Articles & Bylaws (PDF)
ARTICLES OF INCORPORATION OF WEDGE COMMUNITY CO-OP, INC.
ARTICLE I. NAME.
The name of this cooperative shall be Wedge Community Co-op, Inc.
ARTICLE II. PURPOSES.
The purpose of the cooperative shall be to engage, on a cooperative basis, in a mercantile and marketing business to supply and furnish to its members and patrons such goods and services as the members may require or in any lawful business as the members shall authorize.
For these purposes it shall have power to:
a) Borrow money from its members and others upon adequate security; to issue bonds, debentures, notes and other obligations and to secure the same by pledge, mortgage, or trust deed on any property of the cooperative; draw, make, accept, endorse, guarantee, execute and issue promissory notes, bills of exchange, drafts, warrants, warehouse receipts, certificates and other obligations and negotiable or transferable instruments for any purpose deemed necessary to further the objects for which the cooperative is formed.
b) Acquire, purchase, hold, lease, encumber, sell, exchange and convey such real estate, buildings and personal property as the business of the cooperative may require.
c) Purchase, sell, transfer and own capital stock, bonds, and obligations of other corporations.
d) Join with other cooperative corporations or associations to form district, state, national or international purchasing, marketing and service organizations; and to purchase, acquire, and hold capital stock, notes, bonds, and other obligations of such organizations.
e) Do and perform every act and thing necessary and proper to the conduct of its business for the accomplishment of the purposes set forth herein or permitted by the laws of Minnesota applicable to the cooperative, and to have and exercise all of the powers conferred upon the cooperative by the laws of Minnesota under which it was organized, and acts amendatory thereof and supplemental thereto.
ARTICLE III. PLACE OF BUSINESS.
The principal place of business of said cooperative shall be 2105 Lyndale Avenue South, Minneapolis, Minnesota, 55405, County of Hennepin, State of Minnesota. Branch offices may be located at other points.
ARTICLE IV. DURATION.
The period of the continuance of this cooperative shall be perpetual.
ARTICLE V. CAPITAL.
Section 1. The amount of authorized capital stock of the cooperative shall be forty million five hundred thousand dollars ($40,500,000) and shall be divided into three classes of stock. Class A stock shall consist of fifty thousand (50,000) shares of voting stock with a par value of ten dollars ($10.00) per share for a total of five hundred thousand dollars ($500,000). Class B stock shall consist of two million (2,000,000) shares of non-voting stock with a par value of ten dollars ($10.00) per share for a total of twenty million dollars ($20,000,000). Class C stock shall consist of forty thousand (40,000) shares of non-voting stock with a par value of five hundred dollars ($500.00) per share for a total of twenty million dollars ($20,000,000).
Section 2. Class A stock may be issued for cash to any person, firm, cooperative, non-profit corporation, or corporation to qualify him, her or it as a member if he, she, or it is eligible therefore. No dividends shall be paid on Class A stock. Only holders of Class A stock shall be deemed to be members of this cooperative. Class A stockholders shall be entitled to only one vote regardless of the number of shares owned of Class A or other classes of stock. Voting by proxy shall not be allowed. Voting on all matters on which members are entitled to vote may be done by mail as specified in the bylaws.
Section 3. Class B stock may be issued for cash, in payment of patronage refunds or in exchange for outstanding Class A stock to any person, firm, cooperative, non-profit corporation or corporation. Class B stock shall have no voting power and no dividends shall be paid thereon.
Section 4. Class C stock may be issued to holders of Class A stock. Class C stock shall have no voting power. Dividends may be paid on Class C stock at the discretion of the Board of Directors, not to exceed eight percent (8%) per annum. Dividends, if declared, may (but need not) be cumulative, as determined by the Board of Directors at the time the dividend is declared.
Section 5. No share or stock shall be issued for less than its par value, nor until the same has been paid for in cash or its equivalent, and each share of stock shall be paid for at such time and in such manner as the Board of Directors of the cooperative shall require. Members shall be required to purchase one share of Class A stock and an amount of Class B stock as determined by the Board of Directors from time to time. The cooperative shall have a prior lien on the outstanding stock for any indebtedness due it. Stock shall not be sold or transferred except back to the cooperative with the consent and approval of the Board of Directors. Capital stock shall be subject to redemption as provided by law and by the bylaws of this cooperative. The capital stock of this cooperative shall be non-assessable.
