Bylaws

BYLAWS OF EARLHAM FOOD COOPERATIVE

ARTICLE I - NAME

Section 1.1  Name:  The name of this Cooperative shall be Earlham Food Cooperative, and hereinafter referred to as “the Co-op.”

ARTICLE II - Mission

Section 2.1

Our mission is to provide healthy food and high quality products to our members and the local community.  We make a reasonable effort to buy and offer locally grown and created products that are produced and packaged in an environmentally sustainable and socially responsible manner.  In an effort to reduce wasteful packaging, we emphasize and facilitate bulk buying and ordering for our customers.  Our governance and daily functioning depend on the voice and time of our volunteers and members. We provide educational opportunities for local farmers and artisans, the general public and all customers through our products and community participation.

ARTICLE III - MEMBERSHIP

3.1 Open Membership

Without discrimination, membership in the Co-op shall be open to any household or organization able to use its services and willing to support its cooperative organization, purposes, and principles. Individual, household, and organizational memberships shall be offered.

3.2  Household Membership

Household memberships shall be offered for one or more people residing at the same street address. Fees, deposits, rates, and privileges can be changed by a vote at a general membership meeting.

3.3 Organizational Membership

Organizational memberships shall be offered. Fees, deposits, rates, and privileges can be changed by a vote at a general membership meeting.

3.4 Student Membership

Student memberships are available for individual students, or for up to 4 students who designate themselves to function as a single household. Fees, deposits, rates, and privileges can be changed by a vote at a general membership meeting.

3.5 Application for Membership

New members shall be required to complete an application, which shall include responsibilities and rights.

3.6 Responsibilities of Members

Responsibilities of members include: supporting the Co-op by doing business with it, providing needed capital, updating membership information in Co-op records, and abiding by policies and procedure properly adopted by the Co-op.

3.7 Rights of Members

Rights of members include: participating and voting in membership meetings and elections, participating in the volunteer program of the Co-op, having reasonable access to Co-op records and financial information, communicating opinions about the operation of the Co-op to the Board and management, and participating in any membership benefits established by the Board.

3.8 Fees, etc.

Membership fees, membership deposits, and membership discount structure shall be proposed by the Board and approved by membership at a membership meeting.

3.9 Termination of Membership

The Board may terminate the membership of any member for the following reasons: theft, vandalism, inactivity, failure to maintain current records, failure to pay a membership installment within 90 days of its due date, or failure to observe policies or procedure. No membership shall be terminated without reasonable attempt to notify the member. A member may appeal their termination at a membership meeting.

3.10 Cessation of Membership

Upon voluntary cessation of membership, membership fees shall not be returned.

3.11 Limited Liability of Members

Members shall not be liable for any debts or obligations of the corporation except as otherwise provided by law.

ARTICLE IV - MEMBERSHIP MEETINGS

Section 4.1  Annual Member Meeting:  The Board of Directors will organize an annual meeting of members.  The directors shall present a state of the Co-op report including annual financial information, and the meeting shall encompass such other business as may properly come before it.

Section 4.2  Special Member Meetings:  Special meetings of the members may be called by the President, by the Board of Directors or by written petition signed by no less than twenty members.

Section 4.3  Time and Place of Member Meeting:  The date, time and place of all meetings of members shall be determined by the Board or, in the event that the Board fails to so act, by the Secretary.  Meetings shall be held at a time and place convenient to members.

Section 4.4  Notice of Member Meetings:  Public notice of the time and place of each general membership meeting shall be given no less than ten days and no more than twenty-five days before the meeting.

Section 4.5  Quorum at Member Meetings:  Except as otherwise stated in these bylaws as to particular circumstances, the presence of ten percent of members entitled to vote at any meeting shall constitute a quorum.  Unless one-third of all members are present at a membership meeting, the only matters that may be voted upon are those described in the meeting notice.

Section 4.6 – Proxies:  No proxies are allowed for membership meetings.

