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(a) Common stock purchases of eligible nonmembers.—From the amount allocated to each nonmember patron eligible for membership in the association and approved by the board of directors therefor there shall first be deducted, insofar as funds are available, an amount equal to the par value of one share of common stock as payment on the purchase price thereof, and when any such patron has complied with all the conditions for membership a certificate of common stock shall be issued to him.

(b) Preferred stock certificates.-At least (----) percent, as determined by the board of directors, of the undistributed allocation of each patron shall be retained by the association for capital purposes, and certificates of preferred stock shall be issued to the members and patrons therefor.

(c) Cash distribution.—The remaining balance of the patronage allocation of each patron may then be distributed to him in cash.

(d) Application of cash distribution to indebtedness.--Any part of or all the cash dividends on capital stock, cash patronage distributions, and/or cash payments for retirement of stock payable to any patron may be applied at the discretion of the board of directors to the payment of any indebtedness of such patron that may be due the association.

Article XII

MISCELLANEOUS PROVISIONS

SECTION 1. Bylaws printed. After adoption, these bylaws, preceded by the articles of incorporation, shall be printed in pamphlet form and a copy thereof shall be delivered to each member and to each person who may become a member of the association.

SEC. 2. Seal.-The seal of the association shall contain these words and figAssociation, Incorporated, 19--" in circular form, the

ures:

66

impress of which is placed hereon.

Article XIII

AMENDMENTS

If notice of the character of the amendment proposed has been given in the notice of a meeting, these bylaws may be altered or amended at any regular or special meeting of the members by the affirmative vote of more of the members present or voting by mail.

or

We, the undersigned, being all the incorporators and stockholders of the Association, do hereby assent to the foregoing bylaws and do adopt the same as the bylaws of said association; and in witness whereof, we have hereunto subscribed our names, this

day of

19--.

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The purposes for which this association is formed and the powers which it may exercise are set forth in the articles of incorporation of the association.

Article II

DIRECTORS AND OFFICERS

SECTION 1. Number and qualifications of directors.-The business of the association shall be controlled by a board of directors of (----) members, each of whom shall be a member of this association or an authorized representative of an incorporated member. No person shall be eligible for the office of director if he is in competition with or is affiliated with any enterprise that is in competition with the association and if a majority of the board of directors of the association finds at any time following a hearing that any director is so engaged or affiliated, he shall thereupon cease to be a director.

SEC. 2. Election of directors.-At the first annual meeting of the members of this association, directors shall be elected to succeed the incorporating directors. (----) directors shall be elected for 1 year,

(----) directors for 2 years, and (----) directors for 3 years, and thereafter each director shall be elected for 3 years.32 At least two members shall be nominated for each directorship. Directors shall be elected by secret ballot. The nominee who, among the nominees for each directorship, receives the greatest number of votes shall be declared elected to the directorship for the ensuing term. Directors shall hold office until their successors have been elected and qualified and have entered upon the discharge of their duties.33 SEC. 3. Election of officers.-The board of directors shall meet within (‒‒‒‒‒‒‒‒‒‒) days after the first election and within

) days after each annual election and shall elect by ballot a president, vice president, secretary, and treasurer (or a secretary-treasurer), each of whom shall hold office until the election and qualification of his successor unless earlier removed by death, resignation, or for cause. The president and vice president only need be members of the board of directors. SEC. 4. Vacancies.-Whenever a vacancy occurs in the board of directors, other than from the expiration of a term of office, the remaining directors shall appoint a member to fill the vacancy until the next regular meeting of the members.

SEC. 5. Board meetings.—In addition to the meetings mentioned above, regular meetings of the board of directors shall be held (monthly, quarterly, or semiannually) or at such other times and at such places as the board may determine.

"If desired, directors may be elected annually for a term of 1 year.

"It is sometimes deemed advisable to include a provision like the following: No director after having served for two consecutive terms shall be eligible to succeed himself but after a lapse of 1 year shall again be eligible.

SEC. 6. Special meetings.—A special meeting of the board of directors shall be held whenever called by the president or by a majority of the directors. Any and all business may be transacted at a special meeting. Each call for a special meeting shall be in writing, signed by the person or persons making the same, addressed and delivered to the secretary, and shall state the time and place of such meeting, and the matters to be acted upon.

SEC. 7. Notice of board meetings.-Notice of the regular or special meetings of the directors shall be mailed to each director at least_ (----) days prior to the time of such meeting.

SEC. 8. Compensation. The compensation, if any, of the members of the board of directors and of the executive committee, shall be determined by the members of the association at any annual or special meeting of the association; Provided, however, That no member of the board of directors, other than one who is acting as an officer of the association and receiving a regular salary therefor, shall receive compensation or allowance for services rendered the association for more than thirty (30) days in any one year, exclusive of the periods for which compensation is paid for attendance at directors' meetings, or at meetings of the executive committee.

SEC. 9. Quorum.-A majority of the board of directors shall constitute a quorum at any meeting of the board.

Article III

DUTIES OF DIRECTORS

SECTION 1. Management of business.-The board of directors shall have general supervision and control of the business and the affairs of the association and shall make all rules and regulations not inconsistent with law or with these bylaws for the management of the business and guidance of the members, officers, employees, and agents of the association. They shall have installed an accounting system which shall be adequate to the requirements of the business, and it shall be their duty to require proper records to be kept of all business transactions.

