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Last update on: May 25, 2023
FUSE COOPERATIVE (HEREINAFTER THE “COOPERATIVE”)
PREAMBLE
FUSE COOPERATIVE (the “Cooperative”) is a limited cooperative association organized under the Colorado Uniform Limited Cooperative Association Act, C.R.S. Title 7, Article 58 (“ULCAA”). The Cooperative’s business shall be conducted on a cooperative basis for the mutual benefit of the Cooperative’s Members.
The purpose of the Cooperative is to create values-aligned business opportunities and collaboration between the Members. FUSE COOPERATIVE is a federated cooperative where members are staffing business owners that use their collective power to improve their businesses through the cooperative services.
The Cooperative adopts and subscribes to the seven International Cooperative Alliance Cooperative principles:
Voluntary and Open Membership.
Democratic Member Control.
Members' Economic Participation.
Autonomy and Independence.
Education, Training and Information.
Cooperation among Cooperatives.
Concern for Community.
WHEREAS, the Articles of Organization, as amended from time to time (“Articles”), are hereby incorporated by reference into these Bylaws.
1. MEMBERSHIP; AUTHORIZED CAPITAL
1.1 Membership Class and Board Authority. There will be one class of members in the Cooperative: General Members (as defined in Section 1.2). General Members may be referred to as “Patron Member”. Each member of a class shall be a “Member” and collective, “Members”, “Membership”, or “membership class.” Subject to Colorado Law, the board of directors of the Cooperative (“Board of Stewards” or “Board”, with each individual member serving on the Board being a “Steward”) will have the right and authority to admit Members and create additional classes of Membership with qualifications and upon terms as determined by the Board and subject to Section 1.3 below, without vote of the General Members.
1.2 General Members. Subject to acceptance by the Board in its sole discretion, an entity operating under the laws of the United States (including, but not limited to, a corporation, non-profit, corporation or association, partnership, cooperative, limited cooperative association, limited liability company, limited partnership, limited liability limited partnership, special purpose entity, or unincorporated association) (a “Business”) seeking to become a Member that meet the following eligibility requirements and applies for membership may be admitted to the Cooperative as a “General Member”:
1.2.1 Agrees to acquire, by purchase for the price indicated in SCHEDULE 1, or by award, one membership unit in the Cooperative;
1.2.2 Agrees to pay and remain current on periodic fees and/or dues to the Cooperative, if any, as set forth in SCHEDULE 1;
1.2.3 Agrees to undertake patronage responsibilities, which may be prescribed by these Bylaws, by the member agreement (“Member Agreement”), and by policies promulgated by the Board, or by other member agreements executed in the ordinary course of business;
1.2.4 Agrees to be accountable for engaging in recruiting for and/or managing job order accounts;
1.2.5 Agrees to add their individual purpose statements to the collective purpose of the Cooperative;
1.2.6 Agrees to participate in Cooperative governance functions and responsibilities, as required or authorized by these Bylaws and the Board;
1.2.7 Agrees to maintain good standing as a Member at all times;
1.2.8 Agrees to execute such instruments and agreements as may reasonably be necessary or advisable for the Cooperative to carry out its lawful purpose(s);
1.2.9 Meets all other uniform conditions and qualification requirements as may be prescribed from time-to-time by the Board and stipulated in the Member Agreement;
1.2.10 Agrees to at all times abide by the Articles, these Bylaws, the Member Agreement, the terms of use, if any, the Code of Ethics adopted by the Board, and any uniform rules and policies established and adopted from time to time by the Members or the Board; and
1.2.11 Agrees to the patronage distributions as set out in Section 5.3.6.
1.3 Admission to Membership as a General Member.
1.3.1 Upon remittance of payment for the Cooperative’s membership fee in immediately available funds, or other financial or nonfinancial commitment, and execution of such agreements as the Board may require, the Board will vote to admit to membership any applicant who:
1.3.1.1 applies for admission for the purpose of participating in the activities of the Cooperative, through a procedure established by the Board;
1.3.1.2 meets all the requirements for application and membership under these Bylaws, the Articles, the laws of the State of Colorado, and policies established by the Board from time to time;
1.3.1.3 acquires at least one (1) membership unit (collectively “Membership Unit(s)” or “Unit(s)”), as applicable, in the Cooperative;
1.3.1.4 agrees to pay and remain current on fees and dues to the Cooperative, if any, as prescribed by the Board from time to time (“Member Fees”) and indicated in Schedule 1;
1.3.1.5 and executes the corresponding membership agreement or such other agreement as the Board may require.
1.3.2 Representation of Certain Members. A Member must be represented by an individual, associate, officer, manager, or member of the Member-entity, who has been duly authorized by the Member in a writing delivered to the Board, in a form acceptable to the Board.
1.3.3 Methods of acceptance. Acceptance or refusal of membership application by the Board may be done by any legal means, including via smart contracts, protocols, algorithms, or any electronic or automatized means. The Board retains the right to waive the requirements of Section 1.3 above. An applicant shall be considered a Member effective upon acceptance of their application, payment for the membership interest in the manner prescribed by the Board, and full execution of such agreements as the Board may require.
2. MEETINGS OF MEMBERS
2.1. Meetings of Members. Meetings of Members of the Cooperative in accordance with this ARTICLE II may take place in person, by telephone conference, by internet conference, by video conference, Discord, or by any other electronic or telecommunications means by which the Members can effectively communicate, following the notice procedures prescribed in these Bylaws.