Section 4.7  Membership List:  After the record date for notices of a meeting, the Co-op shall prepare a list of members and update it periodically to account for additional members, if any, who were not entitled to notice but are entitled to vote at the meeting.  Such list shall be available for inspection by any member at the principal office of the Co-op only for the purpose of communicating with other members concerning the meeting, and shall also be available for inspection by any member at the membership meeting.

Section 4.8  Organization of Member Meetings:  The President and in his or her absence, the Vice President, and in their absence any member chosen by the members present, shall call meetings of the members to order and shall act as facilitator of such meetings, and the Secretary of the Co-op shall act as Secretary of all meetings of the members.  In the absence of the Secretary, the presiding officer may appoint a member to act as secretary of the meeting.

Section 4.9  Action at Member Meetings:  Except as otherwise provided by law, the affirmative vote of a majority of members entitled to vote and present, shall be required to adopt any motion or resolution of the meeting, provided a quorum be present.  Any such action shall be binding on the Board unless a change is approved at a subsequent meeting of the members, duly noticed and called for that purpose.

Section 4.10  Issues Submitted by Members:  Notices of a meeting of members shall include any proper issues submitted by petition of the lesser of fifty members or five percent of all members.  Petitions must be received at the Co-op not less than ten days before the date of the meeting at which they are to be presented to a vote of members.

Section 4.11  Voting by Mail Ballots:  The Board may authorize voting by mail ballot in conjunction with, or in lieu of, a meeting of members.  In such event, the notice of the meeting shall include a copy of the issue to be voted upon, together with a ballot and a voting envelope and notification of the date by which ballots must be returned.  Ballots must be returned in a sealed envelope which is authenticated by the member’s signature.  If mail ballots are used in conjunction with a meeting of members, votes cast by mail ballot shall be counted together with votes cast in person at the meeting.  If mail ballots are used in lieu of a meeting of members, a quorum shall consist of the number of ballots returned.  A vote cast by mail ballot shall be equivalent to presence in person by the member at a meeting of members.

ARTICLE V - BOARD OF DIRECTORS

Section 5.1  General Powers of Board of Directors:  The business and affairs of the Co-op shall be managed under the direction of the Board of Directors (sometimes referred to in these bylaws as “the Board.”)

Section 5.2  Number of Directors, and Vacancies:  The Board shall consist of six to ten directors elected by members.  All directors shall be members and shall not be paid employees of the Co-op.  Any director who wishes to resign his or her office may do so, giving the Board thirty days prior notice whenever possible. If a director, without good cause, misses more than two consecutive Board meetings in any twelve-month period, the Board may remove such director from office.  Vacancies may be filled until the next annual meeting through a vote of the majority of the remaining directors.  If no action to fill an existing vacancy is taken by the Board for more than two consecutive Board meetings, then a Special Meeting may be called to fill such a vacancy.

Section 5.3  Meetings of the Board of Directors:  The Board shall meet on a scheduled basis, not less than one time a quarter.  A simple majority of the total number of directors shall constitute a quorum. Times and locations of Board meetings will be made available at the Co-op.

Section 5.4  Open Meetings:  All meetings of the Board shall be open to all members of the Co-op and all guests of the Board.  The Board may meet in executive session, to conduct business concerning legal, financial or personnel matters of a sensitive nature, or other similar situation, which executive sessions shall be called by the Board, and which shall be open only to directors and such other persons as the Board may expressly allow.

Section 5.5  Organization of the Board Meetings:  The President and, in his or her absence, the Vice President, and in his or her absence, any director chosen by the directors present, shall call meetings of the Board to order, and shall act as facilitator of such meetings.

Section 5.6  Election of Directors:  Elections shall occur as needed at member meetings or by mail in ballot. If directors are appointed to the board by the board, they must be approved at the next member meeting.

Section 5.7  Action without a Meeting:  Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if prior to such action a written consent to such action is signed by all directors, or all members of such committee as the case may be.

Section 5.8  Board’s Participation in Meetings by Electronic Communications:  Any or all directors may participate in a meeting of the Board of Directors by, or through the use of, any means of communication by which all directors participating may simultaneously hear each other during the meeting.  Participation by this means shall be deemed to constitute presence in person at such meeting.