Section 6. When the Board of Directors determines that the cooperative has sufficient working capital, Class B and Class C stock may be called for payment at par. Stock shall be called for payment as provided in the bylaws. Any redemption of stock is subject to the requirement that at the time of redemption the total amount of stock remaining outstanding after deduction of the amount of stock redeemed, plus the permanent reserve of the cooperative, shall at least equal the total liabilities of the cooperative.
Section 7. In case of dissolution or liquidation of the cooperative, there shall be given a preference to holders of Class C, then Class B, and finally Class A stock.
ARTICLE VI. ALLOCATIONS TO MEMBERS.
Section 1. All or any part of the patronage refund declared by the cooperative at any time may be paid in Class B stock, by allocated equity reserve or by the issuance of capital interest certificates, or by any other media determined by the Board of Directors.
Section 2. All of the annual net savings from patronage with members available for distribution as determined by the bylaws shall belong to the members of the cooperative and shall be allocated to them on the basis of patronage as defined in the bylaws.
Section 3. Upon dissolution or liquidation of the cooperative the debts and liabilities of the cooperative shall first be paid according to their respective priorities. Stockholders or other holders of equity or capital reserve credits or other media issued by the Board of Directors shall then be paid the par value of their shares or credits with payments made in the order of preference stated in the Articles of Incorporation. Any additional property remaining after stockholders and other equity holders have been paid shall be distributed to another cooperative doing business on a cooperative basis or a nonprofit organization exempt from taxes under Section 501(c) of the Internal Revenue code, as shall be determined by the Board of Directors or Trustees.
ARTICLE VII. BOARD OF DIRECTORS, ANNUAL MEETINGS.
Section 1. The governance of this cooperative and oversight of the management shall be vested in a Board of Directors, the members of which must be elected by ballot by the stockholders from their own number. The size of the Board of Directors and the terms of its members shall be prescribed by the bylaws.
Section 2. The annual meeting of the stockholders shall be held in the territory served by this cooperative within four (4) months after the date of the close of the fiscal year, on such date and time as the Board of Directors shall select in each year.
Section 3. Vacancies in the Board of Directors, except in case of removal by the members, may be filled by the remaining members of the Board. The person or persons so appointed shall hold office until the next annual meeting of the stockholders or until their successors have been elected and qualified.
Section 4. A director is not personally liable to the cooperative or its members for monetary damages for breach of fiduciary duty except in the following circumstances:
a) for a breach of the director's duty of loyalty to the cooperative or its members; or
b) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; or
c) for a transaction from which the director derived an improper personal benefit; or
d) for an act or omission occurring prior to the date this provision became effective.
ARTICLE VIII. OFFICERS.
The officers of this cooperative shall be a president, one or more vice presidents, a secretary and a treasurer, who shall be elected annually by and from the directors. The offices of secretary and treasurer may be combined, and when so combined, the person filling such office shall be termed â€śSecretary-Treasurerâ€ť.
ARTICLE IX. DISSOLUTION, AMENDMENTS, SEVERABILITY.
Section 1. This cooperative may be dissolved in the manner as provided by law.
Section 2. These Articles of Incorporation may be amended as provided by law.
Section 3. In the event that any provision of these Articles of Incorporation 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 Articles.
RESOLVED FURTHER, that the proper officers and employees of the cooperative be and they hereby are authorized to take whatever action may be necessary and proper to make said amendments to the Articles of Incorporation effective.
REVISED, October 23, 2013
BYLAWS OF WEDGE COMMUNITY CO-OP, INC.
REVISED, October 23, 2013
ARTICLE I. MEMBERSHIP.
Section 1. Qualifications. Any individual, household, firm, cooperative, nonprofit corporation or other corporation may, upon approval or pursuant to the authorization of the Board of Directors, become a member of this cooperative pursuant to terms established by the Board of Directors. This cooperative shall not discriminate in its membership on social or political grounds, or on the basis of race, creed, age, sex, handicap, sexual preference or marital status. Each transaction between this cooperative and each member shall be subject to and shall include as part of its terms each provision of the Articles of Incorporation of this cooperative and these Bylaws, whether or not the same be expressly referred to in said transaction.
Section 2. One Class of Members. There shall be one class of members in this cooperative. Each corporate or household member shall designate one person to vote on its behalf.
Section 3. Admission of New Members.
