AMENDED AND RESTATED BYLAWS
OF
HARVEST STATES COOPERATIVES
ARTICLE I.
MEMBERSHIP; PATRONS' EQUITIES
SECTION 1 - QUALIFICATIONS. Membership in this Association shall be
restricted to those persons and associations which are described in Section 1 of
Article V of the Articles of Incorporation of this Association and who are
Currently Active Patrons (as herein defined) of this Association.
SECTION 2 - INDIVIDUAL MEMBERS. There is hereby established a class of
membership of this Association the members of which shall be known as
"Individual Members." The duties, rights and privileges of Individual Members
shall include the following:
MEMBERSHIP. Individual Members shall be those members who are
persons described in Section 1(a) of Article V of the Articles of
Incorporation and who are Currently Active Patrons of this Association.
SECTION 3 - DEFINED MEMBERS. There is hereby established a class of
membership of this Association the members of which shall be known as "Defined
Members." The duties, rights and privileges of Defined Members shall include the
following:
(a) MEMBERSHIP. Defined Members shall be those members who are persons
described in Section 1(a) or Section 1(b) of Article V of the Articles of
Incorporation and who are holders of Equity Participation Units as further
described in these Bylaws.
(b) DELIVERY RIGHTS AND OBLIGATIONS. The delivery rights and
obligations of each Defined Member shall be as specified in the member marketing
agreement between such Defined Member and this Association. Each such member
marketing agreement shall at all times be subject to modification by this
Association upon written notice to the Defined Member in question, provided that
such modification is first approved by Defined Members holding a majority of the
voting power of the Defined Business Unit in question who are present and voting
at a meeting of Defined Members holding Equity Participation Units in such
Defined Business Unit, where the notice of such meeting contains a statement of
the proposed modification.
(c) DEFINED BUSINESS UNITS. The Board of Directors may, from time to
time and at its sole discretion, organize Defined Business Units. Each Defined
Member holding Equity Participation Units in a Defined Business Unit shall be
eligible to receive patronage distributions from the Defined Business Unit as a
separate allocation unit. The Board of Directors may, from time to time and at
its sole discretion, sell, liquidate, dissolve or wind up any Defined Business
Unit, in which event the assets of such Defined Business Unit shall be used
first to redeem the Equity Participation Units and Preferred Capital
Certificates of the Defined Business Unit on a pro rata basis.
(d) DEFINED MEMBER BOARDS. Each Defined Business Unit shall be
represented by a Defined Member Board. The initial members of each Defined
Member Board shall be selected by the Board of Directors of this Association.
Subsequently, the members of the Defined Business Unit in question shall be
entitled to elect, on a one Defined Member/one vote basis, the members of the
Defined Member Board. Each Defined Member Board shall be made up of at least
five (5) but not more than ten (10) individuals. Each member of a Defined Member
Board must be (i) either a Defined Member or a representative of a Defined
Member, and (ii) in good standing as a Defined Member and in full compliance
with delivery obligations in and to such member's Defined Business Unit;
provided, however, that no employee of this Association may serve as a member of
any Defined Member Board. Each Defined Member Board shall be headed by a
Chairperson selected by and from the Board of Directors of this Association.
Each Defined Member Board shall meet at least quarterly (one of which meetings
may be its annual meeting), and shall be charged with reflecting Defined Member
concerns and providing a direct communication mechanism to the Board of
Directors of this Association. Individuals serving on a Defined Member Board
shall serve for staggered terms of three (3) years and until their successors
are elected and have qualified.
SECTION 4 - AFFILIATED ASSOCIATIONS. There is hereby established a
class of membership of this Association the members of which shall be known as
"Affiliated Associations." The duties, rights and privileges of Affiliated
Associations shall include the following:
MEMBERSHIP. Affiliated Associations shall be those members
that are associations described in Section 1(b) of Article V of the
Articles of Incorporation, that are Currently Active Patrons and that
have transacted at least $100,000 of business with this Association
during the preceding fiscal year. Associations described in Section
1(b) of Article V of the Articles of Incorporation that meet all of the
requirements for Affiliated Association membership except for the
volume-of-business-transacted requirement shall not be eligible for
such membership, but rather shall be referred to in these Bylaws as
"Non-Member Consenting Patrons."
SECTION 5 - TERMINATION OF MEMBERSHIP. Membership in this Association
shall be terminated by the Board of Directors if a member has become ineligible
for membership or may, at the discretion of the Board of Directors, be
terminated whenever the Board of Directors by resolution finds that a member
has:
(a) intentionally or repeatedly violated any Bylaw of this Association,
or
(b) failed to patronize this Association for a period of twelve (12)
consecutive months, or
(c) breached any contract with this Association, or
(d) willfully obstructed any lawful purpose or activity of this
Association, or
(e) remained indebted to this Association for ninety (90) days after
such indebtedness becomes payable, or
(f) died or legally dissolved;
provided, however, that termination of any member as a result of any of the
circumstances listed in paragraphs (a) through (f) above shall not be deemed to
revoke such member's consent contained in Article IX hereof but rather such
member may only revoke such consent in writing. Upon termination of membership
said member shall thereafter have no voting rights in this Association. A
terminated member's patronage credits shall be revolved or retired in the same
manner as the patronage credits of active members. No action taken hereunder
shall impair the obligations or liabilities of either party under any contract
with the Association which may be terminated only as provided therein.
SECTION 6 - INSTRUMENTS AUTHORIZED. At the sole discretion of the Board
of Directors, this Association may issue debt or equity instruments to its
current or former members or its patrons including, without limitation, the
following:
(a) EQUITY PARTICIPATION UNITS. Equity Participation Units may be
issued to and held only by Defined Members. Equity Participation Units shall
have no voting rights. Holders of Equity Participation Units shall have the
right to deliver to this Association for processing in accordance with the
Articles of Incorporation, these Bylaws and a member marketing agreement,
product corresponding to such Equity Participation Units.
(b) CAPITAL EQUITY CERTIFICATES. Capital Equity Certificates, in
denominations fixed by the Board of Directors, with either no maturity date or
such maturity date as may be fixed by the Board of Directors, and bearing no
interest, dividend or other annual payment, may be issued from time to time in
the discretion of the Board of Directors. They may be issued in partial or
complete distribution of patronage refunds.
(c) CERTIFICATES OF INDEBTEDNESS. Certificates of Indebtedness may be
issued from time to time in the discretion of the Board of Directors. Such
certificates shall be in such denominations, shall bear such maturity and rate
of interest, if any, as the Board of Directors may determine and such
certificates shall state. Such certificates shall be callable for payment in
cash or other assets at such times as may be determined by the Board of
Directors.
(d) NON-PATRONAGE EARNINGS CERTIFICATES. Non-Patronage Earnings
Certificates, in denominations fixed by the Board of Directors, with no maturity
date, and bearing no interest, dividend or other annual payment, may be issued
from time to time in the discretion of the Board of Directors. They may be
issued and distributed only to member patrons and to Non-Member Consenting
Patrons (as herein defined) as part of a non-member/non-patronage distribution.
Such certificates shall be callable for payment in cash or other assets at such
times as may be determined by the Board of Directors.