2.2. Regular Annual Membership Meeting. A regular annual membership meeting of all Members shall be held annually on a date and at such time and place in the area served by the Cooperative as may be determined by the Board and specified in the proper notice of the meeting. At all regular meetings of Members, all lawful business may be brought before the meeting regardless of whether stated in the notice of the meeting; except those amendments to the Articles or these Bylaws or other action required to be stated in the notice of the meeting shall not be subject to action unless notice thereof is stated in the notice of the meeting. The Board shall prepare and post a list of members eligible to vote at that meeting (“Membership List”), during a regular membership meeting.
2.3. Special Membership Meetings. Special meetings of the Members of the Cooperative (“Special Membership Meeting”) may be called at any time by order of the Board, by the Members, by such officer(s) as may be designated in these Bylaws, or upon a written petition of at least fifteen percent (15%) of all Members, such petition delivered to the Board of the Cooperative stating the specific business to be brought before the meeting and shall state the time, date and place of the meeting. The petition shall specify a date for such Special Membership Meeting that is no less than ten (10) days and no more than sixty (60) days from the date of the petition. The place stated in the petition shall be a place reasonably convenient for the general membership. At all special meetings of the Members of the Cooperative, business brought before the meeting shall be limited to the purpose stated in the notice. The Board shall post the Membership List during a special membership meeting. The Board may, but is not required to, adopt a policy providing for the format of the petition mentioned in this Section.
2.4. Notice of Meetings. Written notice of every regular and special meetings of the Members shall be prepared and sent virtually to the last known email address of each Member, and/or the Cooperative’s Coda, Discord channel, or other platform approved by the Cooperative where the Members communicate, not less than ten (10) days before the meeting. The notice shall state the time and place, the business to come before the meeting, and which Membership classes shall be eligible to vote at such meeting. No business shall be transacted at special meetings other than that referred to in the written notice.
2.5. Waiver of Notice. When any notice is required to be given to any Member of the Cooperative by law or under the provisions of the Articles or these Bylaws, a waiver thereof shall be equivalent to the delivery of proper notice, provided such waiver is in writing signed, in any form acceptable by the Board including electronically, by the Member entitled to the notice, whether before, at, or after the time stated in the notice.
2.6. Waiver by Attendance. By attending a meeting, a Member: (1) waives objection to lack of notice or defective notice of the meeting unless the Member, at the beginning of the meeting, objects to the holding of the meeting or the transacting of business at the meeting; and (2) waives objection to consideration at the meeting of a particular matter not within the purpose or purposes described in the meeting notice unless the Member objects to considering the matter when it is presented. “Attendance” shall include attendance in person at any meeting, participating in a telephonic meeting, or participation by signing into a tele-conference or other form of internet on-line meeting format as prescribed by the Board for that particular meeting, including through virtual reality.
2.7. Quorum.
2.7.1. Except for transactions of business specifically requiring a different quorum by law, the following shall constitute a quorum for the transaction of business at any meeting of the Members:
2.7.1.1. The presence of the lesser of thirty (30) Patron Members or ten percent (10%) of the Patron Members, present and voting by means of an online polling tool with cryptographic signature capabilities (e.g., Snapshot, Vocdoni, or another tool as selected by the Board), which shall be considered for all legal purposes attendance in person.
2.7.1.2. In the event a quorum is not present or is lost during the meeting, the meeting may be recessed or adjourned from time to time without further notice by a majority of those present until a quorum is obtained. Any business may be transacted at the resumption of the recessed meeting that might have been transacted at the originally called meeting.
2.8. Voting at Meetings. All Members with voting rights are entitled to vote on all matters brought before the Membership. All matters put to a vote of the entire membership shall require an affirmative vote of a simple majority of all Members.
2.8.1. Proxy and Cumulative Voting. Voting by proxy is not permitted. Cumulative voting is prohibited at any and all meetings of the Cooperative.
2.8.2. Voting by Electronic Means. All voting procedures may take place electronically, in the form established by a policy of the Board, or a policy of the Members, which has been confirmed by the Board. Voting shall remain open for at least the minimum period of notice required in Section 2.4 above, and in any case, no less than 36 hours.
2.9. Order of Business. All Membership meetings of the Cooperative shall be presided upon in accordance with these Bylaws. The Board shall designate the presiding officer of the meeting. The officer presiding over Membership meetings shall have the discretion to adopt and enforce formal governance procedures and rules. The following order of business shall be used as a guide insofar as is applicable and desirable:
1) Determination of quorum
2) Proof of due notice of meeting
3) Reading and disposition of minutes
4) Financial report
5) Report of the Board
6) Reports of Committees
7) Nominations for vacancies on the Board
8) Elections
9) Unfinished business
10) New business
11) Adjournment
2.10. Action without a Meeting. Any action required or permitted to be taken at a meeting of the Members, as set forth in these Bylaws, may be taken without a meeting if notice of the proposed action is given and if the action receives a sufficient number of electronic or written votes before the voting period closes. The failure of any Member to receive such notice of the Member vote shall not invalidate any action that may be taken by such vote. Any actions to be taken without a meeting may be taken via any digital or electronic platforms adopted by the Cooperative, such as Colony, Discord, Coda, Vocdoni, Snapshot, Telegram (“Platforms”) and on-chain votes shall be sufficient for a valid record of such vote.
