be one of the candidates receiving the largest number of votes to prevail in a contested election; or (ii) receive a two-thirds super-majority vote of all Council Members present and entitled to vote in an un-contested election.
Directors shall be elected for a term of two (2) years, except that the terms of directors shall be staggered so that the terms of no more than a minority of then existing Director seats shall expire in any one year and the initial term of a Director elected to fill a vacancy shall be only for the remaining period of the unexpired term.
The Board of Directors shall hold a meeting within thirty (30) days after the adjournment of the annual membership meeting for the purpose of organizing the Board of Directors. Nominations for the election of officers shall be made by Directors from the floor at the Director’s meeting where the officers are to be elected. They shall elect a President. The Board may elect one or more Vice Presidents, a Secretary, and a Treasurer as determined in the discretion of the Board. Each officer shall hold office until the election and qualification of a successor unless earlier removed by death, resignation, or in accordance of these Bylaws. The Board may create, alter, and abolish such additional offices and its attendant duties in its discretion and may appoint persons to serve in such offices at the pleasure of the Board.
(a) At a meeting called expressly for that purpose, as well as any other proper purpose, a Director may be removed by the Council Members in the manner provided in this Section. Removal of a Director requires an affirmative vote of a two-thirds (67%) super-majority of Council Members present and voting if in person, by mail or by email. If removal of a Director is by the Board, then by a two-thirds (67%) super-majority of the members of the Board not subject to removal.
(b) The Board may remove a Director who does not meet the qualifications for Board membership set forth in these Bylaws.
(c) Council Members may remove one or more Directors with or without cause. A written petition signed by at least a twenty-five percent (25%) of Council Members may initiate a vote to remove a Director, in accordance with Section 5(a) above. No petition shall seek removal of more than one (1) Director.
(d) Any Director subject to a removal petition under any provisions of this section shall be promptly informed in writing by the Board and shall have the opportunity, in person and by counsel, to be heard and present evidence at the meeting called for the vote. The persons seeking a Director’s removal shall have the same privilege.
(e) The Board of Directors shall have the power to remove any officer of the Cooperative with or without cause, by a simple majority vote of the Directors not serving as the officer subject to removal.
Upon demand of at least one half (50%) of the entire Board of Directors, made immediately at the same meeting at which the original motion was passed and so recorded, any matter of policy that has been approved or passed by the Board must be referred to the Council Members for ratification at the next regular or special meeting of the members, and a special meeting may be called for that purpose.
Whenever a vacancy occurs in the Board of Directors, except from the expiration of a term of office, the remaining Directors shall, as soon as practicable, appoint a replacement to fill the vacancy until the expiration of the term of the vacant position.
Regular meetings shall be held by the Board of Directors at least once per fiscal year, or more frequently, at such place (including online) and time as the Board may determine.
Special meetings of the Board of Directors shall be held whenever called by the President or by a majority of Directors at a time and place specified in the notice (including online meetings). Any and all business may be transacted at any special meeting. A meeting of the Board of Directors may be held at any time or place with or without notice upon the consent of all the Directors.
Prior written notice of each meeting of the Board of Directors shall be delivered to each Director at least ten (10) calendar days for regular meetings and at least three (3) business days for any special meetings, provided, that the Board may establish regular meeting places, dates, and times for which the aforementioned notice need not be given. Notice may be waived by any or all of the Directors, and appearance at a meeting shall constitute a waiver of notice thereof, except if a director attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting has not been lawfully called or convened.
One or more members of the Board of Directors or any committee designated by the Board may participate in a meeting of the Board or committee by means of conference telephone or similar communications medium by which all persons participating in the meeting can communicate effectively. Such participation shall constitute presence in person at the meeting.
A simple majority of the Board of Directors shall constitute a quorum at any meeting of the Board. In the event a quorum is lost during a meeting, however, the meeting may proceed. Each member of the Board, including each officer who is a member of the Board, shall be entitled to one (1) vote per member of the Board on any matter coming before the Board, except, no Director shall vote on any matter in which he has a pecuniary self-interest in any capacity other than as a Council Member of the Cooperative. A Director who has a pecuniary self-interest may, however, vote on such a matter if the remaining disinterested Directors ratify the vote on such matter and deem the decision to be in the best interest of the Cooperative. Any matter upon which the Board may vote shall require a two-thirds (67%) super-majority affirmative vote of those present and voting to pass.
A Director is considered to have assented to an action of the Board unless:
Actions of the Board may be taken without a meeting if the action is agreed to by all Directors and is evidenced by one or more written consents signed, or electronically submitted via email, by all Directors and filed with the corporate records reflecting the action taken.