(e) PREFERRED CAPITAL CERTIFICATES. Preferred Capital Certificates may
be issued from time to time in one or more series, the units of each series to
have such designations, preferences and relative participating, optional or
other special rights, and qualifications, privileges, limitations or
restrictions thereof, as shall be stated and expressed herein and in a
resolution or resolutions providing for the issue of such series adopted by the
Board. The Board is hereby expressly authorized, subject to the limitations
provided by law, to establish and designate series of the Preferred Capital
Certificates, to fix the amount of each series and to fix the designations and
the relative powers, rights, preferences, privileges and limitations of the
units of each series and the variations of the relative powers, rights,
preferences, privileges and limitations as between series, and to increase and
to decrease the number of units constituting each series. Preferred Capital
Certificates shall carry no voting rights.
(f) OTHER. Such other debt or equity instruments may be issued to
current or former members or patrons as may from time to time be authorized by
the Board of Directors.
Such debt or equity instruments (including, without limitation, Equity
Participation Units, Capital Equity Certificates, Certificates of Indebtedness,
Non-Patronage Earnings Certificates and Preferred Capital Certificates) are
collectively referred to herein as "Patrons' Equities."
SECTION 7 - TRANSFER OF PATRONS' EQUITIES. Patrons' Equities held by
any person may be transferred only with the consent and approval of the Board of
Directors, and by such instrument of transfer as may be required or approved by
this Association. The Board of Directors of this Association shall also have the
authority to allow conversion of Patrons' Equities into Equity Participation
Units or Preferred Capital Certificates on such terms as shall be established by
the Board of Directors.
SECTION 8 - REDEMPTION OR RETIREMENT OF PATRONS' EQUITIES AND ALLOCATED
RESERVE. No person shall have any right whatsoever to require the retirement or
redemption of any Patrons' Equities except in accordance with their term, or of
any allocated capital reserve. Such redemption or retirement is solely within
the discretion and on such terms as determined from time to time by the Board of
Directors of this Association.
ARTICLE II.
DEBT AND EQUITY INSTRUMENTS
At the sole discretion of the Board of Directors, this Association may
issue debt or equity instruments to any person whatsoever including, without
limitation, the following:
(a) PREFERRED EQUITIES. Preferred Equities may be issued from time to
time in one or more series, the units of each series to have such designations,
preferences and relative participating, optional or other special rights, and
qualifications, privileges, limitations or restrictions thereof, as shall be
stated and expressed herein and in a resolution or resolutions providing for the
issue of such series adopted by the Board. The Board is hereby expressly
authorized, subject to the limitations provided by law, to establish and
designate series of the Preferred Equities, to fix the amount of each series,
and to fix the designations and the relative powers, rights, preferences,
privileges and limitations of the units of each series and the variations of the
relative powers, rights, preferences, privileges and limitations as between
series, and to increase and decrease the number of units constituting each
series. Preferred Equities shall carry no voting rights.
(b) OTHER. Such other debt or equity instruments may be issued to
non-members and non-patrons as well as to members and patrons as may from time
to time be authorized by the Board of Directors.
ARTICLE III.
MEETINGS OF MEMBERS
SECTION 1 - ANNUAL AND SPECIAL MEETINGS. The annual meeting of the
members of the Association shall be held at a time and place fixed by the Board
of Directors falling within six (6) months following the close of the fiscal
year. Special meetings of the members of this Association shall be held at a
time and place specified in the notice of the meeting. A special meeting may be
called by the Board of Directors or upon the written petition of twenty percent
(20%) of the members. No business shall be considered at the special meeting
except as mentioned in the notice of the meeting. Any amendment to the Articles
of Incorporation or Bylaws of this Association shall be considered and voted
upon only at an annual meeting, unless the Board of Directors determines by
resolution that a compelling business reason exists for calling a special
meeting for such purpose.
SECTION 2 - NOTICE OF MEETINGS. Notice of any meeting shall be
published in two succeeding issues of this Association's magazine, periodical or
house organ, with the last issue mailed at least two (2) weeks before the
meeting date; provided that if publication of this Association's magazine,
periodical or house organ occurs less frequently than monthly, such notice may
be published in a single issue, mailed at least thirty (30) days before the
meeting date. In lieu of publication in this Association's magazine, periodical
or house organ, written notice of a meeting of the members may be given by
preparing and mailing such notice by first class mail to the last known post
office address of each and every member personally or, in the case of an
Affiliated Association, to the secretary thereof, not less than fifteen (15)
days prior to the date of the meeting. 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 which
contains a copy of the notice, shows the date of mailing or publication (as the
case may be), and states the notice was mailed or published (as the case may be)
within the time prescribed by these Bylaws. The certificate shall be made a part
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 POWER. The voting power of the members of this
Association shall be exercised as follows.
(a) AFFILIATED ASSOCIATIONS. Each Affiliated Association shall be
entitled to delegates based on the following formula:
DOLLAR VOLUME OF SALES TO AND/OR
PURCHASES FROM THIS ASSOCIATION
DURING THIS ASSOCIATION'S FISCAL NUMBER OF
YEAR LAST ENDED PRIOR TO THE MEETING PERMITTED DELEGATES
------------------------------------ -------------------
$ 100,000 - $ 1,500,000 1
1,500,001 - 3,500,000 2
3,500,001 - 6,000,000 3
6,000,001 - 9,000,000 4
9,000,001 - 12,000,000 5
12,000,001 - 15,000,000 6
15,000,001 - 18,000,000 7
18,000,001 - 21,000,000 8
21,000,001 - 24,000,000 9
24,000,001 - 27,000,000 10
27,000,001 - 31,000,000 11
31,000,001 - 35,000,000 12
35,000,001 - 40,000,000 13
40,000,001 - 45,000,000 14
45,000,001 - 15
provided, however, that in any event each such Affiliated Association shall be
entitled to a minimum of two hundred (200) votes and a maximum of three thousand
(3,000) votes on the basis of two hundred (200) votes for each permitted
delegate as set forth above. For the purpose of determining the number of
permitted delegates from an Affiliated Association, the dollar value of
commodities delivered by a Defined Member to the Affiliated Association for
handling by and on behalf of the Association and the Defined Member shall be
included in the Affiliated Association calculation. All votes shall be cast by
each Affiliated Association's delegates, as hereinafter provided.
(b) INDIVIDUAL MEMBERS AND DEFINED MEMBERS. Each Individual Member who
patronizes this Association through a line elevator, a feed mill, or any other
facility owned or leased by this Association, and each Defined Member, shall
have one (1) vote; provided, however, that except as such Individual Member or
such Defined Member shall cast a vote individually in person at an annual or
special meeting (as hereinafter provided), or by mail when a mail ballot has
been provided for, and except for votes of Defined Members for elections to
Defined Member Boards, such Individual Member or Defined Member may be grouped
with other Individual Members and Defined Members in local units ("Patrons'
Associations", as hereinafter further defined) as established from time to time
by the Board of Directors of this Association. An Individual Member who intends
to exercise such Individual Member's vote individually hereunder shall be
entitled to do so only after obtaining a certificate on a form provided by this
Association and signed by the manager of the line elevator, feed mill or other
facility patronized by such Individual Member, certifying that such Individual
Member is a member of this Association. A Defined Member who intends to exercise
such Defined Member's vote individually hereunder shall be entitled to do so
after giving notice of such intent to this Association on a form provided by
this Association. Such certificate or notice (as the case may be) shall be sent
to this Association by such member or manager no less than ten (10) days or more
before the annual or special meeting concerned, provided that in the discretion
of the Credentials Committee, any certificates or notices (as the case may be)
sent thereafter may also be honored.