2.11. Matters Requiring Patron Member Approval. In addition to those matters for which Member approval is required as a matter of custom or law, and without limiting the generality of these Bylaws, the following matters are so integral to the ethos and operations of the Cooperative that they shall require the approval of the Members:
2.11.1. Adoption of ethics code and amendments or respective changes;
2.11.2. Changes to the Cooperative’s values;
2.11.3. Election of Stewards; and
2.11.4. Matters as determined by the Board or by petition of the Members.
STEWARDS; OFFICERS
3.1 Number and Qualifications of Stewards.
3.1.1 At all times the Board must consist of no fewer than three (3) and no more than nine (9) natural persons, who are each at least eighteen (18) years of age, save in the case where the Cooperative has fewer than 3 (three) Members, then the number of Stewards should equal the number of Members, but never fewer than one Steward, and at least a majority of which are elected by Patron Members. Officers may be Stewards of the Cooperative and non-Member Stewards, as required or authorized by law.
3.1.2 The initial Board (“Initial Board”, and each member of the Initial Board an “Initial Steward”) shall serve until the annual meeting of the Members in 2026 (altogether “Initial Term”), unless earlier as determined by the Board in its sole discretion with a unanimous vote.
3.1.3 The Board may vote to increase the size of the Board, with Board Members who must be Members.
3.1.4 Initial Stewards who are representatives of Members shall be entitled to serve the Initial Term and each shall be eligible for re-election to serve on succeeding boards, on such terms as are prescribed herein. Should the Initial Board determine that they need to increase the size of the Initial Board during the Initial Term, the Initial Board may increase the number of Stewards on the Board and appoint such new Stewards by a simple majority vote of all then-current Stewards.
3.2 Term. After the Initial Term, Stewards shall be elected for a term of two (2) years, except that the terms of Stewards shall be staggered so that the terms of no more than a minority of then existing steward seats shall expire in any one year and the initial term of a Stewards elected to fill a vacancy shall be only for the remaining period of the unexpired term. Stewards may be re-elected for an unlimited number of consecutive terms.
3.3 Election of Stewards. After the Initial Term, each board seat (collectively the “Board Seats”) shall be filled as set out in this Section 3.5. The Board shall determine whether elections will be held in person, or by email, electronic ballots, or by other electronic, virtual, or digital means. The Board shall adopt a policy determining the acceptable methods of nominations for candidates to a Board Seat, which shall be representative of the Membership. Newly elected Stewards shall become members of the Board at the first meeting of the Board following their election. To be elected, a nominee for a Board Seat shall receive such number of votes, as follows
3.4 Election of Officers. The Board shall hold a meeting within thirty (30) days after the adjournment of each annual Membership meeting for the purpose of organizing the Board. Nominations for the election of officers shall be made by Stewards from the floor at the Steward's meeting where the officers are to be elected. They shall elect an officer responsible for keeping records, as required by applicable law, and may elect any other officer as determined in the sole discretion of the Board. Each officer shall hold office until the election and qualification of a successor unless earlier removed by death, resignation, or in accordance with these Bylaws. The Board may create, alter, and abolish such additional offices and its attendant duties at its discretion and may appoint persons to serve in such offices at the pleasure of the Board.
3.5 Removal of Stewards.
3.5.1 At a meeting called expressly for that purpose, as well as any other proper purpose, a Steward may be removed by the Board or the Members in the manner provided in this Section.
3.5.2 Removal of Initial Stewards. Prior to the annual membership meeting of 2025, the Initial Stewards may only be removed by unanimous vote of the Board, under Section 3.5.2, or eighty percent (80%) vote of the Patron Members (not included the affected Steward’s vote), under Section 3.5.5, if the Steward consistently fails to uphold the values of the Cooperative.
3.5.3 Removal of a Steward by the Board. The Board may remove one or more Stewards with or without cause. Causes for removal are determined by a simple majority of all Stewards not subject to removal. Causes for removal of a Steward by the Board include, but are not limited to the following:
3.5.3.1 a Steward does not meet the qualifications for Board membership set forth in these Bylaws.
3.5.3.2 a Steward does not comply with the Articles or these Bylaws, specifically including the General Standard of Conduct set out in Section 3.16.
3.5.3.3 a Steward fails to attend three (3) consecutive regular Board meetings without cause.
3.5.4 Petition to Remove a Steward by Members. Members may remove one or more Stewards other than the Initial Stewards with or without cause. A petition executed by cryptographic means (such as Snapshot or Vocdoni), which may be submitted by any electronic means accepted by the Board, signed by at least a simple majority vote of Members shall initiate a vote to remove such Steward, in accordance with this Section. No petition shall seek removal of more than one (1) Steward.
3.5.5 Vote to Remove a Steward by Members. If removal of an Initial Steward is by the Members, it requires eighty percent (80%) super-majority of all current Members, not taking into account the Steward subject to removal. If removal of a Steward other than an Initial Steward is by the Members, then by an affirmative vote of a two-thirds (67%) super-majority of Members present and voting shall be required.
3.5.6 Any Steward subject to a removal petition under any provisions of this Section shall be promptly informed in writing by the Board and shall have the opportunity, in person (including virtually, by electronic means) and by counsel, to be heard and present evidence at the meeting called for the vote. The Members seeking a Steward's removal shall have the same privilege.
3.5.7 The Board shall have the power to remove any Officer of the Cooperative with or without cause, by a simple majority vote of the Stewards not serving as the Officer subject to removal.
3.6Vacancies. Whenever a vacancy occurs in the Board, except from the expiration of a term of office, the remaining Stewards shall, as soon as practicable, appoint a replacement to fill the vacancy until the expiration of the term of the vacant position.
3.7 Referendum on Policy Matter. Upon demand of at least twenty-five percent (25%) of the entire Board, made immediately at the same meeting at which the original motion was passed and so recorded, any matter of policy that has been approved or passed by the Board must be referred to the Members for ratification at the next regular or special meeting of the Members, and a special meeting may be called for that purpose.
