ERIE-CRAWFORD COOPERATIVE

The purposes for which this Cooperative is formed are set forth in the Amended Articles of Association and the powers which it may exercise are those conferred by law.

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Section 1. The registered office of the Cooperative shall be located at:

7733 Route 97
P. O. Box 312
Union City, Erie County, Pennsylvania 16438

Section 2. Thereafter, the registered office shall be located at such other address in Pennsylvania as the Board of Directors may, from time to time, determine.

Section 3. The Cooperative may also have offices at such places, both within and without Pennsylvania, as may be, from time to time, authorized or determined by the Board of Directors for conducting the business of the Association.

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Section 1. Qualifications of members. Any agricultural cooperative association of bona fide producers of agricultural products, and any person, firm, partnership, corporation or association, including both landlords and tenants in share tenancies, who is a bona fide producer of agricultural products in the territory in which the Cooperative is engaged in business, and who agrees to be a patron of the Cooperative, may become a member of the Cooperative by acquiring one (1) share of the common stock and meeting such conditions as may be prescribed by the Board of Directors.

Section 2. Non-member patrons. The Cooperative, if it elects to do business with non-members, shall sell to and buy from non-member patrons on the same basis as members excepting as to dividends and sharing in the profits or equity of the Cooperative, but the value of products marketed shall not exceed the value of products marketed or supplies and equipment purchased for members.

Section 3. Suspension or Involuntary Termination. In the event that any member has done no business with the Cooperative for a period of twelve (12) months, or in the event that any member ceases to be eligible for membership in the Cooperative, the Board may terminate such member’s membership in the Cooperative and cancel such member’s membership certificate on the books and records of the Cooperative. A member shall not lose his membership by his failure to do business with the Cooperative is such failure is due to an Act of God unless the period of time involved covers at least twenty-four (24) months. Any member may voluntarily terminate his membership in the Cooperative upon not less than three (3) months written notice to the Board and the surrender of his membership certificate. Upon termination of membership in the association, all rights and interests of such member in the Cooperative shall cease excepting for such member’s interest, if any, in prior unpaid dividends evidenced by Preferred Stock Certificates, Revolving Fund Certificates, or other written obligations issued by the Cooperative. No action taken hereunder shall impair the obligations or liabilities of either party under any contract with the Cooperative, which may be terminated only as provided therein.

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Section 1. Annual meeting. The annual meeting of the members of this Cooperative shall be held during the months of March or April of each year on a date and at a place designated by the Board of Directors.

Section 2. Special Meetings. Special meetings of the members of the Cooperative may be called at any time by order of the Board of Directors and shall be called at any time by the members upon the written request of at least twenty-five per cent of the members for proposed changes in the By-Laws and otherwise by at least ten per cent (10%) of the members for matters not involving the By-Laws, provided, however, that in no case shall the required number of signatures by less than fifteen (15). Any such request shall state the purpose or object of the special meeting. The Board of Directors shall designate the time and place of each special meeting.

Section 3. Notice of meetings. Written or printed notice of every regular and special meeting of members shall be prepared and mailed to the last known post office address of each member not less than ten (10) days before such meeting. Such notice shall state the purposes or objects thereof and the time and place of meeting. No business shall be transacted at special meetings other than that referred to in the call. Notices may be waived in writing, and appearance at a meeting shall constitute a waiver of notice thereof.

Section 4. Voting. Each member shall be entitled to only one vote. Firms, partnerships, corporations or associations holding membership in the Cooperative may be represented in person by an individual duly authorized in writing. Voting by proxy or cumulative voting shall not be permitted, but when authorized in advance by the Board of Directors, absent members may vote on specific questions, other than the removal of directors, by written ballots prepared by the Cooperative sent by mail to or deposited with the Secretary of the Cooperative, and such ballots shall be counted only in the meeting at the time in which such vote is taken, provided that all members have been notified in writing by the Board of Directors of the exact wording of the motion or resolution up which such vote is taken, and a copy of the same is forwarded with and attached to the vote of the member voting.