Section 5.9  Board’s Power to Appoint Executive Committee:  The Board of Directors shall have power to appoint by resolution an executive committee composed of two or more directors who, to the extent provided in such resolution, shall have and exercise the authority of the Board of Directors in the management of the business of the Co-op between meetings of the Board.

Section 5.10  Board’s Appointment of Committees:  The Board shall establish such committees as it believes advisable.  These committees may include, but are not limited to, the following:  Marketing, Membership, and Education. The president shall appoint the Chairperson of each committee. All committees shall be under the control, direction and supervision of the Board.

Section 5.11  Authorization of Contracts:  The Board of Directors may authorize any officer or officers, agent or agents of the Co-op in addition to the officers so authorized by these ByLaws, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Co-op and such authority may be general or confined to specific instances.

ARTICLE VI - OFFICERS

Section 6.1  Officers:  The Board of Directors shall elect or appoint the officers of the Co-op.  The officers of the Co-op shall be a President, one or more Vice Presidents, a Secretary, a Treasurer, and such other officers as may be deemed desirable by the Board of Directors.  Any two or more offices may be held by the same person, except that the same person shall not serve as both President and Secretary.  Election or appointment of an officer shall not of itself create contract rights.

Section 6.2  Election of Officers:  The officers of the Co-op shall be elected annually from among and by the Board of Directors at the first board meeting following the member meeting. Each officer shall hold office for one year or until his successor has been duly elected and qualified, unless earlier removed by the Board of Directors.  All officers can be removed at any time by the Board of Directors.  Officers shall be eligible for reelection.

Section 6.3  President:  The President shall coordinate the activities of the Board, preside over meetings of the Board and members, sign formal documents on behalf of the Co-op and, as appropriate, represent the Co-op in its dealings with outsiders.

Section 6.4  Vice President:  The Vice President shall perform the duties specified in Section 6.3 in the absence or disability of the President.  In addition, she or he shall perform duties and assignments which may from time to time be delegated by the President or the Board.

Section 6.5  Treasurer:  The Treasurer shall oversee the maintenance of financial records, the reporting of financial information and the filing of required reports and returns.

Section 6.6  Secretary:  The Secretary shall prepare minutes or assign a designated person to take minutes of all meetings of the Board and members, supervise the issuance of notices required under these bylaws, and authenticate records of the Co-op.

Section 6.7  Filling Officers Vacancies:  Whenever any vacancies shall occur in any office by death, resignation, increase in the number of offices of the Co-op, or otherwise, the same shall be filled by the Board, and the officer so elected shall hold office until his or her successor is chosen and qualified.  The President may, in his or her sole discretion, appoint a person to fill a vacancy in the office of either the Secretary or the Treasurer for the interim period of such vacancy prior to it being filled by action of the Board or by Special Meeting as provided herein.

ARTICLE VII - BOOKS AND RECORDS

Section 7.1  Records and inspection rights:  The Co-op shall maintain such books, records and lists as is required by law.  Members shall be provided access to such records, or to information contained in such records, or to an adequate alternative to such access, at a reasonable time and for a proper purpose, under rules and procedures set forth by law.

ARTICLE VIII - FISCAL YEAR

Section 8.1  Fiscal Year:  The fiscal year of the Co-op shall begin on the first day of July in each year and end on the last day of June of the succeeding year.

ARTICLE IX - CAPITAL CERTIFICATES

Section 9.1  Issuance and Terms of Capital Certificates:  To evidence capital funds provided by members, the Co-op shall issue capital certificates upon full payment of its purchase price.  The purchase price of capital certificates shall be set by reference to the current and prospective capital needs of the Co-op.  Capital certificates shall be entitled to no dividends or other monetary return on investment, shall be nontransferable, and may not be pledged or hypothecated.