3.8 Board Meetings. Regular meetings shall be held by the Board at least once per fiscal year or more frequently, at such place (including online) and time, and by any means, as the Board may determine.
3.9 Special Meetings. Special meetings of the Board shall be held whenever called by an officer or by a simple majority of Stewards at a time and place specified in the notice (including online meetings). Any and all business may be transacted at any special meeting. A meeting of the Board may be held at any time or place with or without notice upon the consent of all the Stewards.
3.10 Notice of Board Meetings. Prior written notice of each meeting of the Board shall be delivered electronically to each Steward at least ten (10) calendar days for regular meetings and at least three (3) business days for any special meetings, provided, that the Board may establish regular meeting places, dates, and times for which the aforementioned notice need not be given. Notice may be waived by any or all of the Stewards, and appearance at a meeting shall constitute a waiver of notice thereof, except if a Steward attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting has not been lawfully called or convened.
3.11 Electronic Meetings. One or more Stewards or any committee designated by the Board may participate in a meeting of the Board or committee by means of conference telephone, or online platforms, or similar communications medium by which all persons participating in the meeting can communicate effectively, including but not limited to the Platforms. If the applicable law requires participation in person, then electronic or virtual participation shall constitute presence in person at the meeting, unless the law expressly prohibits it.
3.12 Quorum; Voting. A two-thirds (67%) super-majority of all the Stewards shall constitute a quorum at any meeting of the Board. In the event a quorum is lost during a meeting, however, the meeting may proceed. Each Steward shall be entitled to one (1) vote on any matter coming before the Board, except, no Steward shall vote on any matter in which she/he/they has a financial self-interest that would compromise their ability to act in the best interests of the Cooperative unless such conflict is waived by the other Stewards. A Steward who has a financial self-interest may, however, vote on such a matter if the remaining disinterested Stewards ratify the vote on such matter and deem the decision to be in the best interest of the Cooperative. The Board shall strive to make proposals and decisions based on consent and may adopt mechanisms to address any failure to obtain consent. However, when consent cannot reasonably be obtained, then the provisions of these Bylaws shall apply and any matter upon which the Board may vote shall require a super-majority affirmative vote of those present and voting to pass, unless otherwise specified for the matter being voted on. The CEO, and if not hired, then the chair or president of the Board, shall cast a tie-breaking vote, unless the Board adopts a different policy or as otherwise required by law.
3.13 Assent to Action. A Steward is considered to have assented to an action of the Board unless:
3.13.1 The Steward votes against it or abstains and causes the abstention to be recorded in the minutes of the meeting;
3.13.2 The Steward objects at the beginning of the meeting and does not later vote for it;
3.13.3 The Steward has his/her/their dissent recorded in the minutes;
3.13.4 The Steward does not attend the meeting at which the vote is taken; or
3.13.5 The Steward gives notice of his/her/their objection in writing to the Board chair within twenty-four (24) hours after the meeting.
3.14 Action without a Meeting. Actions of the Board may be taken without a meeting if the action is agreed to by all Stewards and is evidenced by one or more written consents signed, or electronically submitted via email, or the Platforms, by all Stewards and filed with the corporate records reflecting the action taken.
3.15 Remuneration and Expense Reimbursement. The Board may set the remuneration of Stewards in its sole and absolute discretion. Stewards may be reimbursed for actual and reasonable out of pocket expenses incurred in service to the Cooperative. Reasonable procedures for the expense reimbursement of the Stewards members of the Board shall be established by the Board. Notwithstanding the foregoing, Stewards may be eligible for compensation arising from or as provided for in a Membership Agreement, employment agreement, or any other agreement governing the terms and conditions of a membership interest in the Cooperative.
3.16 General Standards of Conduct for Stewards and Officers. Each Steward shall discharge their duties as a Steward, including duties as a member of a committee, and each officer with discretionary authority shall discharge officer duties under that authority in good faith and proper purpose in accordance with Article IV of the Articles.
DUTIES OF STEWARDS AND MANAGEMENT
4.1 Management of Business. The Board shall have general supervision and control of the business and the affairs of the Cooperative and shall make all rules and regulations not inconsistent with law, the Articles or with these Bylaws for the management of the business and the guidance of the Members, employees, and agents of the Cooperative. The Board will adopt an accounting system which shall be adequate to the requirements of the business, and it shall be the duty of the Stewards to require proper records to be kept of all business transactions.
4.2 Employment of Chief Executive Officer and Others. The Board may employ a Chief Executive Officer (“Chief Executive Officer” or “CEO”) who shall be a natural person, define the Chief Executive Officer’s duties, compensation, and negotiate employment contracts. The Board shall authorize the employment of such auditors, agents, and counsel as it from time to time deems necessary or advisable in the interest of the Cooperative and prescribe their duties. The Board shall have general oversight and supervisory responsibility for the Chief Executive Officer’s performance and shall have the ultimate authority to hire, fire, discipline or remove the Chief Executive Officer, subject to the terms of any agreements between the Chief Executive Officer and the Cooperative or the Board.
4.3 Management. Under the direction of the Board, managers shall have general charge of the ordinary and usual business operations of the Cooperative. The managers shall endeavor to conduct the business in such a manner that the Members will receive just and fair treatment. The Board may authorize the hiring of one or more non-natural persons to serve as manager of the Cooperative.
4.4 Reports of Business Activity and Finances. The Board shall present at each regular meeting of the Members and, if appropriate, at special meetings of the Members a detailed statement or report of the business of the preceding year. The statements shall show the financial condition of the cooperative at the end of the fiscal year and shall be in a form as shall fully exhibit to the Members a complete illustration of the assets and liabilities of the Cooperative, of the cash on hand, inventory, and indebtedness and all other facts and figures pertinent to a complete understanding of the cooperative's financial position for the period.