Each Patrons' Association shall be entitled to be represented at any
and all members' meetings of this Association by delegates of its own choosing.
Such delegates and their alternates shall be elected on a one member/one vote
basis by the Individual Members and the Defined Members identified with the
Patrons' Association at an annual meeting of such Patrons' Association held
following reasonable notice; and in no instance shall managers or other
employees of this Association appoint such delegates or alternates. Such
delegates shall exercise the same powers at such members' meetings as the
delegates of Affiliated Associations may exercise. Each Patrons' Association
shall be entitled to a number of delegates based on the activities of its
Currently Active Patrons (as hereinafter defined) and of its Defined Members
based on the following formula, minus one vote for any Currently Active Patron
or any Defined Member who chooses to cast a vote personally (as hereinbefore
provided):
DOLLAR VOLUME OF SALES TO AND/OR
PURCHASES FROM THIS ASSOCIATION
DURING THIS ASSOCIATION'S FISCAL NUMBER OF
YEAR LAST ENDED PRIOR TO THE MEETING PERMITTED DELEGATES
------------------------------------ -------------------
$ 100,000 - $ 1,500,000 1
1,500,001 - 3,500,000 2
3,500,001 - 6,000,000 3
6,000,001 - 9,000,000 4
9,000,001 - 12,000,000 5
12,000,001 - 15,000,000 6
15,000,001 - 18,000,000 7
18,000,001 - 21,000,000 8
21,000,001 - 24,000,000 9
24,000,001 - 27,000,000 10
27,000,001 - 31,000,000 11
31,000,001 - 35,000,000 12
35,000,001 - 40,000,000 13
40,000,001 - 45,000,000 14
45,000,001 - 15
provided, however, that in any event each such Patrons' Association shall be
entitled to a minimum of two hundred (200) votes less the number of individual
votes (if any) cast by Currently Active Patrons and Defined Members of such
Patrons' Association, and a maximum of three thousand (3,000) votes. All votes
shall be cast by each Patrons' Association's delegates, as hereinafter provided.
A Patrons' Association shall not be entitled to more than one delegate for each
two hundred (200) votes (calculated after subtracting the number of individual
votes cast by Individual Members and Defined Members of such Patrons'
Association).
(c) DEFINITIONS. As used in these Bylaws, the following terms shall
have the meanings indicated:
(i) AGRICULTURAL PRODUCERS: Persons who are actually engaged
in the production of agricultural products, including tenants of land
used for the production of any such product, and lessors of such land
who receive as rent therefor a part of the product of such land.
(ii) CURRENTLY ACTIVE PATRONS: Consenting Agricultural
Producers or associations of Agricultural Producers that have
patronized this Association during the year for which Currently Active
Patron status is being determined. The Board of Directors of this
Association may, from time to time, establish minimum volumes of
patronage required of Agricultural Producers and associations of
Agricultural Producers in order to qualify for Currently Active Patron
status.
(iii) PATRONS' ASSOCIATION: An association of the Individual
Members who are Currently Active Patrons of a grain elevator, a feed
mill or a seed plant or any other facility (including related
operations, as designated by this Association) owned or leased by this
Association, or an association of Defined Members, which shall be so
designated by this Association. The membership of a Patrons'
Association may include both Individual Members and Defined Members
assigned to the Patrons' Association.
SECTION 4 - MANNER OF VOTING. At annual and special meetings of members
of this Association, the votes hereinabove provided for shall be cast in the
following manner:
(a) Each Individual Member and each Defined Member shall be entitled to
cast such Member's own vote in person.
(b) Each Affiliated Association and each Patrons' Association shall be
entitled to cast its votes only through its duly selected delegates (or their
duly selected alternates), except as otherwise herein provided in the case of
mail votes; and it shall be entitled to have present and voting up to a total
number of delegates (or their alternates) equal to one delegate for each two
hundred (200) votes it holds, calculated as hereinabove provided. Each delegate
(or alternate) of an Affiliated Association or a Patron's Association shall be
entitled to cast only two hundred (200) votes in the affairs of any such annual
or special meeting (other than items where a mail vote has been provided for),
unless the Affiliated Association or Patrons' Association certifies to this
Association, in the form and in the manner prescribed by this Association, that
it wishes to register less than the permitted number of delegates. In that
event, the total number of authorized votes of such Affiliated Association or
Patrons' Association shall be divided in multiples of two hundred (200) among
its certified and registered delegates in the manner prescribed by this
Association; provided that in no event shall the number of votes a delegate may
cast exceed six hundred (600) votes per delegate. There shall be subtracted from
the said votes cast by the delegates of Patrons' Associations the votes of those
Individual Members and Defined Members registered in person, in all proceedings
of said meeting; provided further, that no individual shall serve as a delegate
or alternate for more than one Affiliated Association or Patrons' Association.
(c) There shall be no mail voting except in cases where, in the notice
of the meeting, the Board of Directors of this Association shall have submitted
a specific issue or issues for a mail vote. In such case, the said notice may
provide that the mail vote as cast by each Affiliated Association or Patrons'
Association shall be binding upon the Association so voting as to the issue or
issues so submitted, and in such case the vote cast by any association voting by
mail shall be binding upon it and its delegates (if any) and alternates (if any)
attending the said meeting; delegates (or alternates) of Affiliated Associations
and Patrons' Associations which have not cast a vote by mail upon said issue or
issues shall cast the vote or votes of their respective associations upon said
issue or issues in the manner prescribed by the chairman of said meeting. No
combination of mail voting and voting in person by delegates of the same
association upon an issue or issues submitted for mail vote shall be permitted,
and an attempt by any association to do so shall be treated as having the effect
of not voting. Nothing in this section shall, however, prevent an annual or
special meeting of this Association from considering and acting upon issues in
addition to those submitted for mail vote, to the extent permitted by law; and
such issues shall be voted upon by delegates (and alternates) in the manner
hereinabove provided for other than mail votes.
(d) The mail vote cast by each Affiliated Association shall be
determined by the Board of Directors of each said Affiliated Association, unless
specified otherwise by the Board of Directors of this Association in the notice
of the meeting of this Association which provides for said mail votes. Any mail
ballot vote determined or cast by the Board of Directors of an Affiliated
Association shall be proportionate to the affirmative and negative votes cast by
members of that Board of Directors. The ballot used by each such association to
cast its vote shall contain the certificate of the secretary or the president of
said association (1) that the vote shown thereon is so cast by the direction of
said association's Board of Directors, (2) the number of directors voting in the
affirmative and the number of directors voting in the negative, and (3) stating
the number of votes which said association is then entitled to cast, according
to other provisions of this Article (with such supporting information therefor
as may be prescribed by this Association).