(a) Application and Investment Requirement. Application for membership shall be made in writing on a form provided by this cooperative. Pending approval by the Board of Directors of the membership application, each prospective member shall purchase one (1) share of Class A stock and such number of shares of Class B stock as may be determined from time to time by the Board of Directors.
(b) Approval of Application. Each application shall be acted on by the Board of Directors at the first meeting of the Board following receipt of the application. The Board of Directors shall have full authority to approve or reject a membership application based on policies established and approved by the Board.
(c) Information. Each new member shall receive a copy of the Articles of Incorporation and Bylaws of this cooperative.
Section 4. Termination of Membership. Membership may be terminated voluntarily by a member upon notice to this cooperative. Membership shall terminate automatically if a member dies, ceases to exist, or fails to patronize this cooperative for a period of one (1) year. Membership of a member may also be terminated by the Board of Directors at its discretion whenever the Board of Directors by resolution finds that the member has:
(a) intentionally or repeatedly violated any provision of the Articles of Incorporation, Bylaws or Board policies of this cooperative;
(b)breached any contract with this cooperative;
(c) willfully obstructed any lawful purpose or activity of this cooperative; or
(d) remained indebted to this cooperative for ninety (90) days after such indebtedness becomes payable.
Members who are to be terminated by resolution of the Board of Directors shall be given notice of the proposed termination and provided an opportunity to address the Board, if requested by the member prior to the date of termination.
Section 5. Actions Upon Termination. When a member is terminated, this cooperative shall either:
(a) purchase the Class A stock of the member by tendering to the member, or to the member's heirs
or successors, the par value or the book value of the member's Class A stock, whichever is less, together with any cash portion of a patronage dividend due or unpaid, less any indebtedness due this cooperative; or
(b) purchase the Class A stock of the member by tendering to the member, or to the member's heirs or successors, Class B stock, together with any cash portion of a patronage dividend due or unpaid, less any indebtedness due this cooperative. Regardless of the reasons for termination, repurchase of this cooperative's stock from a terminated member shall be subject to the same terms and limitations governing all stock repurchases, including availability of replacement capital and the discretion of the Board of Directors to determine terms of repurchase. Upon termination of membership, the member shall thereafter have no voting rights in this cooperative. No action taken hereunder shall impair the obligations or liabilities of either party under any contract with this cooperative which may be terminated only as provided therein.
Section 6. Restrictions on Withdrawals and Transfers of Membership. Upon a member's withdrawal from membership in this cooperative, the stock of the member can be transferred only to this cooperative and only upon approval of the Board of Directors. The stock of this cooperative is not transferable under any other circumstances. This cooperative shall repurchase a terminating member's stock when this cooperative has received replacement capital from new or continuing members.
ARTICLE II. MEETINGS OF MEMBERS.
Section 1. Annual and Special Meetings. The annual meeting of the members of this cooperative shall be held at a time and place fixed by the Board of Directors. Special meetings of the members of this cooperative may be called by the Board of Directors or upon the written petition of twenty percent (20%) of the members. A special members' meeting shall be held at the time and place specified in the notice of the meeting, and the notice shall also state the purpose of the special members' meeting. No business shall be considered at a special members' meeting except as mentioned in the notice of the meeting.
Section 2. Notice of Meeting. Notice shall be given by the Secretary of all meetings of the members by publication in a magazine, periodical or house organ regularly published by or on behalf of this cooperative and circulated generally among its members, or by mailing a notice thereof to each member at the member's last known address, at least two weeks prior to the date of the meeting. If a special meeting is called by member petition, the notice of the time, place and purpose of the special meeting shall be issued within ten (10) days following receipt of the petition by the President, and the special meeting shall be held within thirty (30) days following receipt of the petition by the President. The notice shall state the date, time and place of the meeting, and in the case of a special meeting, the purposes for which the meeting is called. The Secretary shall execute a certificate that contains a copy of the notice, shows the date of mailing or publication (as the case may be) of the notice, and states the notice was mailed or published (as the case may be) as prescribed by these Bylaws. The certificate shall be made a part of the minutes of the meeting. The failure of any member to receive notice shall not invalidate any action which may be taken by the members at a meeting.
Section 3. Voting. Each member shall have one vote upon any matter submitted to a vote of the members. Voting by mail shall be allowed in cases in which, in the notice of the meeting, the Board of Directors of this cooperative shall have submitted a specific issue or issues for a mail vote. Election of directors, except to fill a vacancy, shall always be conducted by mail ballots, with the opportunity for members to bring ballots to the annual meeting or to the place of business of this cooperative for counting at the annual meeting, within the election period and timeline authorized by the Board of Directors and specified in the voting packet sent to each member with the ballot. Members may also vote on any matter by electronic means if an electronic vote is authorized by the Board. There shall be no voting by proxy.