Reasonable procedures for the expense reimbursement of the members of the Board of Directors shall be established by the Board of Directors. Directors will not be eligible for any compensation for their service as Directors. Notwithstanding the foregoing, Directors may be eligible for compensation arising from or as provided for in a Membership Agreement, Employment Agreement or any other agreement governing the terms and conditions of a membership interest in the Cooperative. At the first regular Board meeting of each fiscal year the reimbursement policies shall be established. Directors may be reimbursed for actual and reasonable out of pocket expenses incurred in service to the Cooperative.
The Board of Directors may in its discretion appoint from its own membership an executive committee of three Board members, provided at least one (1) is a Council Member Director, to determine the tenure of office of the committee’s members and their powers and duties. The Board of Directors may delegate to the executive committee all or any stated portion of the functions and powers of the Board of Directors, subject to the general direction, approval, and control of the Board, however, the Board of Directors shall not purport to delegate its fiduciary duties to an executive or any other committee comprised of non-Directors. Copies of the minutes of any meeting of the executive committee shall be mailed or emailed to all Directors within thirty (30) days following the meeting.
The Board of Directors may, in its discretion, appoint such other committees from its own number or from the membership, as may be necessary.
Each Director shall discharge his or her duties as a Director, including duties as a member of a committee, and each officer with discretionary authority shall discharge his or her duties under that authority:
He or she shall give due consideration to the following factors, including, but not limited to, the long-term prospects and interests of the Cooperative and its Members, and the social, economic, legal, or other effects of any action on the current and retired employees and partners, the suppliers and customers of the Cooperative or its subsidiaries, and the communities and society in which the Cooperative or its subsidiaries operate, (collectively, with the members, the “Stakeholders”), together with the short-term, as well as long-term, interests of its members and the effect of the Cooperative’s operations (and its subsidiaries’ operations) on the environment and the economy of the state, the region, and the nation.
Nothing in this section express or implied, is intended to create or shall create or grant any right in or for any person other than a member or any cause of action by or for any person other than a Member.
Notwithstanding the foregoing, any Director is entitled to rely upon the definition of “best interests” as set forth above in enforcing his or her rights hereunder and under state law, and such reliance shall not, absent another breach, be construed as a breach of a Director’s fiduciary duty of care, even in the context of a change in control transaction, where, as a result of weighing other Stakeholders’ interests, a Director determines to accept an offer, between two competing offers, with a lower price per unit.
In discharging his or her duties, a Director or officer is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by:
A Director or officer is not acting in good faith if he or she has knowledge concerning the matter in question that makes reliance otherwise permitted by subsection (b) of this section unwarranted.
The Cooperative shall indemnify, to the fullest extent permitted by applicable law in effect from time to time, any person, and the estate and personal representative of any such person, against all liability and expense (including attorney’s fees) incurred by reason of the fact that he or she is or was a Director or officer of the Cooperative or, while serving as a Director or officer of the Cooperative, he or she is or was serving at the request of the Cooperative as a Director, officer, partner, trustee, partner, fiduciary, or agent of, or in any similar managerial or fiduciary position of, another domestic or foreign Cooperative or other individual or entity or of an partner benefit plan. The Cooperative shall also indemnify any person who is serving or has served the Cooperative as Director, officer, partner, fiduciary or agent, and the estate and personal representative of any such person, to the extent and in the manner provided in any bylaw, resolution of the Board or the Unitholders, contract, or otherwise, so long as such provision is legally permissible. Notwithstanding anything to the contrary herein, such indemnity shall not extend to conduct not undertaken in good faith to promote the best interests of the Cooperative, nor to any recklessness or willful misconduct; and, provided further, that this indemnification shall be limited to the total assets of the Cooperative.
The Board of Directors shall have general supervision and control of the business and the affairs of the Cooperative and shall make all rules and regulations not inconsistent with law, the Articles of Organization or with these Bylaws for the management of the business and the guidance of the Members, officers, subcontractors, partners, and agents of the Cooperative. The Board shall have installed an accounting system which shall be adequate to the requirements of the business, and it shall be the duty of the Directors to require proper records to be kept of all business transactions.
The Board of Directors may employ one or more Managers (“Manager”) who shall be a natural person, define the Manager’s duties, compensation and negotiate employment contracts. The Board shall authorize the employment of such auditors, agents, and counsel as it from time to time deems necessary or advisable in the interest of the Cooperative, and prescribe their duties. The Board shall have general oversight and supervisory responsibility for the Manager’s performance and shall have the ultimate authority to hire, fire, discipline, or remove the Manager, subject to the terms of any agreements between the Manager and the Cooperative or the Board.