4.5 Review of Financials. The Board shall have the Cooperative’s financial statements reviewed by a qualified professional at least at the end of each fiscal year and at other times as it deems necessary.
4.6 Depository. The Board shall have the power to select one or more banks to act as depositories 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 or other types of electronic payments - and the person or persons by whom checks shall be signed, with the power to change banks and the person or persons signing checks and the form thereof at will.
4.7 Agreements with Members. The Board shall have the power to carry out all agreements of the Cooperative with its Members in every way advantageous to the Cooperative, representing the Members collectively.
4.8 Nepotism. No immediate relative of any Steward shall be regularly employed by the Cooperative unless approved in writing by a vote of a simple majority of disinterested Stewards. Immediate relative is defined as father, mother, brother, sister, spouse, common law domestic partner, son, daughter, son-in-law, or daughter-in-law.
CAPITAL
5.1 Notice of Records. All allocated shares of the Cooperative’s Net Margins (as defined in Section 5.3.3) shall be deemed capital contributions in the Cooperative without any further action by the Cooperative other than the giving to the appropriate recipient a written notice of allocation (as defined in 26 U.S.C. 1388). The Cooperative shall keep appropriate books and records showing the capital contribution by each Member in each year. The Cooperative may, but shall not be required to, issue such additional evidence of capital contribution in the Cooperative as the Board may prescribe.
5.2 Computation of Net Margins. The Cooperative's Net Margins, calculated upon the basis of each fiscal year, shall be computed as follows:
5.2.1 Gross Receipts. All proceeds resulting from member dues, income from non-members, revenue resulting from the ordinary course of the Cooperative’s operating activities, plus all sums received from all other sources, except loans, grants, and contributions to this Cooperative and investments in its capital, shall be deemed to be “Gross Receipts"
5.2.2 Deductions from Gross Receipts. This Cooperative shall deduct from the Gross Receipts the sum of the following items:
5.2.2.1 Lawful Exclusions and Deductions. All costs and expenses and other charges which are lawfully excludable or deductible from this Cooperative's Gross Receipts for the purpose of determining the amount of any net margins of this Cooperative.
5.2.2.2 Reserves. The Board may establish amounts for reasonable and necessary reserves for bad debts, contingent losses, working capital, debt retirement, and membership equity retirement (“Reserves”). Unless allocated among the Members entitled to share in allocations of the Cooperative's Net Margins, (a) the Cooperative shall include the amounts credited to the Reserves in computing its taxable income, (b) the tax liability thereon shall be deducted from net margins, and (c) no member or other person entitled to share in the allocation of the Cooperative's Net Margins shall have any right or interest at any time in or to the Reserves of the Cooperative except upon dissolution when the entire Reserve funds of the Cooperative shall be distributed in accordance with the law and these Bylaws.
5.2.2.3 Contributions to Surplus. The Net Margins, less any tax liability of the Cooperative accruing therefrom, attributable to business done for person or entities who are not Members or otherwise qualified to share in allocations of net margins or otherwise derived from non-patronage related sources (“Non-Member Patronage”) may be retained as property of the Cooperative in a surplus fund to be used as additional working capital or for such other purposes as may be determined by the Board. This surplus fund shall be distributed only upon dissolution of the Cooperative and no Member shall at any time have any right or interest in or to the surplus fund, except on dissolution.
5.3.3.Cooperative's Net Margins. The balance of said Gross Receipts which remains after the foregoing deductions shall be deemed to be the “Cooperative's Net Margins” or “Net Margins” which term shall encompass net margins of Patron Members entitled to share in the allocation of Net Margins of the Cooperative. A new Member's allocation of the Cooperative's Net Margins for the year in which it became a Member shall be based on the relationship of the Member's Patronage Activity (as defined in Section 5.3.5.4) after it became a Member to the total Patronage Activity of all Patron Members for that year. Net Margins shall be allocated on equal footing as determined by the Board.
5.3.4. Net Losses. If the Cooperative sustains a loss in any manner for any period resulting from, among other things, operations, casualty, revaluation of assets or otherwise with respect to the Cooperative as a whole or from a particular segment of the Cooperative's operations, the Board shall determine the manner in which the loss shall be taken into account for accounting, taxation or any other purposes; provided that in making its determination the Board shall take into account all applicable facts and circumstances and account for the loss on a basis which is fair and equitable to all Members in the Cooperative. In making its determination the Board may authorize actions including, but not limited to:
5.3.4.1.1. allocating the loss on an equitable basis to some or all of the Members of the Cooperative by debiting capital account balances, by charging Members directly, or by charging Members using non-qualified notices of allocation;
5.3.4.1.2. carrying the loss back or forward to offset earnings of the Cooperative or particular segments of its operations in prior or future years;
5.3.4.1.3. canceling or debiting any or all outstanding capital account balances shown on the books of the Cooperative;
5.3.4.1.4. charging the loss against appropriate reserve or surplus accounts; or
5.3.4.1.5. allowing Members to purchase additional Preferred Units.
5.3.5. The Board may, but shall not be required to, submit a recommendation as to apportionment and allocation of any loss to a vote of the Members at a meeting of the Members duly called and properly held. A vote of a simple majority of the Members present or voting by mail or by email at such a meeting shall be binding upon all the Members entitled to share in allocations of the Cooperative's net margins. To the maximum extent provided by law, no Member shall be liable for the debts of the Cooperative in an amount exceeding its Membership interest and any equity capital invested in the Cooperative.