Section 9.2  Capital Certificates:  Capital certificates shall be signed personally or by facsimile by the President and the Secretary and shall be numbered and registered by the Co-op.  The Co-op may issue a replacement certificate for any certificate alleged to have been lost, stolen or destroyed without requiring the giving of a bond or other security against related losses.

Section 9.3  Accounting for proceeds:  Amounts received for capital certificates shall be credited on the books of the Co-op to capital accounts in the names of contributing members.  The Co-op shall segregate proceeds of capital certificates in a separate bank account that may be used only for acquiring capital assets or for paying liabilities incurred for such purpose.

Section 9.4  Redemption of Capital Certificates:  Upon written request following termination of membership, the capital certificate of such person shall be redeemed as soon as replacement capital has been secured by the Co-op from other members.  Capital certificates shall be redeemed at their carrying value on the books of the Co-op or their net book value, whichever is lesser.  In the case of voluntary termination of membership, a reasonable processing fee may be imposed, as determined by the Board.  No redemptions shall be made unless, after the redemption, the Co-op would be able to pay its debts as they become due in the usual course of its activities, and the Co-op’s total assets would at least equal the sum of its liabilities.  Reapplications for membership shall be subject to full repayment of redemption proceeds and a reasonable reprocessing fee, if any, as determined by the Board.  Redemption proceeds shall at all times be subject to offset by amounts otherwise due and payable to the Co-op.

ARTICLE X - PATRONAGE REBATES

Section 10.1  Patronage Rebate Allocations to members:  In order to assure that it will operate on a nonprofit basis relative to its transactions with members, the Co-op shall allocate and disburse to members its adjusted net savings from business done with them in the manner set forth in this Article.  Members shall retain the right to waive in whole or in part, by action at a meeting of members, any patronage rebates to which they may be entitled.

Section 10.2  Basis of allocation:  Amounts distributed to members as patronage rebates shall be based upon the net savings of the Co-op from business done with members, reduced only by amounts which are not allowable under federal tax laws and by such reasonable reserves for necessary business purposes as may be determined by the Board.  In determining and allocating such adjusted net savings, the Co-op shall use a single allocation unit except to the extent that it shall, subsequent to the adoption of these bylaws, engage in any new and distinct line of business.  Such adjusted net savings shall be allocated to each member in the proportion which his or her patronage bears to the total of all member patronage during the fiscal year.  All members shall be considered patrons of the Co-op to the extent of their purchases of goods and services measured in terms of its dollar amount.

Section 10.3  Distribution and notice:  Patronage rebates shall be evidenced by written notices of allocation delivered to recipient members within eight months and fifteen days following the close of the fiscal year.  All notices, except those subject to Section 10.7 hereof, shall be accompanied by checks in an amount determined by the Board which must be at least twenty percent of the total allocation.  Any allocations of such a nominal amount as not to justify the expenses of distribution may, as determined by the Board, be excluded from distribution provided that they are not then or later distributed to other members.

Section 10.4  Consent of members:  By obtaining or retaining membership in the Co-op, each member shall thereby consent to take into account, in the manner and to the extent required by Section 1385 of the Internal Revenue Code, the stated dollar amount of any qualified written notice of allocation in the taxable year in which such notice is received.

Section 10.5  Revolving capital accounts:  Patronage rebates not currently distributed by check shall be credited or charged to revolving capital accounts in the names of recipient members.  Revolving capital accounts shall accrue no dividend or interest, and shall be assignable only to the Co-op.

Section 10.6  Redemption of Revolving Capital:  Revolving capital that is no longer needed for capital purposes of the Co-op may be redeemed in such amounts and at such times as may be determined by the Board of Directors.  At that time they shall be redeemed only in the order of the oldest outstanding amounts and only on a ratable basis among such amounts for each fiscal year, except that redemptions may be made payable only to members who are then in good standing or become so within a stated period of time.  Revolving capital accounts may otherwise be redeemed only upon compelling circumstances as determined by the Board.  Revolving capital accounts shall be redeemed at their carrying value on the books of the Co-op or their net book value, whichever is lesser.