The Board of Directors shall present at each regular meeting of the Members and, if appropriate, at special meetings of the Members a detailed statement or report of the business of the preceding year. The statements shall show the financial condition of the Cooperative at the end of the fiscal year and shall be in a form as shall fully exhibit to the Members a complete illustration of the assets and liabilities of the Cooperative, of the cash on hand, inventory, and indebtedness and all other facts and figures pertinent to a complete understanding of the Cooperative’s financial position for the period. The books and records of the Cooperative shall be kept in accordance with the terms of these Bylaws and otherwise in accordance with Generally Accepted Accounting Principles, consistently applied.
The Board of Directors may require the Manager, if employed, and all other officers, agents, and partners charged by the Cooperative with responsibility for the custody of any of its funds or negotiable instruments to give adequate bonds. The bonds, if required, unless cash security is given, shall be furnished by a responsible bonding company and shall be approved by the Board of Directors, and the cost thereof shall be paid by the Cooperative. The Board of Directors shall provide for the adequate insurance of the property of the Cooperative, or property which may be in possession of the Cooperative and/or Cooperative partners or stored by it and not otherwise adequately insured. The Board shall provide for adequate insurance covering liability for accidents to all partners and the public.
By resolution of the Board adopted in accordance these Bylaws, the Cooperative may obtain and continuously maintain a so-called “key man” life insurance policy covering the lives each of the Managers in the amount anticipated to be sufficient to fund the dissolution distribution to be paid hereunder and naming the Cooperative as the named insured and beneficiary thereunder.
Within ninety (90) days after the end of each fiscal year, the Cooperative shall transmit to each Member for such fiscal year: (i) the Cooperative’s balance sheet as of the end of such fiscal year and the Cooperative’s profit and loss statement for such fiscal year, all in reasonable detail; and (ii) to the Members, a report setting forth the balance of each Member’s Capital Account as of the end of such fiscal year and a description of the manner of its calculation.
The Cooperative shall also deliver to each Member and to each Person (or his, her, or its legal representative) who was a Member during any part of the fiscal year a Schedule K-1 for such fiscal year by the IRS deadline for Schedule K-1s. Upon request from any Member, the Cooperative shall deliver a copy of the Cooperative’s federal income tax return for such fiscal year to such Member.
The Board of Directors shall have the power to select one or more banks to act as depositories of the funds of the Cooperative and to determine the manner of receiving, depositing, and disbursing the funds of the Cooperative and the form of checks – or other types of electronic payments - and the person or persons by whom checks shall be signed, with the power to change banks and the person or persons signing checks and the form thereof at will.
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 the Members collectively.
No immediate relative of any Director shall be regularly employed by the Cooperative unless approved in writing by a vote of a simple majority of disinterested Directors. Immediate relative is defined as father, mother, brother, sister, spouse, common law domestic partner, son, daughter, son-in-law, or daughter-in-law.
The President shall (a) preside over all meetings of the Cooperative and of the Board of Directors, (b) call special meetings of the Board of Directors, (c) perform all acts and duties usually performed by a presiding officer, and (d) sign such instruments of the Cooperative as he/she/it may be authorized or directed to sign by the Board of Directors; provided, however, that the Board of Directors may authorize any person to sign any or all checks, contracts and other instruments in writing in behalf of the Cooperative. The President shall perform such other duties as may be prescribed by the Board of Directors.
If so elected by the Board pursuant to Article III, Section 4 hereof, in the absence or disability of the President, the Vice President(s) shall perform the duties of the President. The Vice President(s) shall perform such other duties as may be required by the Board of Directors. If such officer(s) has not been elected by the Board, then the foregoing duties shall be the responsibility of the President.
If so elected by the Board pursuant to Article III, Section 4 hereof, the Secretary shall keep a complete record of all meetings of the Cooperative and of the Board of Directors and shall have general charge and supervision of the corporate records of the Cooperative. He or she 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 and to the Members at the annual meeting. The copies of the Board or membership minutes, and complete membership records shall be maintained at the principal office of the Cooperative. The Secretary shall make corporate reports required by law and shall perform such other duties as may be required of the position by the Cooperative or by the Board of Directors. If such officer has not been elected by the Board, then the foregoing duties shall be the responsibility of the President.
If so elected by the Board pursuant to Article III, Section 4 hereof, the Treasurer shall have supervision of the Cooperative’s financial records and perform such duties with respect to the finances of the Cooperative as may be prescribed by the Board of Directors. Upon the election of his or her successor, the Treasurer shall turn over all books and other property belonging to the Cooperative in his or her possession. If such officer has not been elected by the Board, then the foregoing duties shall be the responsibility of the President.