5.3.6. Patronage Returns.
5.3.6.1. The total Net Margins shall be received by the Cooperative, belong to, and be held by the Cooperative for all its Members qualified to share in allocations of the Cooperative's Net Margins and will be allocated to such Members at least at the close of each fiscal year on a patronage basis, or as periodically as the Board shall determine, and shall be distributed in accordance with this Section generally.
5.3.6.2. Each Member’s respective allocated share of the Cooperative’s Net Margins may be computed as determined by the Board upon the basis of each Member's respective Patronage Activity (as defined in Section 5.3.6.4) and the Cooperative’s Net Margins resulting from the operations, the various departments, or segments of operations of this Cooperative.
5.3.6.3. When making allocations through qualified written notices of allocation, this Cooperative shall within eight and one-half (8-1/2) months after the close of its fiscal year notify each Member in the form of a qualified written notice of allocation (as defined in 26 U.S.C. 1388) of said Member's total allocation of Cooperative's Net Margins including the cash portion as well as the amount credited to said Member's capital account. Each recipient shall treat said Member's total allocation in the manner prescribed by Section 1.10 of these Bylaws and any applicable tax laws, regulations, and private letter rulings.
5.3.6.4. “Patronage Activity” shall mean the aggregate value of the Cooperative’s goods and services purchased from or contributed by each Member during the applicable fiscal period. The Board shall have the authority to develop, review, and revise the methodology by which to calculate the Cooperative’s aggregate Patronage Activity and each Member’s respective allocable share of Patronage Activity. Each Member’s allocable share of the Cooperative’s Net Margin and Net Losses shall be made according to each Member’s relative share of the aggregate Patronage Activity.
5.3.6.4.1. Without limiting the Board’s and the Membership’s authority to expand or limit the definition of Patronage Activity for each membership class, the Board may adopt policies designating activities which shall be considered Patronage Activities which entitle the Patron Members to rewards, distributions, benefits, rebates, or allocations.
5.3.6.5. “Profit/Loss Interest” means the percentage interest of each class of Patron Members in the allocable Net Margins and Net Losses of the Cooperative, which shall be allocated as determined by the Board. Losses will be allocated in any manner the Board determines to be fair and equitable, considering the circumstances leading to the loss, subject to any provisions of investor agreements with the Cooperative.
5.3.7. Qualified and Nonqualified Allocations. Allocations of the Cooperative's Net Margins in accordance with this ARTICLE V may be made in the form of qualified written notices of allocation or non qualified written notices of allocation as determined by the Board.
5.3.8. Qualified Notice of Allocation, Payment and Reinvestment. If the Cooperative pays any portion of an allocation of the Cooperative's Net Margins by a qualified written notice of allocation, the Board shall authorize at such time as it may determine, but in no event later than the fifteenth (15th) day of the ninth (9th) month following the end of the Cooperative's fiscal year, the Cooperative to pay in cash to each Member qualified to share in allocations of the Cooperative's Net Margins an amount as determined by the Board of at least twenty percent (20%) of the Member's allocated share of net margins and the balance of its allocated share of net margins shall be credited to the appropriate capital account of the Member on the books and records of the Cooperative. The credit shall be deemed a payment to the Member and a reinvestment by the Member in the equity capital of the Cooperative.
5.3.9. Alternative method of payment. In addition to, or as a replacement for traditional methods of payment and redemption of Patronage Returns, the Cooperative may use digital assets, fungible or non-fungible, as determined by the Board’s policies, for such awards, provided that the Board has declared and approved such allocations, which may be redeemed by the Cooperative in cash, cryptocurrency, goods, or services, or any combination thereof, as determined by policy of the Board. The Board may adopt policies for the use of digital tokens by Members providing for, including but not limited to, any limitations or restrictions on the use and transfer of the digital token as a measure of Patronage Activity, and to attribute increased voting power in the Cooperative, if applicable.
5.3.10. Patronage Points. Patronage Points are digital tokens that may be minted or adopted by the Cooperative with the intent to track, measure, or otherwise facilitate accounting for the Member’s Patronage Activities. Patronage Points are non-transferrable and have no intrinsic value outside of the Cooperative. If a Member transfers or attempts to transfer their Patronage Point(s) to a Business other than a member of the Cooperative, the Cooperative shall not be obligated to honor it in any way or otherwise redeem such tokens.
5.4. Lien. To secure the payment of all indebtedness of any Member to this Cooperative, this Cooperative shall have a perfected security interest and a first lien on the capital investments, net margins, and other property rights and interests, if any, in the Cooperative of such Member. As one means of enforcing its lien, the Cooperative shall be entitled to offset at any time, at the sole discretion of the Board, any debt of a Member to the Cooperative with a corresponding amount of the Member's capital investments, net margins and other property rights and interests, if any, in the Cooperative. Each Member by joining and patronizing the Cooperative shall be deemed to have agreed to sign any instrument necessary to evidence and perfect the lien and security interest provided for in this Section.
5.5. Equity Redemption.
5.5.3. Equity Interest.
5.5.3.1. Patron Members shall be entitled to repayment of their original purchase price, if any is paid, for their membership in the Cooperative. If any allocations or dividends are declared but un-distributed to Patron Members, then the Member’s “Equity Interest” shall be the original purchase price plus the allocated but un-distributed patronage distributions or dividends of those Members which have been set in the Member’s capital account, less any declared and allocated losses or other legally required adjustments.