Section 5. Quorum. Excepting for meetings called to change the By-Laws, these members present at a duly called meeting of the members shall constitute a quorum for the transaction of business at any meeting of the Cooperative. Fore meetings called to change the By-Laws, at least ten per cent (10%) of the members shall be present to constitute a quorum.

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Section 1. Number and qualifications of directors. The business of the Cooperative shall be managed by a Board of Directors of nine (9) members, each of whom shall be a member of the Cooperative (or a duly authorized representative of an incorporated member of the Cooperative). 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 Cooperative. If a majority of the Board of Directors of the Cooperative finds at any time following a hearing that any director is so engaged of affiliated, he shall thereupon cease to be a director.

Section 2. Election of directors. At each annual meeting of the members of this Cooperative, directors shall be elected to succeed those directors whose terms have expired. Each director shall be elected for a term of three (3) years. At least sixty (60) days prior to each annual meeting, the President shall appoint a nominating committee of five (5) members, which shall select one or more nominees for each office of director to be filled at the next annual meeting. The committee shall report its selections to the Secretary of the Cooperative at least twenty (20) days prior to the annual meeting. The Secretary shall place such nominees in the annual meeting notice. Nominations may also be made from the floor at the meeting. All directors shall be elected by secret ballot and the nominee or nominees receiving the greatest number of votes for each office to be filled shall be elected. A director shall hold office for the term for which he was elected and until his successor is elected and qualified and shall enter upon the discharge of his duties.

Section 3. Districts for election of directors. The area in which the Cooperative transacts business shall be divided into districts for the election of directors and the directors elected from such districts shall be apportioned by volume of business transacted with the Cooperative. There shall be not less than five (5) directors who are residents of Erie County and not less than two (2) directors who are residents of Crawford County. The remaining two (2) directors may be residents of any fringe area or from either Erie or Crawford Counties.

Section 4. Election of officers. The Board of Directors shall meet within ten (10) days after each annual election and shall elect by ballot a President, a Secretary and a Treasurer, and may elect one or more Vice Presidents and such other officers as may from time to time be required for the prompt and orderly transaction of the business of the Cooperative. The President, and at least one of the Vice Presidents, and the Treasurer must be members of the Board of Directors. Any two of the offices of Vice President, Secretary and Treasurer may be combined in one person, but no officer shall sign or endorse any instrument or document on behalf of the Cooperative in more than one official capacity. Each officer shall hold office until the election and qualification of his successor unless earlier removed by death, resignation or for cause. Vacancies in such offices shall be filled by the Board of Directors through election by ballot.

Section 5. Vacancies. Whenever a vacancy occurs in the Board of Directors other than from the expiration of a term of office, the remaining Directors, though less than a quorum, shall elect a member to fill the vacancy until his successor is elected by the members at their next annual meeting or at any special meeting duly called for that purpose and held prior thereto.

Section 6. Board meetings. In addition to the meetings mentioned above, regular meetings of the Board of Directors shall be held monthly, or at such other times and at such places within the Commonwealth of Pennsylvania or elsewhere as a majority of the Directors may from time to time determine, or as may be designated in the notice calling the meeting.

Section 7. 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. On the signing of a waiver of notice of a meeting by all Directors, a meeting of the Board of Directors may be held at any time.

Section 8. Notice of board meetings. Oral or written notice of each meeting of the Board of Directors shall be given each Director by or under the supervision of the Secretary of the Cooperative not less than 48 hours prior to the time of the meeting, but such notice may be waived by all the Directors and appearance at a meeting shall constitute a waiver of notice thereof.

Section 9. Compensation. The compensation, if any, of the members of the Board of Directors and of the Executive Committee shall be determined by the Board of Directors.

Section 10. Quorum. A majority of the Board of Directors shall constitute a quorum at any meeting of the board.