Under the direction of the Board of Directors, if so employed, the Manager shall have general charge of the ordinary and usual business operations of the Cooperative. The Manager shall, so far as practicable, endeavor to conduct the business in such a manner that the Members will receive just and fair treatment. The Manager shall cause all money belonging to the Cooperative to be deposited in a bank or invested in a manner selected by the Board of Directors and, if authorized to do so by the Board of Directors, shall make all disbursements by check or withdrawal therefrom for the ordinary and necessary expenses of the business in the manner and form prescribed by the Board of Directors. Upon the appointment of his or her successor, the Manager shall deliver all money and property belonging to the Cooperative which in his or her possession or control.
The Manager shall be required to maintain Cooperative records and accounts in such a manner that the true and correct condition of the business may be ascertained therefrom at any time. Monthly and annual statements shall be prepared in the form and in the manner prescribed by the Board of Directors. All books, documents, correspondence, and records of whatever kind pertaining to the business which may come into his or her possession shall be carefully preserved.
The Manager shall have the authority to employ, supervise, and terminate all partners of the Cooperative and fix their compensation subject to the policies and at salaries within ranges adopted by the Board of Directors not inconsistent with these Bylaws. Partners shall be under the direct supervision of the President. Auditors, agents, or counsel specifically employed by the Board of Directors shall be under the supervision of the Board of Directors and not under the President.
“Net Profits” and “Net Losses” means for each taxable year of the Cooperative an amount equal to the Cooperative’s net taxable income or loss for such year as determined for federal income tax purposes (including separately stated items) in accordance with the accounting method and rules used by the Cooperative and in accordance with Section 703 of the Code, subject to the following provisions:
“Patronage Activity” shall mean the aggregate value of the Cooperative’s goods and services contributed to or purchased by each Council Member during the applicable fiscal period. Patronage Activity may be contributed by Council Members in their capacity as a subcontractor, an independent contractor, a partner or as a strategic partner. The Board shall have the authority to develop, review and revise the methodology by which to calculate the Cooperative’s aggregate Patronage Activity and each member’s respective allocable unit of Patronage Activity. Each member’s allocable unit of the Cooperative’s Net Profits and Net Losses shall be made according to each member’s respective Patronage Activity.
“Depreciation” means, with respect to each asset, for each fiscal year; an amount equal to the depreciation, amortization, or other cost recovery deduction allowable with respect to the asset for such fiscal year; provided, however, that, if the Gross Asset Value of the asset differs from its adjusted basis for federal income tax purposes at the beginning of such fiscal year, Depreciation shall be an amount that bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization, or other cost recovery deduction for such fiscal year bears to such beginning adjusted tax basis; and provided, further, that, if the adjusted basis for federal income tax purposes of an asset at the beginning of such fiscal year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Board.
“Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis for federal income tax purposes, except as follows:
A separate member Capital Account shall be maintained for each Member. Each member’s Capital Account shall be: (i) credited with the member’s initial capital contribution made via the purchase one or more units of the Cooperative’s Class A and/or Class B Units and the Member’s distributive unit of all income and gain, including patronage-based distributions (including any income exempt from federal income tax); and (ii) charged with the amount of all distributions to such member and the member’s distributive unit of losses and deductions. Capital Accounts shall be maintained in accordance with federal income tax accounting principles as set forth in Treas. Reg. § 1.704-1(b)(2)(iv) or any successor provision. Section 752(c) of the Code shall be applied in determining the amount of any liabilities taken into account for purposes of this definition of “Capital Account.”
Net Profits of the Cooperative for any fiscal period shall be allocated among the members, (i) first, to offset prior allocations of Net Loss, in the reverse order and priority of such allocations of Net Loss, (ii) second, to the Council Members on the basis of their patronage of the Cooperative; (iii) third, to the Investor-Members as a percentage of each Investor-Member’s Internal Capital Account balance, as or when determined by the Board in its sole discretion; and (iv) the remainder, if any, as allocated in the discretion of the Board.
Net Loss of the Cooperative for any fiscal period shall be allocated to all Council Members pro rata in accordance with their respective Patronage Activity with the Cooperative during the applicable fiscal period. In the event a member has Patronage Activity for a partial year, Net Profit or Net Loss shall also be pro-rated in accordance with the time period such member was a member in good standing and generated Patronage Activity in the Cooperative.
Notwithstanding the foregoing, no allocation or distribution pursuant to this Article VII shall be made to the extent it would cause or increase a negative balance in any member’s Capital Account.
(a) Guaranteed Payment Distributions
To the extent available from the Cooperative’s then-current cash flow, as determined by a resolution of the Board adopted in accordance with these Bylaws, on a periodic basis as determined by a resolution of the Board adopted in accordance with these Bylaws, the Cooperative shall distribute to the applicable Member an amount of cash (a “Guaranteed Payment Distribution”) equal to such compensation payable in connection with such Member’s performance of his, her, or its service obligations on behalf of the Cooperative, as determined from time to time in accordance with a written agreement and these Bylaws. Guaranteed Payment Distributions shall be deemed to be “guaranteed payments” pursuant to Section 707(c) of the Code and shall reduce income or increase loss, as applicable, otherwise allocable to Members.