Section 4. Presiding Officer. The President or his or her designee shall preside at all meetings of the members.
Section 5. Quorum. At any regular or special meeting of the members, a quorum necessary for the transaction of business shall be at least five percent (5%) of the total number of holders of voting stock of this cooperative. Only members in actual attendance at the meeting shall count towards a quorum, except for matters submitted to the membership by mail.
ARTICLE III. DIRECTORS.
Section 1. Board of Directors. The business and affairs of this cooperative shall be governed by the Board of Directors, which shall consist of seven (7) directors. The Board of Directors shall exercise all of the powers of this cooperative except such as are by law, the Articles of Incorporation or these Bylaws conferred upon or reserved to the members. The Board of Directors may adopt such policies, rules, regulations and actions not inconsistent with law, the Articles of Incorporation or these Bylaws, as it deems advisable. The Board of Directors may establish one or more committees having such powers and authority as are delegated to it by the Board of Directors.
Section 2. Director Qualifications. The qualifications for the office of director shall be as follows:
(a) The individual must be a member of this cooperative.
(b)Only one individual per household or corporate membership may serve on the Board of Directors at any given time.
(c) No director may be a paid employee of the cooperative at any time.
(d)Each director's membership is for a three (3) year term unless she or he resigns, is removed, or is otherwise disqualified to serve. No director shall hold membership for more than three (3) consecutive terms, or nine (9) consecutive years. However, this term limit provision shall be waived in the event that acting on the term limit policy would cause more than two (2) vacancies on the Board of Directors. If in any given year more than one director triggers the term limit policy, and acting on the policy would create more than two (2) vacancies on the Board of Directors, the term-limited directors shall draw lots to determine which of them shall be allowed to run for reelection so as to limit the Board vacancies to only two (2). After a period of one year or more absence from the Board a director may be reelected to the Board for an additional three (3) three (3) year terms.
Section 3. Election of Directors. At each annual meeting of the members of this cooperative, directors shall be elected to fill vacancies created by expired terms. The term of office of such directors shall be three (3) years commencing at the next annual organizational meeting of the Board of Directors, and continuing until the annual organizational meeting of the Board of Directors three (3) years subsequent and until their respective successors are elected and qualified.
Section 4. Vacancies. Each vacancy occurring on the Board of Directors may be filled by the remaining directors until the next annual meeting of the members, at which time the members shall elect a director to serve for the unexpired term; provided, however, that vacancies on the Board created by an increase in the number of directors pursuant to an amendment of the Articles of Incorporation or Bylaws shall be filled at the annual meeting of the members next following the adoption of such amendment unless otherwise provided in the amendment.
Section 5. Removal.
(a) Removal by Members for Cause. Any director of this cooperative may, for cause related to the duties of the position of director, at any annual or special meeting of the members, be removed from office by a majority vote of the members present and entitled to vote. No director shall be removed from office by the members unless he or she has been informed of the meeting at which the matter is to be considered at least ten (10) days before such meeting. Such notice shall be given by certified mail addressed to him or her at his or her last known address, and he or she shall be entitled to be heard at such meeting. In case of removal by action of the members, the members shall fill the vacancy for the unexpired term of such director by special election.
(b) Removal by Board of Directors for Cause. Any director of this cooperative may, for cause related to the duties of the position of director, at any regular or special meeting of the Board of Directors, be removed from office by a vote of three-fourths (3/4) of all of the remaining directors. No director shall be removed from office under this subsection unless he or she has been informed of the meeting at which the matter is to be considered at least ten (10) days before such meeting. Such notice shall be given by certified mail addressed to him or her at his or her last known address, and he or she shall be entitled to be heard at such meeting. In case of removal of a director by action of the Board, the Board may fill the resulting vacancy until the next meeting of the members of this cooperative.
Section 6. Meetings. The Board of Directors shall meet regularly at such times and places as the Board may determine. An annual organizational meeting of the Board of Directors, for the installation of new directors and election of officers, shall be held within five (5) months after the date of the close of the fiscal year of this cooperative and subsequent to the annual meeting of members. Special meetings may be called by the President or any three directors. All meetings shall be held on such notice as the Board may prescribe, provided that any business may be transacted at any meeting without specification of such business in the notice of such meeting. Directors may participate in any such meeting by means of a conference telephone conversation or other comparable method of communication by which all persons participating in the meeting can hear and communicate with each other; and for purposes of taking any action at the meeting, any such directors shall be deemed present in person at the meeting.