Section 11. Removal. Any member may ask for the removal of a Director by filing charges with the Secretary or President of the Cooperative together with a petition signed by not less than ten per cent (10%) of the members requesting the removal of the director in question. A director may be removed from office by the affirmative vote of not less than two-thirds of the members present and voting at any regular or special meeting of the members called for that purpose. Ten days written notice of the time and place and purpose or object of any such meeting shall be give to the members and to the director against whom charges are to be presented. Such director shall at the same time be informed of the nature of the charges to be preferred against him and at such meeting shall have the opportunity to be heard in person or by counsel and by witnesses in regard thereto prior to the vote being taken on his removal. Any officer may be removed by the affirmative vote of a majority of the Directors whenever in their judgment the best interests of the Cooperative will be served thereby.

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Section 1. Management of business. The Board of Directors shall have the general supervision and control of the business and affairs of the Cooperative except such as by law, the Articles of Incorporation, or these By-Laws are conferred upon or reserved to the members. The Board shall make all rules and regulations not inconsistent with law or with these By-Laws for the management of the business and the guidance of the members, officers, employees and agents of the Cooperative. They shall have installed an accounting system which shall be adequate for the requirements of the business, and it shall be their duty to require proper records to be kept of all business transactions.

Section 2. Employment of General Manager. The Board of Directors shall have power to employ or to authorize the employment of a General Manager and such other employees as may be deemed necessary and to fix their compensation and define their duties. The General Manager shall have charge of the business of the Cooperative under the direction of the Board of Directors. The Board may employ any corporate officer as the General Manager.

Section 3. Bonds and insurance. The Board of Directors shall require the General Manager and all other officers, agents and employees charged by the Cooperative with responsibility for the custody of any of its property, funds or negotiable instruments 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 the Cooperative. The Board of Directors shall provide for the adequate insurance of the property of the Cooperative, or property which may be in the possession of the Cooperative, or stored by it and not otherwise adequately insured, plus sufficient insurance covering liability for accidents to all employees and the public.

Section 4. Audits. At the close of each fiscal year, a complete audit of the operations of the Cooperative shall be made by a qualified accountant or accountants employed by the Board of Directors. The written report of said audit shall include at least a balance sheet, an operating statement and reports of commissions, salaries and other remunerations of managers and officers plus other proper information, and shall be submitted to the members at the next regular meeting. Within three (3) months after the expiration of the fiscal year for which made, the Secretary of the Cooperative shall file a summary of the statistical information contained in the report of audit, to be called a "summary of audit", with the Secretary of Agriculture of Pennsylvania upon a form prescribed by or acceptable to the Secretary of Agriculture.

Section 5. Agreements with members. The Board of Directors shall have the power to carry out all agreements of the Cooperative with its members and others in every way advantageous to the Cooperative representing the members collectively. Such agreements with members shall contain a provision which shall specify a reasonable period in each year during which any contracting member of the Cooperative, upon giving notice as prescribed in the contract, may terminate the contract.

Section 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 Cooperative and to determine the manner of receiving, depositing and disbursing the funds of the Cooperative and the form of checks and the person or persons by whom the 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.

Section 7. Reports to State and Federal authorities. The Board of Directors shall cause the Cooperative to file all reports and pay all fees and taxes required by State and Federal laws.

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Section 1. Duties of President. The President shall (1) preside over all meetings of the Cooperative 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 stock and capital certificates and such other papers of the Cooperative 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 Cooperative. The President shall perform such other duties as may be prescribed by the Board of Directors. The President shall be an ex-officio member of all Board committees.

Section 2. Duties of the Vice President. The Vice President, or Vice Presidents, shall have such powers and duties as may from time to time be prescribed by the Board of Directors. Each Vice President may sign stock and capital certificates on behalf of the Cooperative. In the absence or disability of the President, the Vice President who is a member of the Board 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.

Section 3. Duties of the Secretary. The Secretary shall keep a complete record of all meetings of the Cooperative and of the Board of Directors and shall have general charge and supervision of the books and records of the Cooperative. He shall sign all stock and capital certificates with the President, Vice President or Treasurer, and such other papers pertaining to the Cooperative 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 By-Laws 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 books of blank stock and capital certificates complete and countersign all certificates issued and affix the corporate seal to all papers requiring a seal. He shall keep complete stock and capital 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 Cooperative 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 Cooperative that he may have in his possession.