Section 10.7  Allocation of net loss:  In the event the Co-op shall incur a net loss in any fiscal year, such loss may be charged against retained savings or other unallocated equity accounts.  If the net loss exceeds such amounts, or in any event if the Board so determines, the amount of such loss may either be carried forward to offset adjusted net savings of subsequent fiscal years or allocated to members in the same manner as for adjusted net savings except that such allocation shall not exceed the total of invested capital.  Any such allocated net loss shall be charged first against retained patronage rebates of prior fiscal years and then against patronage rebate allocations of subsequent fiscal years.  Allocated net losses which are not so offset may be charged against the carrying value of capital certificates only upon termination of membership.  Allocated net losses shall not otherwise be assessed to or collected from members.

Section 10.8  Limitation:  No patronage rebate shall be disbursed and no revolving capital account shall be redeemed unless, after the disbursement or redemption, the Co-op would be able to pay its debts as they become due in the usual course of its activities, and the Co-op’s total assets would at least equal the sum of its liabilities.

ARTICLE XI - INDEMNIFICATION

Section 11.1  Indemnification of Directors:  The Co-op shall, subject to the limitations in this Article, indemnify its current and former directors and officers against all liabilities and expenses to which they may actually and reasonably become subject by reason of their positions with the Co-op or their service in its behalf to the fullest extent permitted by law.

Section 11.2  Limitations on Indemnification:  No indemnification shall be made unless the person to be indemnified is successful on the merits in defense of the action or is determined to have met the applicable standard of conduct in the manner required by law.  Indemnification payments and advances of expenses shall be made only in such increments and at such times as will not jeopardize the ability of the Co-op to pay its other obligations as they become due.

ARTICLE XII - DISSOLUTION

Section 12.1  Dissolution of the Co-op:  Upon dissolution of the Co-op, its assets shall be distributed in the following manner and order: (i) by paying or making provision for payment of all liabilities and expenses of liquidation; (ii) by redeeming any revolving capital accounts which, if they cannot be paid in full, shall be paid in the order of the oldest outstanding amounts; (iii) by redeeming capital certificates which, if they cannot be paid in full, shall be paid on a pro rata basis among all outstanding amounts; and (iv) by distributing any remaining assets, unless otherwise determined by the membership of the Co-op, to one or more organizations affiliated with the cooperative movement.

ARTICLE XIII - INTERPRETATION AND AMENDMENT OF BYLAWS

Section 13.1  Severability:  In the event that any provision of these bylaws 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 bylaws.

Section 13.2  Amendment by the Board:  The Board of Directors shall have the power to make and alter any bylaw or bylaws, including the fixing and altering of the number of directors.  The text of the proposed amendments shall have been sent to all directors with the call for the meeting at least ten days in advance of such meeting.  All amendments made by the Board shall be submitted to the members by mail as described in section 3.11 but not later than with the notice of the next scheduled meeting of members.  If the amendments are not approved, the Board shall be required to reinstate the portion of the bylaws affected by such disapproval to the form in which it was prior to such action by the Board, without prejudice to the ability of the Board to make other amendments on the same subject or to the same portion of the bylaws at a later time.

Section 13.3  Amendment by Members:  These bylaws may be amended or repealed at a meeting of members, provided that the proposed amendments are stated in the notice of the meeting at which the amendments are to be adopted.

Appendix

EXPLANATION OF PATRONAGE REBATE CONSENT PROVISION

The Internal Revenue Code generally requires each person receiving a patronage rebate to include the amount of such distribution in his or her gross income in the taxable year in which it is received.  Under bylaw section 10.4, mere acceptance or retention of membership in the Co-op constitutes consent to such inclusion in taxable income, including the portion of the patronage rebate that is retained by the Co-op for its capital needs.

The Co-op has been advised by legal counsel, however, that the general rule for inclusion in income of patronage rebates is subject to an exception that is applicable to consumer cooperatives.  Under that exception, a patronage rebate is not required to be included in gross income if the member’s purchases related to “personal, living or family items.”  The patronage rebate would be taxable to a member only if his or her purchases were for business or income producing purposes.