Appendix A.-Proposed The following forms are suggested only and should be carefully checked with the law of the State in which it is proposed to form an association and changed so as to make them conform to the statute under which the cooperative is to be organized. In addition, it should be observed that the forms are general in character and should be adapted or changed so as to best serve the business needs and manner of operation of an association. For example, organization agreements have been employed mainly by large-scale centralized cooperatives and are not ordinarily used in forming local fruit and vegetable associations. Again, in certain cases it may be found that the circumstances and manner of operation are such that an agency form of marketing agreement would be preferable to a purchase and sale form of marketing agreement such as that suggested on page 53, in which the association purchases the fruits and vegetables of its members, and title thereto passes to the association as soon as the same have potential existence. However, in all cases where the agency form of marketing agreement is used, care should be exercised to confer upon the association ample control and dominion over the products to be delivered by its members to enable the association to function effectively. In some instances it may be found practicable not to have a marketing agreement but to include provisions in the bylaws of the association obligating its members to market their products through the association and specifying the terms and conditions under which the products will be marketed and accounted for. In this event each member, when he applies for membership, should specifically agree to the bylaws that are then or may thereafter be in effect. The suggested articles of incorporation, page 60, and the form of bylaws, page 64, provide for the organization of a nonstock association. In some instances it may be deemed advisable to organize an association with capital stock. Appropriate changes should be made in the forms to provide for this. Changes deemed necessary if an association is formed with capital stock are indicated in footnotes to the forms. Particular attention is called to section 2 of article VIII of the bylaws, entitled "Revolving-Fund Certificates," which is designed to provide a means of enabling an association to build up sufficient capital for effective operations and expansion; and when sufficient capital has been built up, to retire the capital contributions of members in former years with capital contributions of the current and active members. In case an association is organized with capital stock, it may be found. desirable to issue certificates of stock instead of revolving-fund certificates, page 76. The following forms have been prepared for associations that do business only with members. Appropriate notes have been inserted for changing the forms if it is desired that an association do business with nonmembers. If an association is to be eligible for exemption from the payment of Federal income taxes, nonmembers must be treated in the same way as members. ORGANIZATION AGREEMENT THE UNDERSIGNED, hereinafter referred to as "Grower" engaged in the production and marketing of fruits and/or vegetables, together with other signers of agreements identical herewith, in order to promote, foster, and encourage the marketing of fruits and/or vegetables cooperatively in either the natural or processed state and to reduce speculation with reference thereto, propose to organize a nonprofit cooperative association without 11 capital stock as hereinafter provided. The Grower agrees for himself, and for the benefit of and for the Association to be organized, and in consideration of the premises, as follows: 1. The Grower will become a member of the Association, a nonprofit association without 12 capital stock, to be organized under the cooperative marketing act of 2. (a) The Association shall be organized with suitable articles of incorporation and bylaws as determined by an organization committee consisting of the following persons: (State name and address of committee members.) (b) If any member or members of this committee shall resign or be unable to act, the remainder of the committee may elect a successor to fill any such vacancy, or the committee may increase its membership if deemed necessary. The said organization committee may appoint an executive committee to conduct the details of its affairs. The said committee, or its executive committee, may prescribe an organization fee to be paid by cach signer hereof and may incur necessary obligations for and on behalf of the committee and the Association to be organized, make necessary expenditures, and take any such action as may be deemed advisable to secure subscribers hereto. 3. The bylaws of the Association shall provide, among other things, that (here enumerate the chief provisions which it is proposed shall be contained in the bylaws). 4. If, on or before 193, the organization committee is of the opinion that sufficient sign-up has been obtained to enable the Association to operate efficiently, the committee shall make such a recommendation to those 11 If an association is to be formed with capital stock "with" should be substituted for "without." 12 If the association is to be formed with capital stock, this should be changed to show the amount and character of the stock subscribed for. who have signed agreements identical with this one by a notice to be published in one or more newspapers of general circulation in the area in which the growers reside. Such notice shall specify a date and place for the holding of a mass meeting of those who have signed this agreement for the purpose of having those signers attending such meeting determine, by a majority vote, if a sufficient sign-up has been obtained to justify the formation and operation of the Association, and their conclusion shall be final. Following the holding of such a meeting, notice of the action there taken shall be published in one or more newspapers of general circulation in the area. 5. After the giving of a notice as above provided that a sufficient sign-up has been obtained to justify the operation of the Association, all subscribers to agreements identical herewith shall deliver their fruits and/or vegetables to the Association in accordance with the marketing agreement hereinafter given. 6. The organization committee shall keep a full, true, and detailed account of all receipts and of all expenditures of every kind and shall have such accounts audited and render a written report thereof to the board of directors of the Association when organized, and shall thereupon turn over to the Association any balance remaining in its hands free of obligation. If it is not so organized, such unexpended balance shall be prorated among those who contributed thereto. 7. The Association, when organized, shall endeavor to secure signatures of additional growers to the marketing agreement. 8. The Grower applies 13 for membership in the Association when organized and expressly agrees that signature to the marketing agreement shall be deemed, to all intents and purposes, the same as signature to this organization agreement; all of which shall be irrevocable except as provided in section 4 of this organization agreement, section 13 of the marketing agreement, or the bylaws of the Association; and he so agrees in order to induce other growers to sign this agreement for his benefit, as well as their own general benefit and the public welfare. 