Section 7. Quorum and Voting. A quorum shall consist of a majority of the directors. A majority vote of the directors present shall decide all questions except where a greater vote is required by the Articles of Incorporation, by these Bylaws or by law.
Section 8. Action Without Meeting. Any action required or permitted to be taken at a meeting of the Board of Directors may be taken without a meeting if all directors consent thereto in writing and the writing or writings are held with the minutes or proceedings of the Board of Directors.
ARTICLE IV. OFFICERS.
Section 1. Election of Officers. At each annual organizational meeting of the Board of Directors, the Board shall elect from its membership a President, one or more Vice Presidents, a Secretary-Treasurer and such other officers as it shall deem necessary, with such authority and duties as may be prescribed by the Board of Directors. Other than the offices of President and Vice President, one person may hold one or more of the offices of this cooperative if eligible to hold each such office. If any vacancy occurs among the officers of this cooperative, it shall be filled by the Board of Directors at its next regular or special meeting following the vacancy.
Section 2. President. The President shall preside at all meetings of the members and the Board of Directors. The President shall have such authority to execute all certificates, contracts and other documents on behalf of this cooperative as may be delegated to the President by the Board of Directors.
Section 3. Vice President. In the absence or disability of the President, the Vice President shall perform the duties of the President. The Vice President shall have such other duties as may be assigned to him or her by the President or the Board of Directors.
Section 4. Secretary. The Secretary shall keep complete minutes of each meeting of the members and of the Board of Directors, and shall sign with the President all notes, deeds and other conveyances of real estate, and affix the corporate seal to all documents requiring the corporate seal. The Secretary shall keep a record of all business of this cooperative and shall prepare and submit to the annual meeting of the members a report of the previous fiscal year's business. The annual report shall contain a statement of assets and liabilities, a statement of income and expenses, and such other statements and statistical memoranda as the Board of Directors shall require. The Secretary shall give all notices as required by law. The Secretary shall perform such other duties as may be required by the Board of Directors. The Board of Directors may delegate, or authorize the Secretary to delegate, to any other officer or employee of this cooperative, under the supervision of the Secretary, any or all of the duties enumerated in this section.
Section 5. Treasurer. The Treasurer shall oversee the receipt and disbursement of all funds of this cooperative, ensure that complete records of all financial transactions of the association are kept, and perform such other duties as may be required by the Board of Directors. The Board of Directors may delegate, or authorize the Treasurer to delegate, to any other officer or employee of this cooperative, under the supervision of the Treasurer, any or all of the duties enumerated in this section.
Section 6. Secretary-Treasurer. In the event that the offices of Secretary and Treasurer are combined, his or her duties shall be a combination of the duties of the Secretary and the Treasurer and his or her office shall be known as Secretary-Treasurer.
Section 7. Chief Executive Officer. The Board of Directors shall employ and supervise a Chief Executive Officer of this cooperative. The Chief Executive Officer shall have general charge of the ordinary and usual business operations of this cooperative subject to the direction and approval of the Board of Directors. The Chief Executive Officer shall properly maintain all business records and accounts of this cooperative. He or she shall provide annual and periodic reports in a form and manner prescribed by the Board of Directors. The Chief Executive Officer shall employ and discharge employees subject to direction and guidelines approved by the Board. The Chief Executive Officer shall handle and account for all monies belonging to this cooperative which come into his or her possession in the manner and form prescribed by the Board of Directors.
ARTICLE V. CAPITAL STOCK.
Section 1. Certificates or Proof of Membership. The signed, completed membership application form, or a carbon copy thereof, validated to indicate receipt of initial stock purchase, shall serve in lieu of certificates for Class A stock, when the initial required stock is fully paid for and the membership application has been received. Class B stock received as patronage dividends shall be evidenced by written notice of allocation mailed to the members. Certificates evidencing other types of stock shall contain the name of the member who owns the stock, the membership number assigned to that member, and shall bear the signature of the President and Secretary. This cooperative shall retain the right to terminate all memberships as provided in these Bylaws and to purchase or recall all stock of this cooperative. Redemption of capital stock by this cooperative is subject to any indebtedness owed to this cooperative by the member.