(b) Distribution of Cash from Operations (“Patronage Distributions”)
Distributions of cash from operations of the Cooperative shall be made each calendar year, to the Council Members pro- rata in accordance with their respective Patronage Activity with the Cooperative. Any such distribution shall be made at the time and in the amounts determined by the Board to be appropriate in light of the cash needs of the Cooperative; provided, however, that the members intend, but do not require, that the Board will cause the Cooperative to distribute cash to the members at least annually in an amount sufficient to meet the tax liability of each Member in relation to the taxable income of the Cooperative allocated to each such Member.
(c) Distribution on Class B Units
In accordance these Bylaws and applicable law, outstanding Class B Units shall be eligible to receive a target, non-cumulative distributions at a target rate of five percent (5%), calculated based upon the original purchase price paid for such units. Dividends on Class B Units may be declared solely at the discretion of the Board of Directors. The intention shall be that the aggregate amount of the Patronage Distribution for all Council Membership classes in a given period shall never be less than the aggregate amount available or declared for distribution on Class B Units. Likewise, the intention shall be that the aggregate amount available or declared for distribution on the Class B Units shall never be less than twenty-five (25%) percent of the aggregate amount of the patronage allocation for all Council Membership classes.
(d) Distributions Upon Sale or Refinancing
Net proceeds from the sale or refinancing of any property of the Cooperative, after payment of all expenses of sale or refinancing, and in the case of a sale after payment of all other debts and obligations of the Cooperative, shall be distributed (except as provided for in Article 8 upon liquidation of the Cooperative) as follows:
The following special allocations shall be made for any fiscal year of the Cooperative in the following order:
(a) Minimum Gain Chargeback
If there is a net decrease in “partnership minimum gain” as defined in Treasury Reg. §§ 1.704-2(b)(2) and 1.704-2(d) during any Cooperative fiscal year, each Member shall be specially allocated items of Cooperative income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Member’s unit of such net decrease, determined in accordance with Treasury Reg. §§ 1.704-2(f) and 1.704-2(g)(2). The items to be so allocated, and the manner in which those items are to be allocated among the Members, shall be determined in accordance with Treasury Reg. §§ 1.704-2(f) and 1.704-2(j)(2). This Section 6(a) is intended to satisfy the minimum gain chargeback requirement in Treasury Reg. § 1.704-2(f) and shall be interpreted and applied accordingly.
(b) Member Minimum Gain Chargeback
If there is a net decrease in “partner nonrecourse debt minimum gain” as defined in Treasury Reg. § 1.704-2(i) during any Cooperative fiscal year, each Member who has a unit of such gain, determined in accordance with Treasury Reg. § 1.704-2(i)(5), shall be specially allocated items of Cooperative income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Member’s unit of such decrease, determined in accordance with Treasury Reg. §§ 1.704-2(i)(4) and 1.704-2(i)(5). The items to be so allocated, and the manner in which those items are to be allocated among the Members, shall be determined in accordance with Treasury Reg. §§ 1.704-2(h)(4) and 1.704-2(j)(2). This Section 6(b) is intended to satisfy the minimum gain chargeback requirement in Treasury Reg. § 1.704-2(i)(4) and shall be interpreted and applied accordingly.
(c) Qualified Income Offset
In the event that any Member unexpectedly receives any adjustments, allocations, or distributions described in Treasury Reg. §§ 1.704-l(b)(2)(ii)(d)(4), (5) or (6), items of Cooperative income and gain shall be specially allocated to such Member in an amount and in a manner sufficient to eliminate as quickly as possible, to the extent required by Treasury Reg. § 1.704-(1)(b)(2)(ii)(d), the deficit balance, if any, in such Member’s Capital Account as of the end of the taxable year (which shall be determined as if all other allocations provided for in this Article 6 have been tentatively made, and as if this Section 6(c) were not in this Agreement), after giving effect to the following adjustments:
This Section 6(c) is intended to comply with the provisions of Treasury Reg. 1.704-1(b)(2)(ii)(d) and 1.704-2, and will be interpreted consistently with those provisions.
The allocations set forth in this Article are intended to comply with certain regulatory requirements under Code Section 704(b). The Members intend that, to the extent possible, all allocations made pursuant to such Sections will, over the term of the Cooperative, be offset either with other allocations pursuant to this Article VII or with special allocations of other items of Cooperative income, gain, loss, or deduction pursuant to this Article VII. Accordingly, the Board is hereby authorized and directed to make offsetting allocations of Cooperative income, gain, loss, or deduction under this Article VII in whatever manner the Board determines is appropriate so that, after such offsetting special allocations are made, the Capital Accounts of the Members are, to the extent possible, equal to the Capital Accounts each would have if the provisions of Section 6 were not contained in this Agreement and all income, gain, loss and deduction of the Cooperative were instead allocated pursuant to this Article VII.