5.5.4. No acquisition, recall, distribution, or redemption of equity capital (or capital account) in the Cooperative shall be made, required, or effected, if the result of it would be to render the Cooperative unable to pay its debts as they become due in the usual course of business or causes the remaining assets of the Cooperative to be less than its liabilities plus the amount necessary to satisfy the interests of the holders of securities or other equity capital preferential to those receiving the distribution if the Cooperative were to be dissolved at the time of the distribution. Provided that the financial condition of the Cooperative will not be impaired, the Board, in its sole discretion and subject to the approval of the Cooperative's secured creditors having the right to approve equity redemptions or retirements, and the application of the Uniform Limited Cooperative Association Act, may, but shall not be obligated to, authorize the redemption of any equity capital in the Cooperative at any time when a Member owning equity capital in the Cooperative shall (1) die, liquidate its business affairs and intend to dissolve, (2) withdraw or be terminated from the Cooperative as provided in these Bylaws, or (3) for other reasons as provided in an equity retirement policy adopted by the Board. Each class of equity capital and all entities in each of the above classifications shall be treated similarly with their respective class or classification. The Board may, in its discretion, issue to the Member, interest-bearing certificates of indebtedness in substitution and exchange for the equity capital of a Member, which may be subject to redemption.
5.5.5. If (i) payments to entities entitled to repayment under an equity retirement policy developed by the Board under the immediately preceding paragraph (a) shall have been made or adequate provision made therefor, (ii) the Cooperative has obtained the approval of the Cooperative's secured creditors, and (iii) the Board determined the total amount of Members' investments in equity capital to exceed the amount reasonably needed by the Cooperative, the Board may at its discretion retire a percentage of the equity capital in the Cooperative which the Board has determined is not needed. The percentage shall be paid to every holder of equity capital equitably among all on the same percentage basis of their total investments in equity capital regardless of when such investment was made, except that no equity capital shall be repaid under this plan until said Member shall have invested at least $20 in equity capital.
5.5.6. When a Member separates from the Cooperative, whether through voluntary withdrawal, expulsion or death, or other means of membership termination, the Cooperative shall redeem the Member's capital account pursuant to policies adopted by the Board, which policies may be revised from time to time in the sole discretion of the Board.
5.5.7. No Member entitled to share in the allocation of the Cooperative's Net Margins shall have any right or interest at any time in or to any reserve fund, surplus accounts or equity capital allocated in the form of non-qualified written notices of allocation, except upon dissolution of the Cooperative when any such reserve fund, surplus account, or equity capital shall be distributed in accordance with these Bylaws, as otherwise provided by law or as the Stewards may otherwise determine.
5.5.8. In connection with or in addition to the foregoing, the Board may establish policies and practices for the redemption of equity capital based upon the recognition of difference in the character and liquidity of assets held by the Cooperative and the resulting impact on availability of funds for equity redemption.
5.6. Commingling of Capital; No Interest. Investments in equity capital need not be segregated from, and may be invested in, or commingled with, any other assets of the Cooperative. Unless provided otherwise in these Bylaws, no dividend, interest, or any other income shall be declared or paid on account of any membership interest, capital units or other equity capital in the Cooperative owned by a Member.
DISSOLUTION; LIQUIDATION; COOPERATIVE SALE; WINDING UP
Upon the dissolution, liquidation, sale of the Cooperative, or sale of all or substantially all of the Cooperative’s assets, all debts and liabilities of the Cooperative shall first be paid according to their respective priorities, as defined by law or by agreement. Any property or proceeds remaining after discharging the debts and liabilities of the Cooperative shall be distributed to the Members in the Cooperative's equity capital in accordance with the following priorities to the extent funds are available for such purpose, payments within each priority to be made on a pro-rata, pari passu basis without regard to time of investment:
6.1. First, to the General Members, to the extent of any declared but un-distributed patronage dividends or distributions; and then
6.2. Then, to all Patron Members, to the extent of any declared but un-distributed patronage dividends or distributions.
If, in winding up of the affairs of the Cooperative, certain assets are not liquid, have no market value, creditors having claim on these assets have been satisfied and the trustees in liquidation or other persons charged with winding up the Cooperative's affairs have determined that the costs involved in delaying the winding up of the affairs of the Cooperative exceed the potential benefits, the trustees are authorized to assign the assets or any future proceeds from assets that are not liquid to any local or statewide nonprofit organization that has as one of its principal mission of the Cooperative, as determined in their reasonable discretion. The trustees shall under no circumstances be liable to any other member or equity holder in the Cooperative for any claim on any assets assigned by the trustees pursuant to the authority of this ARTICLE VI.
UNCLAIMED MONEY
In the event of any attempted distribution of or demand for funds held by the Cooperative in a Member’s Account or owed to the Member by the Cooperative, (i) for which the Member or another person entitled to payment (ii) has made a demand for payment against the Cooperative (a “Money Claim”), (iii) the Cooperative has attempted to pay, paid, or is paying generally Money Claims arising under similar circumstances, but (iv) payment of the Money Claim cannot be made because the Cooperative cannot locate the person entitled to payment, then the following must be observed:
If the Money Claim is not made in writing within a period of three (3) years after giving written notice, it will be removed as a liability on the books of the Cooperative and the Money Claim will be extinguished. However, the Money Claim may only be removed and extinguished if the Cooperative has sent a written notice of eligibility to the last address on record, physical or electronic, for payment to the person appearing on the Cooperative’s records as entitled to payment, except that the Cooperative shall not be liable to any Member who has not provided or refused to provide sufficient information to allow for direct notifications to the Member or the Member’s representative. Any and all amounts recovered by the Cooperative pursuant to this ARTICLE VII, minus the amount of any taxes payable thereon, will be placed in a reserve or surplus account established by the Cooperative.