(e) The mail vote cast by each Patrons' Association shall be determined
by the delegate or delegates last previously designated by each such association
(and whose identity has been so previously stated in writing to this Association
by such persons and in such manner as may be prescribed by this Association),
including therein the alternate of any delegate who has since died or is unable
to act at the time of such mail vote. The ballot used by each such association
to cast its vote shall contain the certificate of the delegate or delegates (1)
that the vote shown thereon is so cast, and (2) stating the number of votes
which said association is then entitled to cast, according to other provisions
of this Article (with such supporting information therefor as may be prescribed
by this Association).
(f) The mail vote cast by each Individual Member or Defined Member of
this Association shall be on such form of ballot as may be prescribed by the
Board of Directors of this Association, and shall include (i) in the case of
Individual Members, the certificate that such member is a member of this
Association; and (ii) in the case of a Defined Member, the notice of intent to
vote individually, in either case as provided for in Section 3(b) of this
Article.
(g) There shall be no voting by proxy or under power of attorney at any
annual or special meeting of this Association.
SECTION 5 - QUORUM AND REGISTRATION.
(a) A quorum necessary to the transaction of business at any annual or
special meeting of this Association shall be at least ten percent (10%) of the
total number of members in this Association represented in person by delegates
(or alternates) or by mail votes when the members do not exceed five hundred
(500) in number. If the members of this Association exceed five hundred (500) in
number, fifty (50) members of this Association represented in person by
delegates (or alternates) or by mail votes shall constitute a quorum. In
determining a quorum at any meeting, on a question submitted to a vote by mail,
as hereinabove provided, members represented in person by delegates (or
alternates) or represented by mail vote shall be counted. The fact of the
attendance of a sufficient number of members to constitute a quorum shall be
established by a registration of the members of this Association present at such
meeting, which registration shall be verified by the Chairman, President and
Secretary of this Association and shall be reported in the minutes of the
meeting.
(b) Registration of Individual Members and Defined Members and of
delegates (and/or alternates) of Affiliated Associations and Patrons'
Associations shall close at such hour on the day for which an annual or special
meeting is called (or in case it is called for a series of days, at such hour on
the first day thereof) as the Board shall determine and specify in the Notice of
Meeting, or at such later time to which the close of registration may be
extended by majority vote of those registered before said initial time for
closing of registration. Persons otherwise eligible to vote, either as
Individual Members, Defined Members or as delegates or alternates, but not
registered as in attendance at or before said time (original or as extended),
shall have no right to vote in any of the affairs of the meeting (including, but
not limited to, election of Directors).
(c) Each Affiliated Association and Patrons' Association shall certify
its delegates and alternates to this Association, in the manner prescribed by
this Association, at least thirty (30) days before each annual meeting of this
Association, and at least three (3) days before each special meeting; provided
that in the discretion of the Credentials Committee such certificates received
thereafter may also be honored. The delegates and alternates so certified, and
found by this Association to be eligible to be seated at the meeting or meetings
of this Association, shall represent their Affiliated Associations or Patrons'
Associations, as the case may be, to the extent and in the manner provided in
this Article. In matters of which advance notice has been given, such delegates
and alternates shall endeavor to inform themselves as to the views of the
membership of the association which they represent.
(d) A delegate (or alternate) elected or appointed as above provided,
and certified to this Association in the manner prescribed by this Association,
shall hold office and shall represent such delegate's (or alternate's)
association at meetings of this Association to the extent and in the manner
prescribed in this Article until such delegate's (or alternate's) successor is
elected and qualified, but in any event no such certificate of election as
delegate shall be valid for more than two years; provided, further, that any
delegate (or alternate) shall cease to be such if such delegate (or alternate)
ceases to be an Agricultural Producer doing business with such delegate's (or
alternate's) Affiliated Association (or in the case of delegates or alternates
of Patrons' Associations, if such delegate (or alternate) ceases to be an
Agricultural Producer doing business with this Association).
(e) No employee of an Affiliated Association, nor any employee of this
Association, shall serve as a delegate or alternate to any meeting of this
Association; if any such person shall be certified as such a delegate or
alternate, such person shall nevertheless not be seated as such.
(f) A cooperative association which has business transactions with this
Association but which does not qualify as an Affiliated Association shall not be
entitled to have a voting delegate or alternate at any meeting of this
Association, but it may have present a "non-voting delegate", who shall be
entitled to be present at the meetings, but not to vote, and shall only be
recognized to speak at the discretion of the Chairman of the meeting.
(g) Nothing herein shall prevent Individual Members or Defined Members
of this Association or of Affiliated Associations, who are not delegates to the
annual meetings or special meetings of this Association from serving as
chairperson of a district meeting or as chairperson or member of a committee.
(h) Each member of the Board of Directors of this Association shall
have the right to speak on any subject during annual or special meetings of this
Association.
(i) A minimum of one-half (1/2) hour shall be allotted at the annual
meeting during the regular business session for the purpose of entertaining
members' questions.
ARTICLE IV.
DIRECTORS
SECTION 1 - BOARD OF DIRECTORS. The members of this Association shall
elect a Board of Directors of this Association, as more fully provided herein.
Each member of the Board of Directors must be an Agricultural Producer and an
active patron of this Association (either directly or through an Affiliated
Association) for a period of not less than five (5) years at the time of his or
her election, must be less than sixty-eight (68) years of age at the time of
such election, and shall not be an employee of this Association or of an
Affiliated Association.
SECTION 2 - ELECTION OF DIRECTORS.
(a) At each annual meeting of members, directors shall be elected to
fill vacancies created by expired terms; such directors shall be elected for
terms of three (3) years and until their respective successors are elected and
qualified.
(b) The Board of Directors shall be composed of four (4) persons who
must be residents of District Number 1, which shall include the States of
Minnesota, Illinois, Iowa and Wisconsin; four (4) persons who must be residents
of District Number 2, which shall include the State of North Dakota; two (2)
persons who must be residents of District Number 3, which shall include the
States of South Dakota, Kansas and Nebraska; two (2) persons who must be
residents of District Number 4, which shall include the States of Montana and
Wyoming; and two (2) persons who must be residents of District Number 5, which
shall include the States of Washington, Oregon, Utah and Idaho.
(c) Nominations for the election of directors shall be made by the
members of this Association and may be made by balloting, nominating committee,
petition of members or from the floor, provided that nominations from the floor
shall be requested in addition to nominations made by petition or nominating
committee. Before each annual meeting of members the Board of Directors shall
appoint a nominating committee to supervise the nominating procedure for
election of directors, which procedure shall be prescribed by the Board of
Directors.
(d) At each annual meeting of members, the directors of this
Association to be elected shall be elected in the following manner: Individual
Members, Defined Members, delegates and alternates from each District shall meet
separately, and at each such District meeting the director or directors of this
Association then to be elected shall be elected by the majority of the votes
then entitled to be cast. The Board of Directors shall have the power and
authority to adopt a policy and procedure for assigning to an existing district
those members who are not residents of any district established in Section 2(b)
above. Such policy and procedure may be amended from time to time at the
discretion of the Board of Directors. Each such District election shall be
binding upon the annual meeting and upon this Association, without any
ratification or right of rescission or veto by Individual Members or Defined
Members or delegates or alternates, or any combination thereof, of other
districts. A temporary Chairman of each such District meeting shall be selected
by the Chairman of this Association. Election of directors shall be by balloting
when there are two or more nominees for a position to be filled, or when there
are more nominees than there are positions to be filled.