Except as specifically set forth in this Section 8, allocations of taxable income and loss shall be made in the same manner as allocations for Capital Account purposes. In accordance with Code Section 704(c) and Treasury Reg. § 1.704-3, income, gain, loss and deduction with respect to any property contributed to the capital of the Cooperative shall, solely for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Cooperative for federal income tax purposes and its initial book value determined by the Board. Allocations pursuant to this Article VII are solely for purposes of federal, state, and local taxes and shall not affect, or in any way be taken into account in computing, any Member’s Capital Account or unit of Net Profit, Net Loss, or other items as computed for book purposes, or distributions pursuant to any provision of this Agreement.
To secure the payment of all indebtedness of any Member to this Cooperative, this Cooperative shall have perfected security interest and a first lien on the capital investments, net margins, and other property rights and interests, if any, in the Cooperative of such Member. As one means of enforcing its lien, the Cooperative shall be entitled to offset at any time, at the sole discretion of the Board of Directors, any debt of a Member to the Cooperative with a corresponding amount of the Member’s capital investments, net margins and other property rights and interests, if any, in the Cooperative. Each Member, by joining and patronizing the Cooperative, shall be deemed to have agreed to sign any instrument necessary to evidence and perfect the lien and security interest provided for in this Section.
No Member qualified to unit in allocations of Cooperative’s Net Profits shall be entitled to demand offset of any portion of such person’s allocated unit of Net Profit retained by the Cooperative against any indebtedness or claim due the Cooperative from such person.
(a) No acquisition, recall, distribution or redemption of equity capital in the Cooperative shall be made, required or effected, if the result of it would be to render the Cooperative unable to pay its debts as they become due in the usual course of business or causes the remaining assets of the Cooperative to be less than its liabilities plus the amount necessary to satisfy the interests of the holders of securities or other equity capital preferential to those receiving the distribution if the Cooperative were to be dissolved at the time of the distribution. Provided that the financial condition of the Cooperative will not be impaired, the Board of Directors in its sole discretion and subject to the approval of the Cooperative’s secured creditors having the right to approve equity redemptions or retirements, and the application of the Uniform Limited Cooperative Association Act, may, but shall not be obligated to, authorize the redemption of any equity capital in the Cooperative at any time when a Member owning equity capital in the Cooperative shall (i) die, (ii) if a non-natural person, liquidate its business affairs and intend to dissolve, (iii) cease patronizing the Cooperative or using the Cooperative’s services for a period of five (5) consecutive years, (iv) withdraw or be terminated from the Cooperative as provided in these Bylaws, or (v) for other reasons as provided in an equity retirement policy adopted by the Board of Directors. Each class of equity capital and all persons in each of the above classifications shall be treated similarly with their respective class or classification. The Board of Directors may, in its discretion, issue to the Member interest bearing certificates of indebtedness in substitution and exchange for the equity capital of a Member, which may be subject to redemption.
(b) If (i) payments to persons entitled to repayment under an equity retirement policy developed by the Board of Directors under the immediately preceding paragraph (a) shall have been made or adequate provision made therefor, (ii) the Cooperative has obtained the approval of the Cooperative’s secured creditors, and (iii) the Board of Directors shall have determined the total amount of Members’ investments in equity capital shall exceed the amount reasonably needed by the Cooperative, the Board may at its discretion retire a percentage of the equity capital in the Cooperative which the Board has determined is not needed. The percentage shall be paid to every holder of equity capital equitably among all on the same percentage basis of their total investments in equity capital regardless of when such investment was made, except that no equity capital shall be repaid under this plan until said Member shall have invested at least $20 in equity capital.
(c) When a Member separates from the Cooperative, whether through voluntary withdrawal, expulsion or death, the Cooperative shall redeem the Member’s capital account pursuant to policies adopted by the Board of Directors, which policies may be revised from time to time in the sole discretion of the Board of Directors.
(d) No Member entitled to an allocation of the Cooperative’s Net Profit shall have any right or interest at any time in or to any reserve fund, or surplus accounts, if any, except upon dissolution of the Cooperative when any such reserve fund, or surplus account shall be distributed in accordance with these Bylaws, as otherwise provided by law or as the Directors may otherwise determine.
(e) In connection with or in addition to the foregoing, the Board of Directors may establish policies and practices for the redemption of equity capital based upon the recognition of difference in the character and liquidity of assets held by the Cooperative and the resulting impact on availability of funds for equity redemption.