Section 4. Duties of the Treasurer. The Treasurer shall have such powers and shall perform such duties with respect to the finances of the Cooperative as may from time to time be prescribed by the Board of Directors. He may sign stock and capital certificates on behalf of the Cooperative. The Treasurer and/or any other officer or officers, or other person or persons, may be authorized to draw checks upon funds of the Cooperative as the Board of Directors, by resolution, may from time to time direct.

Section 5. Duties of Assistant Secretary. The Assistant Secretary or Assistant Secretaries, if any, may attest the authenticity of and affix the Cooperative’s seal to any paper or document requiring such action. Each Assistant Secretary shall have such other powers and shall perform such other duties as may from time to time be prescribed by the Board of Directors. Each Assistant Secretary may sign stock and capital certificates on behalf of the Cooperative.

Section 6. Duties of Assistant Vice President. The Assistant Vice President or Assistant Vice Presidents, if any, shall have such powers and shall perform such duties as may from time to time be prescribed by the Board of Directors.

Section 7. Duties of Assistant Treasurer. The Assistant Treasurer or Assistant Treasurers, if any, shall be responsible to the Treasurer and shall have such powers and shall perform such duties as may from time to time be prescribed by the Board of Directors. Each Assistant Treasurer may sign stock and capital certificates on behalf of the Cooperative.

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Section 1. Powers and duties. The Board of Directors may at its discretion elect from its own membership and Executive Committee of not less than three (3) members, determine their tenure of office and their powers and duties. The Board of Directors may delegate to such Executive Committee all or any stated portion of the functions and powers of the Board of Directors, subject to the general direction, approval and control of the Board. Copies of the minutes of any meeting of the Executive Committee shall be available to all Directors and shall be read and approved at the next regular meeting of the Board of Directors.

Section 2. Other committees. The Board of Directors may, at its discretion, appoint such other committees as may be deemed necessary.

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Section 1. In general. Under the direction of the Board of Directors, the General Manager (if employed by the Board) shall have general charge of the ordinary and usual business operations of the Cooperative, including the purchasing, marketing and handling of all products and supplies handled by the Cooperative. 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 General Manager shall deposit all money belonging to the Cooperative which comes into his possession in the name of the Cooperative 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 there from 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 General Manager shall deliver to him all money and property belong to the Cooperative which he has in his possession or over which he has control.

Section 2. Duty to account. The General 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 there from at any time. He shall render annual and periodic statements in the form and in the 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.

Section 3. Control of employees. Subject to the approval of the Board of Directors, the General Manager shall employ, supervise and dismiss all agents and employees of the Cooperative not specifically employed by the Board of Directors.

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Section 1. Generally. Certificates representing shares, evidences of a member’s equity in any fund, capital investment or other asset of the Cooperative, shall be issued in numerical order by type of capital and shall be signed by the President or Vice President, or Treasurer (or Assistant Treasurer) and the Secretary (or Assistant Secretary) of the Cooperative, or by facsimiles of their signatures, and may be sealed with the seal of the Cooperative or a facsimile thereof, and on the record of each certificate shall be entered the name of the member owning the shares or equity interest represented thereby, the number of such shares or the amount of the equity interest and the date of issue.

Section 2. Common stock. Each certificate of common stock issued following the adoption of these By-Laws shall have the following statement printed thereon:

"The common stock of this association may be purchased, owned or held only by producers of agricultural products, including tenants and landlords receiving a share of the crop, and cooperative associations of such producers who shall patronize the association in accordance with uniform terms and conditions prescribed by it and only such persons shall be regarded as eligible members of the association. In the event a holder of common stock has done no business with the association for the period of 12 months, or in the event the board of directors of the association shall find that any of the common stock has come into the hands of any person who is not eligible for membership, or that the holder thereof has ceased to be an eligible member, in any of such events such holder shall have no rights or privileges on account of such stock, or vote or voice in the management or affairs of the association (other than the right to participate in accordance with law in case of dissolution and to receive the book or par value of such stock, whichever is less, in the event of its sale or transfer as herein provided), and the association shall have the right, at its option, (a) to redeem such stock at its book or par value, whichever is less; (b) to require the transfer of any such stock at such book or par value, whichever is less, to any person eligible to hold the same; or (c) to require such holder of any such stock to convert the same into shares of preferred stock of equal value. In exercising its right to redeem or to require the transfer or conversion of common stock, if the holder thereof fails to deliver the certificate evidencing the stock, the association may cancel such certificate on its books and issue a new certificate of common or preferred stock, as the case may be, to the party entitled thereto. The common stock of this association may be transferred only with the consent of the board of directors of the association and on the books of the association, and then only to persons eligible to hold the same; and no purported assignment or transfer of such stock shall pass to any person not eligible to hold the same, any rights or privileges on account of such stock, or vote or voice in the management or affairs of the association. Each eligible holder of common stock shall be entitled to only one vote on each question that may be presented in any meeting of the stockholders, regardless of the number of shares of stock owned by him. The association shall have a lien on all of its issued common stock for all indebtedness of the holders thereof to the association. There shall be no dividends paid on the common stock. Upon dissolution or winding up of the association in any manner, after the payment of all debts, all outstanding preferred stock shall first be retired at par value in full or on a pro rata basis without priority, plus all accrued and unpaid dividends; and second, the remaining assets and funds, if any, shall be distributed in accordance with the bylaws of the association."

Section 3. Preferred stock. Each certificate of preferred stock shall have the following statement printed thereon:

"The preferred stock of this association may be owned or held by anyone, shall carry no voting rights and may be transferred only on the books of the association, and may be redeemed in whole or in part on a pro rata basis at par plus any dividends accrued thereon and unpaid, at any time on thirty (30) days’ notice by the association; provided said stock is redeemed in the same order as originally issued by years, and on the failure to deliver the certificate evidencing any such stock, the association may cancel the same on its books. Stock which has been redeemed may, at the discretion of the board of directors, be reissued or retired in the manner provided by law. All such preferred stock so redeemed shall be paid for in cash at the par value thereof, plus any dividends accrued thereon and unpaid; and such stock shall not bear dividends after the date fixed for redemption. The association shall have a lien on all of its issued preferred stock and on dividends accrued thereon for all indebtedness of the holders thereof to the association. Cumulative dividends of three per cent per annum may be paid thereon when, if and as declared by the board of directors. At the discretion of the board of directors, all dividends or distributions of the association or any part thereof may be paid in certificates of preferred stock and/or credits on preferred stock or ad interim certificates representing fractional parts thereof, subject to conversion into full shares. Notwithstanding any of the foregoing provision, the board of directors shall have the power from time to time and at any time to purchase as treasury stock any preferred stock certificates in any instance (a) in which the amount of the preferred stock is relatively small and the interests of the association are deemed to be furthered thereby; (b) to compromise or settle a dispute between a holder thereof and the association; (c) to facilitate the settlement of an estate of a deceased or bankrupt stockholder; (d) to facilitate the winding up and liquidation of a corporate holder in dissolution or other legal proceedings; or (e) to close out a stockholder’s interest when he has moved from the territory served by the association. The foregoing shall also include authority to purchase ad interim certificates or credits on preferred stock. Upon dissolution or winding up of the association in any manner, after the payment of all debts all outstanding preferred stock shall first be retired at par value in full or on a pro rata basis without priority, plus all accrued and unpaid dividends and second, the remaining assets and funds, if any, shall be distributed in accordance with the bylaws of the association."

Section 4. Transfers. Except as otherwise provided in these By-Laws, transfers of stock shall be made only on the books of the Cooperative by the holder in person or under power of attorney duly executed, witnessed and filed with the Cooperative, and upon surrender of the outstanding certificate of such stock for cancellation on the books of the Cooperative. Transfers will be made only when the stockholder is free from indebtedness to the Cooperative. The Board of Directors may close the transfer books in their discretion for a period not exceeding thirty (30) days preceding any meeting of the members or the day appointed for the payment of a dividend.