SECTION 3 - VACANCIES. Each vacancy occurring on the Board of Directors
may be filled by the remaining directors until the next annual meeting of the
members when the members shall elect a director to serve for the unexpired term,
provided that vacancies on the Board created by any amendment of the Articles of
Incorporation or Bylaws shall first be filled at the annual meeting of the
members next following the adoption of such amendment unless otherwise provided
in the amendment.
SECTION 4 - MEETINGS. The Board of Directors shall meet regularly at
such times and places as the Board may determine. Special meetings may be called
by the Chairman 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 5 - 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 6 - 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.
SECTION 7 - BORROWINGS. 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 Association as security for the sums so
borrowed.
ARTICLE V.
DUTIES OF DIRECTORS
SECTION 1 - GENERAL POWERS. The Board of Directors shall manage the
business and affairs of this Association, and shall exercise all of the powers
of this Association except such as are by law, the Articles of Incorporation, or
these Bylaws conferred upon or reserved to the members. The Board of Directors
shall adopt such policies, rules, regulations, and actions not inconsistent with
law, the Articles of Incorporation, or these Bylaws, as it may deem advisable.
SECTION 2 - BONDS AND INSURANCE. The Board of Directors shall require
all officers, agents, and employees charged by this Association 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 Association. The Board of Directors shall provide
for the adequate insurance of the property of the Association, or property which
may be in the possession of this Association, or stored by it, and not otherwise
adequately insured, and in addition adequate insurance covering liability for
accidents to all employees and the public.
SECTION 3 - ACCOUNTING SYSTEM AND AUDIT. The Board of Directors shall
install and maintain an adequate system of accounts and records. At least once
in each year the books and accounts of this Association shall be audited and a
review of such audit shall be published annually in this Association's magazine,
periodical or house organ, and a report of such audit shall in addition be made
at the next annual meeting of the members.
SECTION 4 - DEPOSITORY. The Board of Directors shall have power to
select one or more banks to act as depositories of the funds of this
Association, and to determine the manner of receiving, depositing, and
disbursing the funds of this Association, the form of checks, and the person or
persons by whom they shall be signed, with the power to change such banks and
the person or persons signing such checks and the form thereof at will.
ARTICLE VI.
OFFICERS
SECTION 1 - ELECTION OF OFFICERS. Promptly following each annual
meeting the Board of Directors shall elect from its membership a Chairman, one
or more Vice Chairmen, a Secretary and a Treasurer; it shall also elect a
President and one or more Group Vice Presidents, Senior Vice Presidents and Vice
Presidents who may be, but need not be, members of the Board. The offices of
Secretary and Treasurer may be held by the same person and, when so held, shall
be termed Secretary-Treasurer. Nominations for election of officers shall be
made by the Directors and may be made by balloting, nominating committee or from
the floor, provided that nominations from the floor shall be requested in
addition to nominations made by a nominating committee. Election of officers
shall be by balloting when there are two or more nominees for a position to be
filled, or when there are more nominees than there are positions to be filled.
The Board of Directors may appoint such other officers as it shall deem
necessary who shall have such titles, power, and duties as the Board may
prescribe; this shall include, but not be limited to, Presidents and Vice
Presidents of "divisions" of the Association. If any vacancy shall occur among
the principal officers of this Association, it shall be filled by the Board of
Directors at its next regular meeting following the vacancy.
SECTION 2 - CHAIRMAN. The Chairman shall preside at all meetings of the
members and the Board of Directors. Except where the signature of the President
is required, the Chairman shall possess the same power as the President to sign
all certificates, contracts and other instruments of the corporation which may
be authorized by the Board of Directors.
SECTION 3 - PRESIDENT. The President shall be the chief executive
officer of this Association. The President shall have general supervision of the
affairs of this Association, shall sign or countersign all certificates,
contracts or other instruments of this Association as authorized by the Board of
Directors, shall make reports to the Board of Directors and members and shall
perform such other duties as are incident to the President's office or are
properly required by the Board of Directors.
SECTION 4 - VICE CHAIRMEN. In the absence or disability of the
Chairman, the Vice Chairmen, in the order designated by the Board of Directors,
shall perform the duties and exercise the powers of the Chairman. Each Vice
Chairman shall have such other duties as are assigned to such Vice Chairman from
time to time by the Board of Directors.
SECTION 5 - GROUP VICE PRESIDENTS, SENIOR VICE PRESIDENTS AND VICE
PRESIDENTS. In the absence or disability of the President, the Group Vice
Presidents, Senior Vice Presidents and Vice Presidents, in the order designated
by the Board of Directors, shall perform the duties and exercise the powers of
the President. Each Group Vice President, Senior Vice President and Vice
President shall have such other duties as are assigned to such Vice President
from time to time by the President.
SECTION 6 - SECRETARY. The Secretary shall keep complete minutes of
each meeting of the members and of the Board of Directors, and shall sign with
Chairman or the President all notes, conveyances and encumbrances of real
estate, capital securities and instruments requiring the corporate seal;
provided that the Secretary, in writing, may authorize any other officer or
employee to execute or sign the Secretary's name to any or all such instruments.
The Secretary shall keep a record of all business of this Association, prepare
and submit to the annual meeting of the members a report of the previous fiscal
year's business, and give all notice 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, under the supervision of the Secretary, all or any of
the duties enumerated in this section.
SECTION 7 - TREASURER. The Treasurer shall supervise the safekeeping of
all funds and property of this Association, supervise the books and records of
all financial transactions of this Association, 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, under
the supervision of the Treasurer, all or any of the duties enumerated in this
section.
SECTION 8 - ASSISTANT SECRETARY. The Assistant Secretary or Assistant
Secretaries shall perform such duties as may be assigned by the Board of
Directors, the Chairman, President or the Secretary. In the absence or
disability of the Secretary, or in the event of a vacancy in that office, the
Assistant Secretary shall perform the duties of the Secretary, or if there are
two or more Assistant Secretaries, the Chairman shall designate the order in
which they shall act in place of the Secretary.
SECTION 9 - ASSISTANT TREASURER. The Assistant Treasurer or Assistant
Treasurers shall perform such duties as may be assigned by the Board of
Directors, the Chairman, the President, or the Treasurer. In the absence or
disability of the Treasurer, or in the event of a vacancy in that office, the
Assistant Treasurer shall perform the duties of the Treasurer; or if there are
two or more Assistant Treasurers, the Chairman shall designate the order in
which they shall act in place of the Treasurer.
SECTION 10 - SPECIAL POWERS. Any officer may be vested by the Board of
Directors with any power and charged with any duty not contrary to law or
inconsistent with the Articles of Incorporation or these Bylaws.
ARTICLE VII.
INDEMNIFICATION AND INSURANCE
SECTION 1 - INDEMNIFICATION. This Association shall indemnify each
director, officer, manager, employee, or agent of this Association, and any
person serving at the request of this Association 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 an association may be indemnified under the law of the
State of Minnesota or any amendments thereto or substitutions therefor.