This Cooperative may borrow such additional capital from Members or any other person or source as permitted by law. It may issue notes or certificates of indebtedness for amounts of borrowed money with such terms and conditions and on which it may pay an interest rate as determined by the Board of Directors.
Investments in equity capital need not be segregated from, and may be invested in, or commingled with, any other assets of the Cooperative. Unless provided otherwise in these Bylaws, no allocation, interest, or any other income shall be declared or paid on account of any capital unit or other equity capital in the Cooperative owned by a member or other investor.
Upon the dissolution, liquidation, sale of the Cooperative, or sale of all or substantially all of the Cooperative’s assets, all debts and liabilities of the Cooperative shall first be paid according to their respective priorities, as defined by law or by agreement. Any property or proceeds remaining after discharging the debts and liabilities (including due and payable Guaranteed Payment Distributions) of the Cooperative shall be distributed to the Council Members and Investor-Members in the Cooperative’s equity capital in accordance with the following priorities to the extent funds are available therefor, payments within each priority to be made on a pro-rata, pari passu basis without regard to time of investment:
If, in winding up of the affairs of the Cooperative, certain assets are not liquid, have no market value, creditors having claim on these assets have been satisfied and the trustees in liquidation or other persons charged with winding up the Cooperative’s affairs have determined that the costs involved in delaying the winding up of the affairs of the Cooperative exceed the potential benefits, the trustees are authorized to assign the assets or any future proceeds from assets that are not liquid to any local or statewide nonprofit organization that has as one of its principal purposes the advancement of cooperatives, education or community service. The trustees shall under no circumstances be liable to any other member or equity holder in the Cooperative for any claim on any assets assigned by the trustees pursuant to the authority of this Article.
A claim made against the Cooperative for money shall be subject to the provisions of this Article IX whenever the Cooperative is ready, able, and willing to pay the claim, and has paid or is paying generally claims arising under similar circumstances, but payment of the claim cannot be made for the reason that the Cooperative does not know the whereabouts or mailing address of the one to whom it is payable or the one entitled to payment. If the claim is not actually paid within a period of three (3) years after notification as herein provided, the Cooperative shall remove the claim as a liability on its books. No removal shall be made unless the Cooperative shall have sent by first class, United States mail, a written notice of eligibility for payment addressed to the person appearing on the Cooperative’s records to be entitled to payment at the last address of such person shown by the records of the Cooperative. If not claimed within three (3) years after giving of notice, the claim shall be deemed extinguished. Any and all amounts recovered by the Cooperative pursuant to this Article IX, after deducting therefrom the amount of any taxes payable thereon, shall be placed in a reserve or surplus account established previously or hereafter by the Cooperative.
A Dispute Resolution Committee shall be authorized and constituted by these Bylaws. It shall be comprised of five (5) members, and appointed by the Board of Directors from among the membership (the “Dispute Resolution Committee”). The Board shall strive to appoint members to the Dispute Resolution Committee to be representative of each membership class. The members of the Dispute Resolution Committee shall be selected and appointed based upon possessing special training, experience or skill with respect to alternative dispute resolution. The members of the Dispute Resolution Committee shall serve at the pleasure of the Board of Directors, however, no member of the Dispute Resolution Committee shall be removed on account of or as a pretext for reprisal or retaliation for good faith service on the Committee or bona fide recommendation of a decision against a Member or the Cooperative if supported by proper evidence and founded rationale.
In the event of a dispute between Members, or a Member and the Cooperative, concerning any matter arising out of the relationship or transactions between Members or the Member and the Cooperative, which cannot be resolved through direct, amicable, frank, open and honest communication, upon request of either party, the matter shall be set for mediation, to be conducted by a single member of the Dispute Resolution Committee, selected by the mutual agreement of the disputing parties. If the parties to a dispute are unable to agree with respect to the selection of a mediator, the Dispute Resolution Committee shall select a mediator from among the Committee.
If mediation is incapable of resolving the dispute, upon request of either party and ten (10) days’ prior notice to the Member concerned, the matter shall be set for hearing before a three (3) person panel of the Dispute Resolution Committee, which shall hear the same, and shall enter written findings and make a recommendation to the full five (5) member banc of the Dispute Resolution Committee. The decision of the full banc of the Dispute Resolution Committee in such cases shall be final; provided, however, that either party having received a decision may fifteen (15) days thereafter bring an appeal to the Board of Directors, which may rely upon the facts found by the Dispute Resolution Committee or which may enter its own findings of fact if the Board judges, in its sole discretion, that the findings of fact were erroneous, invalid or inadequate. The decision by the Board of Directors, shall, in case of appeal, be final and binding upon the parties. Any member affected by the final ruling rendered in the dispute, who shall thereafter refuse to acquiesce or abide by the ruling, shall thereafter be subject to termination of membership in accordance with the provisions of Section 3 of Article I of these Bylaws. With respect to a Member’s dispute with the Cooperative, to the extent direct communication and mediation are incapable of resolving the dispute and the matter requires a decision by the Board or is appealed to a court of proper jurisdiction, and further to the extent that the Cooperative prevails, the Member shall be obligated to pay all attorneys’ fees and costs associated with the claim.