Section 2. Non-Transferability. All shares of stock of this cooperative shall be transferable only to this cooperative with the consent and approval of the Board of Directors. Shares of stock may not be transferred in any other manner.
Section 3. Refund or Repurchase by this Cooperative. This cooperative shall repurchase all shares of stock of terminating members, whether for cause or for voluntary or involuntary reasons, provided that this cooperative has received replacement capital from new or continuing members. The Board of Directors may establish additional conditions and terms for repurchase of members' shares of stock, provided such conditions and terms apply to all members equitably.
Section 4. Classes and Issuance. To further the cooperative character of this cooperative and provide a means by which its members will finance its activities, this cooperative is authorized to issue Class B stock, equity reserve or capital interest certificates, or any other media as determined by the Board of Directors and as permitted by law. Funds and credits arising from the issue of such stock, certificates or other media may be used for creating a revolving fund for the purpose of creating working capital to meet this cooperative's financing needs. Whenever this cooperative determines that all of its funds are not necessary for the proper financing of its operations, the Board of Directors may choose to retire Class B stock, or liquidate equity or capital reserves or any other media previously issued.
Section 5. Order of Payment Upon Dissolution or Liquidation. Upon dissolution or liquidation of this cooperative, the debts and liabilities of this cooperative shall first be paid according to their respective priorities. Stockholders or other holders of equity of capital reserve credits or other media issued by the Board of Directors shall then be paid the par value of their shares or credits with payment made in the order of preference stated in the Articles of Incorporation. Any additional property remaining after stockholders and other equity holders have been paid shall be distributed to another association doing business on a cooperative basis or a nonprofit organization exempt from taxes under Section 501(a) of the Internal Revenue Code, as shall be determined by the Board of Directors.
ARTICLE VI. DISTRIBUTION OF SURPLUS.
Section 1. Annual Net Savings.
(a) Gross Receipts. Gross receipts shall be all proceeds from the sale of goods and services to members and non-members and all other sums received (including patronage dividends and all non-patronage income).
(b) Deductions From Gross Receipts. This cooperative shall deduct from gross receipts all expenses incurred in generating said gross receipts, including but not limited to marketing expenses, costs of goods or services sold, taxes, depreciation, reserves for doubtful accounts and all other necessary expenses.
(c) Total Annual Net Savings. The amount remaining after reducing the gross receipts in subsection (a) by the deductions in subsection (b) shall constitute the annual net savings (net earnings) of this cooperative.
Section 2. Member Patronage Income.
(a) Member Patronage. The annual net savings of this cooperative shall be divided into (1) annual net savings from member patronage; (2) annual net savings from non-member patronage; and (3) non-patronage sources. Annual net savings from member patronage shall be determined by multiplying the percentage of gross receipts attributable to business done with or for members (including patronage dividends, etc.) by the total annual net savings minus non-patronage savings. The resulting amount shall be the annual net savings from member patronage, which shall be distributed to the members of this cooperative in proportion to the amount of business done by each member with the cooperative, subject only to the deductions and the exceptions provided in Sections 3 and 4 of this Article.
(b) Non-Member Patronage and Non-Patronage Income. The difference between total annual net savings and net savings from member patronage shall be the annual net savings from non-member patronage and non-patronage sources.
Section 3. Educational Reserve. The Board of Directors may set aside a sum not to exceed five percent (5%) of non-member patronage and non-patronage income as an educational fund to promote and encourage cooperative associations.
Section 4. Capital Reserve. The Board of Directors shall annually set aside all annual net savings from non-member patronage and non-patronage sources less any deductions for the educational reserve as a capital reserve. In addition, the Board of Directors may also place into the capital reserve fund all annual net savings from member patronage attributable to members who are unidentified, or who do not consent to take into account patronage dividends from this cooperative in the manner provided in 26 U.S.C. Section 1385. Amounts previously set aside as capital reserves shall not be allocated to the members but shall be kept in the general reserve fund of this cooperative. The Board of Directors may, by resolution duly adopted prior to the beginning of the fiscal year, set aside up to fifty percent (50%) of the total annual net savings or other reasonable amounts as a capital reserve.
Section 5. Patronage Dividend Distribution.
(a) The annual net savings from member patronage, less any deductions or exceptions as determined by Sections 3 or 4 of this Article, shall be distributed annually to the members of this cooperative. Members shall, by their ongoing membership in this cooperative, consent to include in their income such patronage distributions from this cooperative in the manner provided in and to the extent required by 26 U.S.C. Section 1385.