SECTION 2 - INSURANCE. This Association shall have power to purchase
and maintain insurance on behalf of any person who is or was a director,
officer, manager, employee, or agent of this Association, or is or was serving
at the request of this Association 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 VIII.
METHOD OF OPERATION - PATRONAGE REFUNDS
SECTION 1 - COOPERATIVE OPERATION. This Association shall be operated
upon the cooperative basis in carrying out its business within the scope of the
powers and purposes defined in the Articles of Incorporation. Each transaction
between this Association and each member shall be subject to and shall include
as a part of its terms each provision of the Articles of Incorporation and
Bylaws of this Association, whether or not the same be expressly referred to in
said transaction. Upon delivering or selling or contracting to deliver or sell,
any agricultural products to this Association, or upon receiving, or buying, or
contracting to receive or buy, any supplies or equipment or services from this
Association, each member so delivering, selling, receiving, buying, or
contracting, as the case may be, shall be entitled to any and all patronage
refunds as defined in this Article VIII arising out of said patronage.
SECTION 2 - MEMBER PATRONAGE.
(a) GROSS RECEIPTS FROM MEMBER PATRONAGE. Gross receipts of the
Association from member patronage shall be all proceeds (including patronage
dividends received) from the sale of products marketed for member patrons, all
sums received for supplies, equipment, commodities, and other property procured
for member patrons, and all sums received (including patronage dividends
received) for services performed for member patrons.
Those gross receipts which by their nature reduce the cost and expenses
incurred in connection with member patronage shall be used to reduce the
deductions from gross receipts enumerated in Section 2(b) of this Article.
(b) DEDUCTIONS FROM GROSS RECEIPTS FROM MEMBER PATRONAGE. The
Association shall deduct from gross receipts from member patronage:
(1) all amounts paid for products marketed, and all necessary
manufacturing, processing and marketing expenses attributable to member
patronage;
(2) the actual cost of supplies, commodities, equipment and
other property procured for member patrons;
(3) the actual cost of services performed for member patrons;
(4) taxes, other than taxes based on income, attributable to
member patronage;
(5) that portion attributable to member patronage of additions
to reserves for depreciation and for other valuation reserves, all
established and computed in accordance with the Internal Revenue Code
of 1986, as amended, and all regulations promulgated thereunder
(collectively, "U.S. Federal Tax Laws");
(6) all other necessary expenses attributable to member
patronage, not including interest or dividends on Preferred Capital
Certificates or other securities deemed to be capital rather than
indebtedness, nor amounts set aside for promoting and encouraging
cooperative organization;
(7) to the extent that the amount available from receipts from
non-member marketing patronage and sources other than patronage (as
described in Section 4 of this Article), plus the amount available from
receipts from non-member patronage of purchasing operations (as
described in Section 3 of this Article), is not sufficient for payment
of income taxes, then such additional sum as shall be necessary for
payment of income tax obligations of the Association; and
(8) a sum determined by the Board of Directors, but not to
exceed five percent (5%) of the gross receipts from member patronage
remaining after deduction of subparagraphs (1) through (7) of this
subsection (b), to be used for the purpose of promoting and encouraging
cooperative organization.
(c) ANNUAL NET SAVINGS FROM MEMBER PATRONAGE. The amount remaining
after reducing the gross receipts from member patronage by the deductions
specified in Section 2(b) of this Article shall constitute the annual net
savings (net income) from member patronage.
SECTION 3 - NON-MEMBER PATRONAGE-PURCHASING.
(a) GROSS RECEIPTS FROM NON-MEMBER PATRONAGE OF PURCHASING OPERATIONS
AND FROM NON-MEMBER CONSENTING PATRON PATRONAGE OF MARKETING OPERATIONS. Gross
receipts of the Association from patronage of Non-Member Consenting Patrons and
from non-member patronage of purchasing operations shall be all proceeds
(including patronage dividends received) from the sale of products marketed for
Non-Member Consenting Patrons of marketing operations and all proceeds
(including patronage dividends received) for supplies, equipment, commodities
and other property procured for such non-member patrons, and all sums received
(including patronage dividends received) for services performed for such
non-member patrons.
Those gross receipts which by their nature reduce the costs and
expenses incurred in connection with such patronage shall be used to reduce the
deductions from gross receipts enumerated in Section 3(b) of this Article.
(b) DEDUCTIONS FROM GROSS RECEIPTS FROM NON-MEMBER PATRONAGEPURCHASING
AND FROM NON-MEMBER CONSENTING PATRON PATRONAGE-MARKETING. The Association shall
deduct from gross receipts from non-member patronage of purchasing operations
and from Non-Member Consenting Patron patronage of marketing operations:
(1) all amounts paid for products marketed, and the actual
cost of supplies, commodities, equipment and other property procured
for non-member patrons;
(2) the actual cost of services performed for non-member
patrons;
(3) taxes, other than taxes based on income, attributable to
non-member patronage of purchasing operations;
(4) that portion attributable to non-member patronage of
purchasing operations and to Non-Member Consenting Patron patronage of
marketing operations of additions to reserves for depreciation and for
other valuation reserves all established and computed in accordance
with U.S. Federal Tax Laws;
(5) all other necessary expenses attributable to non-member
patronage of purchasing operations and Non-Member Consenting Patron
patronage of marketing operations, not including interest or dividends
on Preferred Capital Certificates or other securities deemed to be
capital rather than indebtedness, nor amounts set aside for promoting
and encouraging cooperative organization;
(6) to the extent that the amount available from receipts from
non-member marketing patronage and sources other than patronage (as
described in Section 4 of this Article) is not sufficient for payment
of income taxes then such additional sum as shall be necessary for
payments of income tax obligations of the Association; and
(7) a sum determined by the Board of Directors, but not to
exceed five percent (5%) of the gross receipts from non-member
patronage of purchasing operations and Non-Member Consenting Patron
patronage of marketing operations remaining after deduction of
subparagraphs (1) through (6) of this subsection (b), to be used for
the purpose of promoting and encouraging cooperative organization.
(c) ANNUAL NET SAVINGS FROM NON-MEMBER PATRONAGE OF PURCHASING
OPERATIONS AND FROM NON-MEMBER CONSENTING PATRON PATRONAGE OF MARKETING
OPERATIONS. The amount remaining after reducing the gross receipts from
non-member patronage of purchasing operations and Non-Member Consenting Patron
patronage of marketing operations by the deductions specified in Section 3(b) of
this Article shall constitute the annual net savings (net income) from
non-member patronage of purchasing operations and from Non-Member Consenting
Patron patronage of marketing operations.
SECTION 4 - NON-MEMBER PATRONAGE-MARKETING; NON-PATRONAGE SOURCES.
(a) GROSS RECEIPTS FROM NON-MEMBER PATRONAGE OF MARKETING OPERATIONS
AND FROM SOURCES OTHER THAN PATRONAGE. Gross receipts of the Association from
non-member patronage of marketing operations other than patronage by Non-Member
Consenting Patrons and from all sources other than those described in Sections
2(a) and 3(a) of this Article shall constitute gross receipts from non-member
patronage of marketing operations and sources other than patronage. They shall
be subject to the deductions therefrom hereinafter provided, and any net amount
thereof shall be held or used for the purposes and in the manner hereinafter
provided.