As a matter of last resort, in the event that each and all prior attempts at dispute resolution, as required by these Bylaws, may fail to resolve the dispute, the party aggrieved by the final decision of the Board of Directors may, within sixty (60) days thereafter, bring appropriate action in any court of proper jurisdiction regarding such matter or transaction. These Bylaws shall be governed by and construed in accordance with the laws of the State of Colorado including all matters of construction, validity and performance. Members and the Cooperative agree that any action or proceeding commenced under or with respect to these Bylaws shall be brought only in the district courts of the County of Boulder, State of Colorado, and the parties irrevocably consent to the jurisdiction of such courts and waive any right to alter or change venue, including by removal. EACH MEMBER AND THE COOPERATIVE WAIVE ITS RESPECTIVE RIGHTS TO TRIAL BY JURY OF ANY SUIT, CLAIM, CAUSE OF ACTION, OR OTHER ACTION TO ENFORCE ANY TERM OR CONDITION OF THESE BYLAWS OR OTHERWISE ARISING OUT OF OR RELATED TO THESE BYLAWS.
The fiscal year of this Cooperative shall commence on January 1 each year and shall end on the following December 31.
Amendments to these Bylaws shall be proposed and recommended by two-thirds (67%) of the Board of Directors, and thereafter ratified by a simple majority vote of Council Members. If upon presentment of a petition presented to the Secretary and signed by twenty five (25%) percent of the Council Members, the amendment to these Bylaws shall become effective by a two-thirds (67%) vote of Council Members. If notice of the character of the amendment proposed has been given in the notice of a meeting, these Bylaws may be altered or amended at any regular or special meeting of the Council Members by the affirmative vote of a simple majority of the Council Members present, or voting by mail or email, provided the Council Members so voting have received the exact wording of the amendments.
Except as otherwise provided in Section 2 of this Article XIII, if the Cooperative is a party to a plan of merger, consolidation, or unit or equity capital exchange, such plan shall first be approved by a two-thirds vote (67%) of all the members of the Board of Directors and then approved by a two-thirds (67%) vote of the Council Members present and voting in person or voting by mail or email, if voting by mail or email has been authorized by a majority of the Board of Directors. The provisions of Article VIII shall apply to any proceeds which may result from such merger, consolidation, or unit or equity capital exchange.
The Board of Directors may approve, in its discretion, by an affirmative two-thirds (67%) vote and without further membership approval or consent, a plan of merger of a subsidiary of the Cooperative into the Cooperative if the Cooperative owns one hundred percent (100%) of the voting units, memberships, or interests in the subsidiary and the Cooperative has the right to vote on behalf of the subsidiary; except, that if, as a result of the merger, the voting units, memberships or other interests of the members of the Cooperative would be materially altered, then the members shall have the right to vote on the plan of merger in a manner consistent with the provisions of Section 1 of this Article XIII.
After adoption of these Bylaws or an amendment, a copy of these Bylaws or the amendment, as the case may be, shall be provided to each Member and other person qualified to unit in the Cooperative’s net margins and to each person who later becomes a Member or person qualified to unit in the Cooperative’s net margins as shown on the books of record of the Cooperative.
The Cooperative shall maintain in record available at its principal office such information as is required by law. The Cooperative may maintain additional information in record, but shall not be required to make the same available unless required by law. The Cooperative strives to balance the privacy interest of its Members with the right to access information by the same. The Cooperative shall entertain requests for information by Members and former Members in accordance with applicable law. A Member or former Member making a valid request for information under this section and subject to applicable law, shall be solely responsible for paying or reimbursing the Cooperative for the reasonable costs associated with copying documents, including and limited to the cost of equipment, labor, and materials.
Without limiting the generality of the foregoing, Members and former Members shall at all times maintain in strict confidence and promise to not disclose any person or entity not otherwise entitled to receive such information any and all information received by or through the Cooperative, pertaining to the records of the Cooperative, its Members, and the operations, activities or transactions of the same. Each Member and former Member, whether receiving information consequent to a valid request for information under this section, or through its activities with or through the Cooperative, shall further ensure that any information transmitted or communicated to an attorney or other agent of such Member, shall be kept in confidence to the same degree and extent as the Member or former Member is or would be bound by this section. All membership information, fee schedules, financial information, correspondence and all other Cooperative documents and information furnished to the Member by the Cooperative will be kept in strict confidence.