SEC. 2. Employment of manager.-The board of directors shall have power to employ or to authorize the employment of a manager and such other employees as may be deemed necessary, and to fix their compensation. The manager shall have charge of the business of the association under the direction of the board of directors. No director shall serve as manager.

SEC. 3. Bonds and insurance.-The board of directors shall require the manager and all other officers, agents, and employees charged by the association with responsibility for the custody of any of its funds or negotiable instruments to give adequate bonds. Such bonds shall be furnished by a responsible bonding company and approved by the board of directors, and the cost thereof shall be paid by the 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 the 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.

SEC. 4. Audits.-At least once in each year the board of directors shall secure the service of a competent and disinterested public auditor or accountant, who shall make a careful audit of the books and accounts of the association and render a report in writing thereon, which report shall be submitted to

the members of the association at their annual meeting. This report shall include at least (1) a balance sheet showing the true assets and liabilities of the association; (2) an operating statement for the fiscal period under review which shall show the cost of, and income from, sales and the gross income or loss from each of the commodities handled during the period; (3) an itemized statement of all expenses for the period under review.

SEC. 5. Agreements with members.-The board of directors shall have the power to carry out all agreements of the association with its members in every way advantageous to the association representing the members collectively.

SEC. 6. Depositary.-The board of directors shall have the power to select one or more banks to act as depositaries of the funds of the association and to determine the manner of receiving, depositing, and disbursing the funds of the association and the form of checks and the person or persons by whom same shall be signed, with the power to change such banks and the person or persons signing such checks and the form thereof at will.

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SEC. 7. Membership certificates.-The association shall admit to membership only those eligible applicants who have paid the prescribed fee of lars ($------), and who have met all other conditions for membership prescribed by the board of directors. The board of directors shall cause to be issued appro priate certificates of membership.

Article IV

DUTIES OF OFFICERS

SECTION 1. Duties of president. The president shall (1) preside over all meetings of the association and of the board of directors, (2) call special meetings of the board of directors, (3) perform all acts and duties usually performed by an executive and presiding officer, and (4) sign all membership and revolving-fund certificates, and such other papers of the association as he may be authorized or directed to sign by the board of directors: Provided, however, That the board of directors may authorize any person to sign any or all checks, contracts, and other instruments in writing on behalf of the association. The president shall perform such other duties as may be prescribed by the board of directors.

SEC. 2. Duties of the vice president.—In the absence or disability of the president, the vice president shall perform the duties of the president: Provided, however, That in case of death, resignation, or disability of the president, the board of directors may declare the office vacant and elect his successor.

SEC. 3. Duties of secretary.-The secretary shall keep a complete record of all meetings of the association and of the board of directors and shall have general charge and supervision of the books and records of the association. He shall sign all membership and revolving fund certificates with the president and such other papers pertaining to the association as he may be authorized or directed to sign by the board of directors. He shall serve all notices required by law and by these bylaws and shall make a full report of all matters and business pertaining to his office to the members at the annual meeting. He shall keep the corporate seal and the book of blank membership and revolving-fund certificates, complete and countersign all certificates issued, and affix the corporate seal to all papers requiring a seal. He shall keep complete membership and revolving-fund certificate records. He shall act as secretary of the executive committee. He shall make all reports required by law and shall perform such other duties as may be required of him by the association or the board of directors. Upon the election of his successor, the secretary

shall turn over to him all books and other property belonging to the association that he may have in his possession.

SEC. 4. Treasurer.-The treasurer shall perform such duties with respect to the finances of the association as may be prescribed by the board of directors.

Article V

EXECUTIVE COMMITTEE

SECTION 1. Powers and duties.-The board of directors may in their discretion appoint from their own membership an executive committee of three (3) members, determine their tenure of office and their powers and duties. The executive committee shall have such powers and duties as may, from time to time, be prescribed by the board of directors and these duties and powers may be all of the duties and powers of the said board of directors, subject to the general direction, approval, and control of the board of directors. Copies of the minutes of any meeting of the executive committee shall be mailed to all directors within seven (7) days following such meeting.

Article VI

DUTIES OF MANAGER

SECTION 1. In general.-Under the direction of the board of directors the manager shall have general charge of the ordinary and usual business operations of the association, including the purchasing, marketing, and handling of all products and supplies handled by the association. He shall, so far as practicable, endeavor to conduct the business in such a manner that the members will receive just and fair treatment. The manager shall deposit all money belonging to the association which comes into his possession in the name of the association in a bank selected by the board of directors and if authorized to do so by the board of directors shall make all disbursements by check therefrom for the ordinary and necessary expenses of the business in the manner and form prescribed by the board of directors. Upon the appointment of his successor, the manager shall deliver to him all money and property belonging to the association which he has in his possession or over which he has control.

SEC. 2. Duty to account.-The manager shall be required to maintain his records and accounts in such a manner that the true and correct condition of the business may be ascertained therefrom at any time. He shall render annual and periodical statements in the form and manner prescribed by the board of directors. He shall carefully preserve all books, documents, correspondence, and records of whatever kind pertaining to the business which may come into his possession.

SEC. 3. Control of employees.-Subject to the approval of the board of directors, the manager shall employ, supervise, and dismiss all agents and employees of the association not specifically employed by the board of directors.

Article VII

MEMBERS AND PATRONS

SECTION 1. Qualifications of members.-Any person, firm, partnership, corporation, or association, including both landlords and tenants in share tenancies,

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