Those gross receipts which by their nature reduce the costs and
expenses incurred in connection with non-member patronage of marketing
operations and business derived from all sources other than those described in
Sections 2(a) and 3(a) of this Article shall be used to reduce the deductions
from gross receipts enumerated in Section 4(b) of this Article.
(b) DEDUCTIONS FROM GROSS RECEIPTS FROM NON-MEMBER PATRONAGE OF
MARKETING OPERATIONS AND SOURCES OTHER THAN PATRONAGE. The Association shall
deduct from gross receipts from non-member patronage of marketing operations and
sources other than patronage:
(1) all amounts paid for products marketed and all necessary
manufacturing, processing and marketing expenses attributable to
non-member patronage of marketing operations and sources other than
patronage;
(2) taxes, other than taxes based on income, attributable to
non-member patronage of marketing operations and sources other than
patronage;
(3) that portion attributable to non-member patronage of
marketing operations and sources other than patronage of additions to
reserves for depreciation and for other valuation reserves, all
established and computed in accordance with U.S. Federal Tax Laws;
(4) all other necessary expenses attributable to non-member
patronage of marketing operations and sources other than patronage, not
including interest or dividends on Preferred Capital Certificates or
other securities deemed to be capital rather than indebtedness, nor
amounts set aside for promoting and encouraging cooperative
organization;
(5) income taxes, if any, regardless of the patronage to which
they are attributable; and
(6) a sum determined by the Board of Directors, but not to
exceed five percent (5%) of the gross receipts from non-member
patronage of marketing operations and sources other than patronage
remaining after deduction of subparagraphs (1) through (5) of this
subsection (b), to be used for the purpose of promoting and encouraging
cooperative organization.
(c) ANNUAL NET SAVINGS FROM NON-MEMBER PATRONAGE OF MARKETING
OPERATIONS AND SOURCES OTHER THAN PATRONAGE. The amount remaining after reducing
the gross receipts from non-member patronage of marketing operations and sources
other than patronage by the deductions specified in Section 4(b) of this Article
shall constitute the annual net savings (net income) from non-member patronage
of marketing operations and sources other than patronage.
SECTION 5 - TOTAL ANNUAL NET SAVINGS. The sum of annual net savings
from member patronage (Section 2), annual net savings from non-member patronage
of purchasing operations (Section 3), and annual net savings from non-member
patronage of marketing operations and sources other than patronage (Section 4)
shall be known as the total annual net savings.
SECTION 6 - NET LOSSES.
(a) NET LOSSES SUSTAINED BY ONE OR MORE DIVISIONS, FUNCTIONS, OR
OPERATIONS WHEN OVERALL NET SAVINGS ARE REALIZED. If in any fiscal year the
Association shall sustain a net loss or net losses from activities of one or
more divisions, functions or operations but shall realize net savings from
overall operations, the patronage dividends distributable to patrons of
divisions, functions, or operations which realized net savings for that fiscal
year shall, at the discretion of the Board of Directors, be reduced by the
amount of such net loss or the aggregate amount of such net losses, and in an
equitable manner; provided, however, that for purposes of determining net
savings or net losses, gains or losses from Defined Business Units shall not be
netted against gains or losses from other divisions, functions or operations of
the Association, or against gains or losses of any other Defined Business Unit.
The Board of Directors in its discretion exercised before the close of the
fiscal year during which the loss is sustained and with due consideration of all
the circumstances which caused the loss, may provide that future net savings of
any such loss division(s), function(s), or operation(s) shall be reduced, for
purposes of distributing patronage dividends for such future years, by all or
any part of the net loss or net losses so applied in reduction of net savings of
other divisions, functions, or operations, a like amount to be distributed as
patronage dividends for the future fiscal year or years to the patrons of
profitable divisions, functions, or operations whose patronage dividends were
reduced in previous years.
(b) NET SAVINGS REALIZED BY ONE OR MORE DIVISIONS, FUNCTIONS OR
OPERATIONS WHEN OVERALL NET LOSS IS SUSTAINED. If in any fiscal year the
Association shall sustain a net loss from overall operations but shall realize
net savings from activities of one or more divisions, functions or operations,
the Board of Directors may, in its discretion (exercised before the close of the
fiscal year during which the loss is sustained and with due consideration of all
the circumstances which caused the loss) provide for the reduction of future net
savings of loss divisions, functions or operations by the aggregate amount of
net savings realized during the year of loss by profitable divisions, functions,
or operations, or any part thereof, for purposes of distributing future
patronage dividends, a like amount to be distributed as patronage dividends for
the future fiscal year or years to the patrons of profitable divisions,
functions or operations whose patronage dividends were eliminated by the net
losses in overall net loss years; provided, however, that gains and losses from
Defined Business Units shall not be netted against each other or any other
divisions, functions or operations.
(c) OVERALL NET LOSSES. In the event this Association shall incur a net
loss in any fiscal year, such net loss may be charged first against any earned
surplus or paid-in surplus which is unallocated, or against any unallocated
reserve other than valuation reserves. If such loss exceeds the total of said
unallocated earned surplus and unallocated reserves or, in any event, if the
Board of Directors so elects, the amount of such loss may be carried forward or
back, or may be recovered from prior or subsequent years' net margins or
savings. This section shall not be construed or administered in such a way as to
deprive the Association of the right to carry back or carry forward net
operating losses to past or future years, in accordance with the applicable
provisions of the Internal Revenue Code or State Taxing statutes.
(d) ASSESSMENTS AGAINST MEMBERS OR PATRONS. There shall be no right of
assessment against members or patrons for the purpose of restoring impairments
to capital caused by net losses.
SECTION 7 - DISTRIBUTION.
(a) PATRONAGE DIVIDENDS -- MEMBER-PATRONAGE. The annual net savings
from member patronage shall be distributed annually or more often as patronage
dividends to the member patrons on the basis of their respective patronage, and
said member patrons shall be notified thereof; provided, however, that no
distribution need be made where the amount otherwise to be distributed to a
member patron is less than $10.00 or such lesser amount as shall be fixed by the
Board of Directors.
(b) PATRONAGE DIVIDENDS -- NON-MEMBER PATRONAGE. The annual net savings
from non-member patronage of the purchasing operations, and from Non-Member
Consenting Patron patronage of marketing operations, shall be distributed
annually or more often as patronage dividends to such non-member patrons on the
basis of their respective patronage, and said non-member patrons shall be
notified thereof; provided, however, that no distribution need be made to
non-consenting patrons, nor where the amount otherwise to be distributed to a
non-member patron is less than $10.00, or such lesser amount as shall be fixed
by the Board of Directors.
(c) ESTABLISHMENT OF ALLOCATION UNITS FOR PATRONAGE DIVIDEND
DISTRIBUTIONS. In making such patronage dividend distributions, due regard shall
be given to the sources from which such savings accrue. The purchasing and
marketing functions of the Association shall be accounted for as separate
allocation units and within each such function, the Board of Directors may
create such separate divisional, departmental, geographic or other allocation
units as it deems to be reasonable and equitable; provided, that each Defined
Business Unit shall be accounted for as a separate allocation unit. The Board of
Directors shall adopt such reasonable and equitable cost accounting procedures
as will, in the Board's judgment, equitably allocate among such allocation units
the Association's revenues and expenses derived from or attributable to its
patronage business.