Section 5. Lost or destroyed certificates. When a certificate has been lost or destroyed, a new certificate may be issued therefor upon satisfactory proof of such loss or destruction and upon the giving of a bond if required by the Board of Directors, with sufficient surety to be approved by it to protect the Cooperative, or any person injured by the issue of the new certificate, from any liability or expense which it or they may incur by reason of the original certificate remaining outstanding or by reason of the issue of a new certificate.

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Section 1. Revolving fund. The Cooperative is authorized to issue and sell to members 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 Cooperative and provide a means whereby its active members will furnish capital for the Cooperative thereafter, the Cooperative is authorized to issue certificates of preferred stock and/or revolving fund certificates to evidence capital furnished by members. 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. Such revolving fund certificates may contain such terms and conditions not inconsistent herewith as may be prescribed from time to time by the Board of Directors of the Cooperative. Such preferred stock and revolving fund 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 Cooperative in the order of issuance by years as funds are available for that purpose. Revolving fund certificates shall bear such rates of interest (in no event to exceed six per cent per annum) as the Board of Directors of the Cooperative in its sole discretion may from time to time prescribe without any obligation on the part of the Board of Directors and the Cooperative to pay interest on such certificates. Preferred stock shall bear such dividends as are provided in these By-Laws. A record of all holders of revolving fund certificates shall be kept and maintained by the Cooperative and shall be transferable only to the Cooperative or to such other person as may be approved by the Board of Directors, and no transfer of revolving fund certificates shall be binding upon the Cooperative unless so transferred. All debts of the Cooperative, both secured and unsecured, shall be entitled to priority over all outstanding revolving fund certificates. This Cooperative shall have a lien on all its issued revolving fund certificates for all indebtedness of the holders thereof to the Cooperative.

Section 2. Patronage distributions. In order to induce patronage by the members and to assure that this Cooperative will operate on a nonprofit basis relative to all its transactions with its patrons, the Cooperative shall account on a patronage basis to all of its members for all amounts received on account of the rendition of services and on account of the sale or disposition of commodities furnished by the Cooperative or purchased by the Cooperative over and above the costs or outlays relative to such commodities and the costs and expenses of the Cooperative in handling such commodities and in furnishing such services, with each commodity marketed by the Cooperative and each commodity purchased by patrons from the Cooperative, and each service furnished by the Cooperative bearing its fair part of the general operating costs and expenses of the Cooperative, including valuation reserves and interest and dividends on capital not to exceed 8 per cent per annum.

The Cooperative is hereby obligated to (a) allocate all such amounts to the members on the books of the Cooperative on a patronage basis; (b) disclose the stated dollar amounts allocated on the books of the Cooperative to the members by written notice to the members; and (c) pay the amounts allocated to the members in cash or by means of certificates of preferred stock or revolving fund certificates or credits to the members in the capital reserve accounts of the Cooperative in the amount prescribed by the Board of Directors for that year, or partly in cash and partly in certificates or preferred stock and partly in revolving fund certificates and partly in credits in the capital reserve accounts. Such allocations, disclosures, and payments shall be made within the time permitted by law after the close of the fiscal year; provided that at least twenty percent (20%) of the patronage dividend payable to any member shall be paid in cash. Nothing contained herein shall prevent the Cooperative in its discretion from paying the amount allocated to a member solely in cash if the amount involved is $5.00 or less.

All such amounts so allocated, other than amounts paid in cash are received by the Cooperative and furnished by the members as capital, and shall have the same status as though such amounts had been paid to the members in cash in pursuance of a legal obligation to do so, and the member had then furnished corresponding amounts for capital for the Cooperative. All such capital funds furnished by the members may be used by the Cooperative for such proper corporate purposes as shall be determined by the Board of Directors.

