who is a bona fide producer of agricultural products in the territory in which the association is engaged in business may become a member of the association by acquiring a membership, executing the marketing agreement," and meeting such other conditions as may be prescribed by the board of directors. The membership certificate shall be in such form as may be prescribed by the board of directors, but shall not be transferable.

SEC. 2. Suspension or termination.—If, following a hearing, the board of directors shall find that a member has ceased to be a producer or that such member has not, for a period of years, marketed his agricultural products through the association, or has moved out of the territory in which the association is operating, they may suspend his rights as a member or terminate his membership. Upon termination of membership in the association in any manner, all of the rights and interests of such member in the association shall, by that act, be canceled, and such member shall be entitled only to payment or credit for the equitable appraised value of his property rights and interests in the association, as conclusively determined by the board of directors." No action taken hereunder shall impair the obligations or liabilities of either party under any contract which may be terminated only as provided therein.

SEC. 3. Nonmember patrons.-The association may transact any authorized business with nonmembers provided that the total value of business transacted by the association with nonmembers in any fiscal year shall not exceed the total value of business transacted with its members. Nonmember patrons shall be treated the same as members with respect to the distribution and allocation of income. The association shall have the right to retain an amount of the patronage allocation of a nonmember patron equal to the membership fee, if such patron is eligible for membership in the association and is approved by the board of directors.

Article VIII

REVOLVING CAPITAL

SECTION 1. Revolving-fund certificates.-The association is authorized to issue and sell to members and others revolving-fund certificates, of a character hereafter described, for the purpose of raising capital funds with which to engage in business, and in order to further the cooperative character of this association

34 This clause should be omitted if marketing agreements are not used.

35

If State statutes provide a time of payment for property interests of a retiring member, such requirements should be added.

Furthermore, in order to avoid the embarrassment that might result from having to pay members the amount of their property interest in the association, consideration should be given, in those States where the statutes so permit, to the substitution of the following in lieu of this sentence:

"In the event of termination of a membership, regardless of how terminated, the association shall not become or be liable for the payment of any amount whatsoever as the value of the property interests in the association of the member whose membership is terminated, and each member is received into membership upon the express agreement on the part of such member, and upon the conditions, that the value of the property interests of such member in the association is nothing, and that in the event of termination, whether by expulsion or otherwise, such member shall not be entitled to be paid anything as or for the value of the property interests of such member."

and to provide a means whereby its current and active patrons will finance the association thereafter, the association is authorized to issue revolving-fund certificates evidencing deductions made pursuant to agreements and/or patronage dividends, which are, in whole or in part, so paid, at the end of each fiscal year. Funds arising from the issue of such certificates shall be used for creating a revolving fund for the purpose of building up such an amount of capital as may be deemed necessary by the board of directors from time to time and for revolving such capital, and such funds or funds derived from any other source shall, when, in the opinion of the board of directors of the association such funds are not necessary for the proper financing of the operations of the association, be devoted to the refunding of the oldest outstanding series of revolving-fund certificates. Such certificates may contain such other terms and conditions not inconsistent herewith as may be prescribed from time to time by the board of directors of the association. Such certificates shall be issued in annual series, each certificate in each series upon its face being identified by the year in which it is issued; and each series shall be retired fully or on a pro rata basis, only at the discretion of the board of directors of the association, in the order of issuance by years as funds are available for that purpose. Notwithstanding any of the foregoing provisions, the board of directors shall have the power, from time to time and at any time, to pay off or retire or secure a release or satisfaction of any revolving-fund certificate compromising or settling a dispute between the holder thereof and the association.

Such revolving-fund certificates shall bear such rates of interest and only such rates of interest (in no event to exceed 6 percent per annum) as the board of directors of the association in its sole discretion may from time to time prescribe without any obligation on the part of the board of directors and the association to pay interest on such certificates. A record of all holders of revolving-fund certificates shall be kept and maintained by the association and such certificates shall be transferable only on the books of the association and no transfer of certificates shall be binding upon the association unless so transferred. All other debts of the association, both secured and unsecured, shall be entitled to priority over all outstanding revolving fund certificates. Upon the dissolution or winding up of the association in any manner, after the payment of all other debts, all outstanding revolving-fund certificates shall be retired in full or on a pro rata basis without priority before any liquidation dividends are declared on membership certificates or on account of property rights and interests.