(d) FORMS OF PATRONAGE DIVIDENDS. Patronage dividends shall be
distributed in cash, credits, revolving fund certificates, Capital Equity
Certificates, Preferred Capital Certificates or Certificates of Indebtedness, or
any combination thereof designated by the Board of Directors. By entering into a
business transaction with this Association, each member patron, the non-member
patron of purchasing operations and Non-Member Consenting Patron of marketing
operations, agrees to accept a distribution of the patronage refund under these
Bylaws, in such form or forms as are hereinabove provided in this Section, in
satisfaction of the obligation of this Association to make the patronage refund;
and the member-patron, the non-member patron of purchasing operations and
Non-Member Consenting Patron of marketing operations shall be deemed to have
received the amount of such patronage refund and reinvested the same in the
capital securities, or credits in a patron's refund account, or in any
combination thereof, as hereinabove provided. The books and records of this
Association shall show the interest of each such patron, which shall be credited
on this Association's books to the respective patron according to such patron's
respective contributions.
(e) NON-MEMBER/NON-PATRONAGE DISTRIBUTIONS -- NON-CONSENTING PATRONS;
NON-MEMBER PATRONAGE, MARKETING; AND NON-PATRONAGE SOURCES. Annual net earnings
attributable (i) to non-consenting non-member patrons of purchasing operations
(i.e., those members or non-member patrons who have not consented to take
patronage refunds into account in computing their net income, as provided in 26
U.S.C. ss 1385, as amended), (ii) from non-member patronage of marketing
operations and (iii) from sources other than patronage may, at the discretion of
the Board of Directors, be distributed annually or more often as
non-member/non-patronage distributions to member patrons and to Non-Member
Consenting Patrons on the basis of their respective patronage. The amount of
such net earnings with respect to a fiscal year distributed hereunder shall not
exceed the net earnings (after provision for income taxes) of the Association
for the fiscal year, as reported in its financial statements for the year, less
patronage dividends paid with respect to the year. Any such net earnings not so
distributed shall be retained by the Association and placed in the capital
reserve (as defined in Section 8 hereof).
(f) NON-MEMBER/NON-PATRONAGE ALLOCATIONS. In making any such
non-member/non-patronage distributions, the Board of Directors may use any
method of allocating the earnings on the basis of patronage to member patrons
and Non-Member Consenting Patrons as shall be reasonable and equitable in the
judgment of the Board of Directors.
(g) FORM OF NON-MEMBER/NON-PATRONAGE DISTRIBUTIONS.
Non-Member/Non-Patronage distributions shall be in cash, property, Non-Patronage
Earnings Certificates, or any combination thereof designated by the Board of
Directors.
SECTION 8 - CAPITAL RESERVE. The Board of Directors shall cause to be
created a Capital Reserve, and shall annually add to such Capital Reserve the
annual net savings attributable (i) to non-consenting, non-member patrons of
purchasing operations, (ii) from non-member patronage of marketing operations,
and (iii) from sources other than patronage which are not distributed to member
patrons and Non-Member Consenting Patron as non-member/non-patronage
distributions. Interest (dividends) paid by the Association on Preferred Capital
Certificates shall be paid first from amounts in the Capital Reserve which
accrued from such sources.
SECTION 9 - DEFINED BUSINESS UNIT RETENTIONS. This Association may
require from time to time, investment in its capital in addition to the
investments from retained patronage and Equity Participation Units. These
investments shall be direct capital investments from a retain on a per unit
basis for the products received by the Association from its Defined Members, and
the same may be determined on either a Qualified or a Nonqualified basis as
defined in Subchapter T of the United States Internal Revenue Code. The per unit
retention, if required, shall be made on products delivered, in the same amount
per unit and shall not become a part of the net annual savings available for
patronage.
Each member, by continuing to be such, agrees to invest in the capital
of this Association. Such investment shall be accounted for separately in a unit
retention account set up on the books of the Association. All such amounts, from
the moment of receipt by this Association, are received and retained with the
understanding that they are furnished by members as capital. This Association is
obligated to account to each member in such manner that the amount of per unit
retains furnished by each member is annually credited to an appropriate record
to the per unit retains capital account of each member. Within a reasonable time
after the close of its fiscal year, this Association shall notify each member of
the amount of capital retains and credit it to the member's account by
reflection upon this Association's books.
When the Board determines in its sole discretion that the Association
has sufficient working capital in the applicable Defined Business Unit, unit
retains may be called for payment at the lesser of their stated or book value.
Unit retains may be paid, redeemed, or revolved in whole or in part at a time
and manner determined by the Board.
ARTICLE IX.
CONSENT
SECTION 1 - CONSENT. Each entity which hereafter applies for and is
accepted to membership in this Association and each member of this Association
as of the effective date of this bylaw who continues as a member after such date
shall, by such act alone, consent that the amount of any distributions, with
respect to its patronage which are made in written notices of allocation (as
defined in 26 U.S.C. '1388), and which are received by the member from the
Association, will be taken into account by the member at their stated dollar
amounts in the manner provided in 26 U.S.C. '1385(a) in the taxable year in
which such written notices of allocation are received by the member.
SECTION 2 - CONSENT NOTIFICATION TO MEMBERS AND PROSPECTIVE MEMBERS.
Written notification of the adoption of this Bylaw, a statement of its
significance and a copy of the provision shall be given separately to each
member and prospective member before becoming a member of the Association.
ARTICLE X.
DISSOLUTION
Subject to the Articles of Incorporation, in the event of any
liquidation, dissolution or winding up of the affairs of this Association,
whether voluntary or involuntary, equity capital shall be distributed to the
holders thereof as follows: first to payment of the face amount (par value) of
all Equity Participation Units and all Preferred Capital Certificates, second to
payment of the face amount (par value) of all Capital Equity Certificates and
other outstanding equities (other than Non-Patronage Earnings Certificates), and
third to payment of the face amount (par value) of Non-Patronage Earnings
Certificates; provided, however, that assets held at such time by any Defined
Business Unit shall first be used to redeem the Equity Participation Units and
Preferred Capital Certificates of the Defined Business Unit on a pro rata basis.
ARTICLE XI.
FISCAL YEAR
The fiscal year of this Association shall commence on the first day of
June each year and shall end on the last day of May of the following year.
ARTICLE XII.
NO SEAL
The Board of Directors may, by resolution, adopt, alter or abandon the
use of a corporate seal.
ARTICLE XIII.
AMENDMENTS
These Bylaws may be amended in accordance with the Minnesota
Cooperative Law, Minnesota Statutes Chapter 308A; upon the approval of a
majority of the votes cast in person or by mail vote at any annual or special
meeting of the members called in accordance with Section 1 of Article III of
these Bylaws; provided, however, in the event the Board of Directors of this
Association declares, by resolution adopted by a majority of the Board of
Directors present and voting, that the amendment involves or is related to a
hostile take over, then the amendment may be adopted only upon the approval of
eighty percent (80%) of the total voting power of the members of this
Association, whether or not present and/or voting on the amendment; and provided
further that notice of such amendment shall have been given in accordance with
Section 2 of Article II of these Bylaws to the members in or with the notice of
such meeting.