FISCAL YEAR
The fiscal year of this Cooperative shall commence on January 1 each year and shall end on the following December 31.
MERGER, SALE, CONSOLIDATION, OREQUITY CAPITAL EXCHANGE
9.1 Board and Member Approval of Merger, Sale, Dissolution, Consolidation, or Equity Capital Exchange. Except as otherwise provided in Section 9.2, if the Cooperative is a party to a plan of merger, sale of all or substantially all of the Cooperative’s assets, consolidation, dissolution, or unit or equity capital exchange, such plan shall first be approved by a seventy-five percent vote (75%) super majority of all the Stewards on the Board, and then approved by a majority of the Patron Members, whether present and voting in person (including virtually, by electronic means) or voting by mail, email, or other permitted electronic means. The provisions of ARTICLE VI shall apply to any proceeds which may result from such merger, sale of all or substantially all of the Cooperative’s assets, consolidation, dissolution, or share or equity capital exchange.
9.2 Merger of Cooperative Subsidiary. The Board may approve, in its sole discretion, by an affirmative two-thirds (67%) vote of the Members, and without further membership approval or consent, a plan of merger of a subsidiary of the Cooperative into the Cooperative if the Cooperative owns one hundred percent (100%) of the voting units, memberships, or interests in the subsidiary and the Cooperative has the right to vote on behalf of the subsidiary; except, that if, as a result of the merger, the voting units or shares, memberships or other interests of the members of the Cooperative would be materially altered, then the Members shall have the right to vote on the plan of merger in a manner consistent with the provisions of Section 9.1 above.
DISTRIBUTION OF BYLAWS
After adoption of these Bylaws or an amendment, a copy of these Bylaws or the amendment, as the case may be, shall be provided or made available to each Member and other person qualified to share in the Cooperative's Net Margins and to each person qualified to share in the Cooperative's Net Margins as shown on the books of record of the Cooperative.
RIGHT TO INFORMATION; CONFIDENTIALITY
11.1 The Cooperative shall maintain in record available at its principal office such information as is required by law. The Cooperative may maintain additional information in record but shall not be required to make the same available unless required by law. The Cooperative strives to balance the privacy interest of its Members with the right to access information by the same. The Cooperative shall entertain requests for information by Members and former Members in accordance with applicable law. A Member or former Member making a valid request for information under this section and subject to applicable law, shall be solely responsible for paying or reimbursing the Cooperative for the reasonable costs associated with copying documents, including and limited to the cost of equipment, labor and materials.
11.2 Without limiting the generality of the foregoing, Members and former Members, shall at all times maintain in strict confidence and promise to not disclose to any entity not otherwise entitled to receive such information any and all information received by or through the Cooperative, pertaining to the records of the Cooperative, its Members, and the operations, activities or transactions of the same. Each Member and former Member, whether receiving information consequent to a valid request for information under this section, or through its activities with or through the Cooperative, shall further ensure that any information transmitted or communicated to an attorney or other agent of such Member, shall be kept in confidence to the same degree and extent as the Member or former Member is or would be bound by this section. All membership information, fee schedules, financial information, correspondence and all other Cooperative documents and information furnished to the Member by the Cooperative will be kept in strict confidence
NOTICES
Unless specified otherwise, all notices and other communications given or made pursuant to these Bylaws shall be in an electronic form and shall be deemed effectively delivered when sent by confirmed electronic mail if sent during normal business hours of the recipient, and if not so confirmed or when sent by electronic mail not requiring confirmation, then on the next business day. Notices shall be posted on the Cooperative’s Platforms and will be deemed effective for notice purposes the next business day of publication.
DISPUTE RESOLUTION; GOVERNING LAW; VENUE; JURISDICTION; JURY TRIAL WAIVER
The Cooperative may adopt on-chain mechanisms to resolve disputes between the Members and between the Members and the Cooperative, such as, but not limited to, on-chain arbitration services, or a similar method selected by the Board.
In the absence of adoption by the Board or the Membership of an on-chain mechanism, dispute among Members, disputes between Members, or a Member and the Cooperative concerning any matter arising out of the relationship or transactions between Members or the Member and the Cooperative, which cannot be resolved through direct, amicable, frank, open and honest communication, upon request of either party, shall be set for mediation, to be conducted by a single member of the Dispute Resolution Committee, selected by the mutual agreement of the disputing parties. If the parties to a dispute are unable to agree with respect to the selection of a mediator, the Dispute Resolution Committee shall select a mediator, from among the Committee.
As a matter of last resort, if each and all prior attempts at dispute resolution, as required by these Bylaws, fail to resolve the dispute the party aggrieved by the final decision of the Board may within sixty (60) days thereafter bring appropriate action in any court of proper jurisdiction regarding such matter or transaction. These Bylaws shall be governed by and construed in accordance with the laws of the State of Colorado including all matters of construction, validity and performance. Members and the Cooperative agree that any action or proceeding commenced under or with respect to these Bylaws shall be brought only in the district courts of the County of Denver, State of Colorado, and the parties irrevocably consent to the jurisdiction of such courts and waive any right to alter or change venue, including by removal. EACH MEMBER AND THE COOPERATIVE WAIVE ITS RESPECTIVE RIGHTS TO TRIAL BY JURY OF ANY SUIT, CLAIM, CAUSE OF ACTION OR OTHER ACTION TO ENFORCE ANY TERM OR CONDITION OF THESE BYLAWS OR OTHERWISE ARISING OUT OF OR RELATED TO THESE BYLAWS.