SEC. 2. Reserves.-The books and records of the association shall be kept in such a manner, by years, that the amount carried to reserves, which have the status of capital, accruing from patronage of each patron of the association may be ascertained at any time. Whenever in a given year the operation of the association results in a net loss, such loss, to the extent that reserves are available, shall be charged against the same and they shall thereby be reduced accordingly. The board of directors shall prescribe the basis on which the reserve contributions of members by years shall be reduced on account of any such loss, so that it will be borne by the patrons on as equitable a basis as the board of directors finds practicable. Whenever in the discretion of the board of directors the reserves are found to be in excess of the amount deemed reasonably necessary for the sound financial operations of the association, such excess shall be applied to paying off ratably, by years, the oldest unexhausted reserve contributions of members. Upon the dissolution or winding up of the association in any manner, 402026°-42-27

after the payment of all debts, including revolving-fund certificates, any balance remaining over shall be distributed ratably in the following order and manner in the liquidation of (a) unexhausted reserve contributions, (b) membership certificates, and (c) property rights and interests.

Article IX

MEETINGS

SECTION 1. Fiscal year.-The fiscal year of this association shall commence on the first day of and end on the last day of

day of

SEC. 2. Annual meeting. The annual meeting of the members of this association shall be held in the town of State of at of each year, or on any date which the board of directors shall designate at least 30 days in advance of the date specified above.

-----

o'clock a. m., on the

SEC. 3. Special meetings.-Special meetings of the members of the association may be called at any time by order of the board of directors, and shall be called at any time upon the written request of at least (----) percent

(----). The

of the members, provided, however, that in no case shall the required number of signatures of members to such a request be less than request shall state the time, place, and object of the meeting.

SEC. 4. Notice of meetings.-Written or printed notice of every regular or special meeting of members shall be prepared and mailed to the last known post office address of each member not less than (-) days before

such meeting. Such notice shall state the object or objects thereof and the time and place of meeting and, in the discretion of the board of directors, may be given by publishing the same at least (----) days prior to the date of the meeting in a newspaper of general circulation published in the town where the principal place of business of the association is located. No business shall be transacted at special meetings other than that referred to in the call.

SEC. 5. Absentee voting.-Voting by proxy shall not be permitted but absent members may vote on specific questions other than the removal of directors by ballots transmitted to the secretary by mail, and such ballots shall be counted only in the meeting at the time in which such vote is taken, provided that all members, pursuant to action by the board of directors, have been mailed an exact copy of the motion or resolution upon which such vote is taken, and a copy of the same is forwarded with and attached to the vote of the member voting. SEC. 6. Quorum.-Five (5) percent of the members shall constitute a quorum for the transaction of business at any meeting of the association except for the transaction of business concerning which a different quorum is specifically provided by law or by these bylaws; but in the event a quorum is not present such meeting may be adjourned from time to time by those present until a quorum is obtained."

SEC. 7. Order of business.-The order of business at the annual meeting shall be:

(1) Roll call.

36 The right of a member to vote by proxy is granted in some States.

37

If permitted by law, the number of members necessary to constitute a quorum should be small, in order that meetings may not fail for the lack of a quorum.

(2) Proof of due notice of meeting.

(3) Reading and disposal of minutes.

(4) Annual reports of officers and committees.

(5) Election of directors.

(6) Unfinished business. (7) New business.

(8) Adjournment.

Article X"

ALLOCATION AND DISTRIBUTION OF INCOME

SECTION 1. Allocation of income. At the end of each fiscal year, the board of directors shall allocate the net income of the association, as shown on the annual report of the auditors, in the following order and manner:

(a) General reserve."-An amount of the net income equal to not less than (----) percent thereof shall be set aside for the purpose of establishing, building up, and maintaining a general reserve of not less than (----) percent of the aggregate of the par value of all outstanding membership certificates and the face amount of outstanding revolving-fund certificates.

(b) Interest on revolving-fund certificates.-A sufficient amount of net income shall be set aside for the payment of interest, if any, on outstanding revolving-fund certificates, as determined by the board of directors.

(c) Patronage allocation.-The net income remaining after provision for reserves and interest, if any, on revolving-fund certificates shall be allocated to each patron in proportion to his patronage of the association during the fiscal year. In computing patronage allocations, the board of directors is authorized if deemed advisable to make such computations on an equitable basis at different rates upon different classes or kinds of products or supplies handled, or services performed.

SEC. 2. Distribution of patronage allocations. The patronage allocations determined in the manner provided in section 1 (c) hereof shall be distributed in the following order and manner:

(a) Membership fees 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 a membership in the association as payment on the purchase price thereof, and when any such patron has complied with all the conditions for membership a certificate of membership shall be issued to him.

(b) Revolving-fund 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 revolving-fund certificates more particularly described in article VIII, section 1 of these bylaws 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.

38 If an association is to function exclusively with a marketing agreement, such as that given in this appendix, which obligates the association to pay in cash all amounts received for commodities to the members delivering them, less authorized deductions, the article given here need not be included by such an association.

39

Statutory requirements concerning reserves should be ascertained and met.

(d) Application of cash distribution to indebtedness.—Any part of or all the cash patronage distributions and/or cash payments for retirement of revolvingfund certificates 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 XI

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.

66

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

form, the impress of which is placed hereon.

Article XII

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