(b) Patronage dividends shall be distributed in cash or in equity (Class B stock) or by any combination thereof designated by the Board of Directors. Equity distributions (Class B stock) may be paid or redeemed in whole or in part at such time, in such manner and such order as shall be determined by the Board of Directors in its sole discretion. The Board of Directors may establish policies and programs for the payments of or redemption of such equities. No transfer or assignment of such equity (Class B stock) shall be allowed without the approval of this cooperative.
Section 6. Allocation of Losses. If this cooperative sustains an annual loss in net savings from member patronage, the Board of Directors shall have the power and authority to allocate such losses from member business in the following manners: (1) to the members for such year or years on a patronage basis and apply such losses against the equity credits or stock of said members; (2) to apply the loss to this cooperative's capital reserve; or (3) to carry such loss forward or back to other years.
ARTICLE VII. CONSENT BY MEMBERS.
Each member of this cooperative shall, by becoming a member, consent that the amount of any distributions with respect to such member's patronage occurring in any fiscal year which are made by qualified written notices of allocation (as defined in 26 U.S.C. Section 1388) received by such member from the cooperative shall be included in such member's income in the manner provided in 26 U.S.C. Section 1385 during the taxable year in which the qualified written notices of allocation are received. It is the intent of this provision to provide a consent binding on all members who retain or obtain membership in this cooperative and receives a written notification and copy of this provision, for the purpose of making such distributions â€śqualifiedâ€ť within the meaning of the Internal Revenue Code.
ARTICLE VIII. INDEMNIFICATION.
Section 1. Indemnification. This cooperative shall indemnify each person who is or was a director, officer, manager, employee or agent of this cooperative, and any person serving at the request of this cooperative as a director, officer, manager, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred, to the fullest extent to which such directors, officers, managers, employees or agents of a cooperative may be indemnified under Minnesota law.
Section 2. Insurance. This cooperative may purchase and maintain insurance on behalf of any person who is or was a director, officer, manager, employee or agent of this cooperative, or is or was serving at the request of this cooperative as a director, officer, manager, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against that person and incurred by that person in any such capacity.
ARTICLE IX. FISCAL MATTERS.
Section 1. Fiscal Year. The fiscal year of this cooperative shall end on June 30.
Section 2. Borrowing. The Board of Directors shall have power to authorize and approve the borrowing of money and the pledging and mortgaging of any or all of the assets of this cooperative as security for the sums so borrowed.
Section 3. Compensation and Reimbursement. Compensation of the Board of Directors shall be determined by resolution of the Board of Directors. All decisions regarding directors' compensation shall be announced to the members of this cooperative at the next regular or special meeting of the members. Officers and directors shall also be entitled to reimbursement for actual expenses incurred in attending Board meetings or other business of this cooperative. Such expense claims shall be approved by a majority of the Board. Compensation and reimbursement paid to directors shall not constitute payments to them as employees.
Section 4. Bonds and Insurance. The Board of Directors may require the officers, agents or employees charged by this cooperative with responsibility for the custody of any of its funds or property to give adequate bonds. Such bonds, unless cash security is given, shall be furnished by a responsible bonding company and approved by the Board of Directors and the cost thereof shall be paid by this cooperative. The Board of Directors shall maintain in effect property and liability insurance for this cooperative.
Section 5. Audit. The Board of Directors shall review all financial statements prepared and presented by management at their regular meetings but no less than four times a year. The Board may, in addition, have the books audited or reviewed at least annually by a certified public accountant. Such audit or review shall be made between the date of the close of the fiscal year and the date of the annual meeting of members, and a report of findings, containing at least a statement of assets and liabilities showing the financial condition of this cooperative at the close of the fiscal year and a statement of income and expenses for the year, shall be submitted to the members at the annual meeting.
Section 6. Depository. The Board of Directors may select one or more financial institutions to act as depositories of the funds of this cooperative, and to determine the manner of receiving, depositing, and disbursing the funds of this cooperative, the form of checks, and the person or persons by whom such checks shall be signed, with the power to change such financial institutions and the person or persons signing such checks and the form thereof at will.
ARTICLE X. AMENDMENT.
These Bylaws may be amended, repealed or altered in whole or in part by a majority vote of a quorum of the members present at a meeting or voting by mail.