If in any fiscal year there are savings from one or more activities and a loss from any other activity or activities, such savings shall be equitably applied to wiping out such loss or losses insofar as possible. If in any fiscal year the Cooperative shall incur a net operating loss which is recognizable for tax purposes, the Board of Directors shall have full authority to prescribe the basis on which capital furnished by members in prior years or patronage payments to members in future years shall be reduced on account of any such loss so that it will be borne by the members as equitably as the Board of Directors finds practicable.

Nothing contained herein shall prevent the Cooperative from using carry-backs and carry-overs in computing its federal income taxes and for all other accounting purposes. All capital furnished by deductions or otherwise under specific contracts with members, other than capital evidenced by certificates of common and preferred stock, shall be evidenced by certificates of preferred stock and/or by revolving fund certificates, or credited to members in the capital reserve accounts of the Cooperative, and such certificates of preferred stock and revolving fund certificates and credits shall be subject in all respects to the provisions of these By-Laws regarding such certificates and credits.

Section 3. Redemption of Preferred Stock and Revolving Fund Certificates. Except as herein provided, the Preferred Stock and/or Revolving Fund Certificates that are retired in a given year in whole or on a pro rata basis shall be the oldest outstanding and unexhausted type of capital of the Cooperative that is retired. Notwithstanding any other provisions of these By-Laws, the Board of Directors at its discretion shall have the power at any time to pay off or retire or secure a release or satisfaction of any certificate of stock, revolving fund certificates and capital reserve credits in any instance (a) in which the amount of the certificate or credits is relatively small and the interests of the Cooperative are deemed to be furthered thereby; (b) to compromise or settle a dispute between a holder thereof and the Cooperative; (c) to facilitate the settling of an estate of a deceased or bankrupt holder; (d) to facilitate the winding up and liquidation of a corporate holder in dissolution or other legal proceedings; or (e) to close out a holders'’ interest when he has moved from the territory served by the Cooperative. The Board of Directors at its discretion shall also have the power to purchase any certificates of preferred stock, revolving fund certificates and capital reserve credits from any holder thereof on such terms and conditions as may be agreed upon in any instance in which the interests of the Cooperative are deemed to be furthered thereby and funds are determined by the Board of Directors to be available for such purpose.

Section 4. Capital accounts. A record of all credits accrued to members as reflected by the Preferred Stock and Revolving Fund Certificates issued and outstanding shall be kept and maintained by the Cooperative and such credits shall be transferable only on the books of the Cooperative and no transfer of credits shall be binding upon the Cooperative until such transfer has been effected on the books of the Cooperative. All debts of the Cooperative, both secured and unsecured, shall be entitled to priority over all outstanding credits to members in the capital accounts of the Cooperative. This Cooperative shall have a lien on all credits to members in the capital accounts for all indebtedness of the holders thereof to the Cooperative.

Section 5. Treatment of income not derived from patronage. All net income (determined in accordance with sound corporate practices and sound accounting principles) derived by the Cooperative from sources other than patronage transactions with its patrons shall be allocated, disclosed and paid to the members in a manner consistent with the provisions of Section 2 of this Article governing the allocations, disclosure and payment of amounts derived by the Cooperative from patronage transactions.

Section 6. Set-off. The Cooperative shall be entitled to set-off against any claims which it may have against any member or patron, any amounts which the Cooperative may owe such member or patron; provided, however, that the right of set-off shall not apply to the 20 per cent of the amount of patronage allocations previously paid in cash by the Cooperative to members under the provisions of Section 2 hereof.

Section 7. Consent. Each person who hereafter applies for and is accepted to membership in this Cooperative, and each member of this Cooperative on the effective date of these By-Laws who continues as a member after such date shall by such act alone consent that the amount of any distributions with respect to his patronage occurring after June 30, l963 which are made in written notices of allocation (as defined in 26 U.S.C. 1388) and which are received by him from the Cooperative, will be taken into account by him at their stated dollar amounts in the manner provided in 26 U.S.C. 1385 (a) in the taxable year in which such written notice of allocation is received by him.

Section 8. Notification to prospective members. Written notification of the adoption of the By-Laws provision set forth in Section 7 of this Article, a statement of its significance and a copy of said By-Laws provision shall be given separately to each prospective member before he becomes a member of the Cooperative.

Section 9. Treatment of statutory reserves. All unexhausted apportioned credits in the statutory reserve accounts accumulated prior to the adoption of these By Laws shall, insofar as possible, be treated as capital reserves and be subject in all respects to the provisions of these By Laws governing the handling and treatment of credits in the capital reserve accounts.

Section 10. Dissolution. Upon the dissolution or winding up of the Cooperative in any manner and after the payment of all debts, all outstanding preferred stock shall first be retired at par value in full or on a pro rata basis without priority, plus all accrued and unpaid dividends; second, all outstanding revolving fund certificates shall then be retired in full or on a pro rata basis without priority; third, all unexhausted credits in the capital reserve accounts shall then be retired in full or on a prop rata basis; fourth, all outstanding common stock shall then be retired at par value in full or on a pro rata basis without priority; and finally, the remaining assets and funds, if any, shall then be distributed ratably to members during the past five (5) years in proportion to their individual patronage as shown by the records of the Cooperative on as equitable a basis as the Board of Directors finds practicable.

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Section 1. Any officer, director, employee or agent of the Cooperative, and his heirs, executors, administrators, or personal representative, shall be indemnified by the Cooperative for reasonable expenses actually incurred in connection with any action, suit or proceedings, civil or criminal, to which he or they shall be made a party by reason of his being or having been a director, officer, employee or agent of the Cooperative or of any other corporation, association or organization in which he served in any capacity at the request of the Cooperative. Provided, however, that no person shall be so indemnified or reimbursed in relation to any matter in such action, suit or proceedings to which he shall finally be adjudged to have been guilty of or liable for willful or criminal misconduct in the performance of his duties to the Cooperative; and, provided further that no person shall be so indemnified or reimbursed in relation to any matter in such action, suit or proceedings which has been made the subject of a compromise settlement except with the approval of a court of competent jurisdiction or the Board of Directors acting by vote of a majority of the whole number of the Directors. The foregoing rights shall not be exclusive of other rights to which said person, his heirs, executors, administrators or personal representatives may be entitled as a matter of law.

Section 2. The Board of Directors shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Cooperative, or is or was serving at the request of the Cooperative as a director, officer, employee or agent of another corporation, association, partnership, joint venture or other business enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Cooperative would otherwise have the power to indemnify him against such liability under the provisions of this Article.

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The fiscal year of this Cooperative shall commence on the first day of October and end on the last day of September.

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Section 1. Bylaws printed. After adoption, these by-laws, preceded by the Articles of Association, shall be mimeographed or printed in pamphlet form and a copy thereof shall be delivered to each member and to each person who later becomes a member of the Cooperative as shown on the books of record.

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Section 1. These By-Laws may be altered, amended or revised from time to time by (1) the affirmative vote of a majority of the Board of Directors at any regular or special meeting of the Directors duly called for such purpose, or (2) the affirmative vote of a majority of the members at any regular or special meeting of the membership duly called for such purpose, providing that not less than ten per cent (10%) of the membership shall be present to constitute a quorum.

Section 2. The members may prescribe that any By-Law provision made or changed by them at a duly called meeting of members at which a quorum was present shall not be altered, amended or repealed by the Directors.

Section 3. Any meeting of the members called to vote on any changes in the By-Laws shall be given in writing to the last known address of each member not less than ten (10) days prior to such meeting and shall contain the full text of the proposed changes to the By-Laws.

Section 4. When authorized in advance by the Board of Directors, members may vote by mail ballot at any regular or special meeting called to change the By-Laws and each such mail ballot received shall count towards the establishment of a quorum.

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All matters of procedure not covered by these By-Laws shall be governed by the latest revised edition of Robert’s Rules of Order.

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Excepting as otherwise specifically provided herein or as provided in the notice of the meeting, the order of business at each annual, regular or special meeting of the Board, of committees, and of the members, shall be as follows:

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