9. Acceptance hereof shall be deemed conclusive upon the mailing, by the Association, of a notice to that effect to the subscriber at his address noted below, and such mailing and notice shall be conclusively established by the affidavit of the secretary of the Association. 10.14 The Grower agrees to be bound by the terms of the following marketing agreement: MARKETING AGREEMENT THIS AGREEMENT between the ASSOCIATION, hereinafter called the "Association" and the undersigned, hereinafter called the "Grower," WITNESSETH: (1) The Association buys and the Grower sells to the Association all fruits and/or vegetables except those which the Grower reserves for his own personal use, but not for sale, produced by or for him or acquired by him as landlord or lessor and the Grower agrees to deliver all such fruits and/or vegetables at such place or places as the Association may direct. This contract is intended by the parties to pass an absolute title to all such fruits and/or vegetables as soon as the 13 If an association is formed with capital stock this should be changed to "subscribes for stock." 14 In those States which provide for the recording of marketing agreements, if desired, the following should be added at the end of this sentence: "and, upon demand of the Association when organized, to execute an agreement in like form and to acknowledge the same, if required, so as to entitle it to record." FARM CREDIT ADMINISTRATION same have potential existence but shall be at the risk of the Grower until delivery. The Association is authorized to exercise any and/or all powers conferred upon it hereunder through any central agency of which this and any other similar associations are or may become members. (2) The Association agrees to make such advances to the Grower on such fruits and/or vegetables hereunder upon the delivery thereof as in the discretion of its board of directors may be justified by marketing conditions. (3) The Association agrees to sell, either in the natural or processed state, such fruits and/or vegetables, together with the fruits and/or vegetables delivered by other growers, and to pay over ratably the net amount received therefrom as payment in full to the Grower, after making deductions to cover (a) advances, interest upon advances, the cost of picking, gathering, harvesting, receiving, assembling, transporting, handling, grading, packing, inspecting, processing, financing, advertising, storing, insuring, selling and marketing such fruits and/or vegetables and/or products derived therefrom; (b) organization, operating and maintenance expenses and purchase of stock in a central agency; (c) revolving funds for the purpose of building up such an amount of capital as may be deemed necessary by its board of directors from time to time and for revolving such capital in the manner that may be provided in section 2 of article VIII of the bylaws of the Association, which shall be not less than percent nor more than percent of the gross sales price of such fruits and/or vegetables and/or products derived therefrom, as determined from time to time by the board of directors; and (d) contingency reserves to meet the general contingencies of the business of the Association of not to exceed percent of the gross sale price of such fruits and/or vegetables and/or products derived therefrom. The deductions made for capital purposes and for revolving such capital from time to time shall be evidenced by revolving-fund 15 certificates in the form prescribed by the board of directors. The Association, within the discretion of its board of directors, is authorized to establish, from time to time, daily, weekly, monthly, or seasonal pools of fruits and/or vegetables of the same variety, grade and quality, and all growers having fruit and/or vegetables in a particular pool shall share ratably in the net amount received therefrom. (4) All fruits and/or vegetables shall be delivered by the Grower at the earliest reasonable time after harvesting at such place as the Association may direct, and each package of fruits and/or vegetables delivered to the Association shall be marked for identification purposes in the manner prescribed by the Association at the Grower's expense. (5) Any loss that the Association may suffer on account of inferior or damaged condition at delivery shall be charged against the Grower, individually. (6) The Grower further agrees that the Association and/or the central marketing agency shall have the power to borrow money for any purpose of the Association, and/or the central marketing agency, on the security of the fruits and/or vegetables delivered to the Association and/or the products derived therefrom and/or on any evidence of such products or byproducts or cash or accounts arising from the sale thereof, and to give a lien, either legal or equitable thereon, as the absolute owner thereof; and the Association and/or the central marketing agency may grade, pool or commingle such fruits and/or vegetables 15 In case an association is to be formed with capital stock, it may be deemed advisable to evidence such deductions with stock certificates. and/or products derived therefrom or any part thereof with other fruits and/or vegetables and/or products derived therefrom of like grade and variety: and shall exercise all other rights of ownership without limitation. (7) Inasmuch as the remedy at law would be inadequate and inasmuch as it would be impracticable and extremely difficult to determine the actual damage resulting to the Association should the Grower fail to deliver the fruits and/or vegetables hereby sold, regardless of the cause of such failure, the Grower hereby agrees to pay to the Association for all fruits and/or vegetables delivered or disposed of by or for him, other than in accordance with the terms hereof, the sum of cents per on all fruits and/or vegetables, as liquidated damages for the breach of this contract; all parties agreeing that this contract is one of a series dependent for its true value upon the adherence of each and all of the contracting parties to each and all of the said contracts, but the cancellation of this contract or the failure of the Grower to comply therewith shall not affect other similar contracts. --- (8) If the Association brings any action of any character whatsoever by reason of a breach or threatened breach hereof, the Grower shall pay all costs of court, costs for bonds and otherwise, expenses of travel and all expenses arising out of or caused by the litigation, and reasonable attorney fees expended or incurred by it in such proceedings and all such costs and expenses shall be included in the judgment. (9) It is agreed that the articles of incorporation and the bylaws, now or hereafter in effect, and this contract constitute the entire agreement between the Association and the Grower. (10) The Association may enter into agreements with other growers differing in terms from those contained herein but consistent with the bylaws of the Association without invalidating this contract, provided that the Grower at his request may sign a similar contract as a substitute for this agreement. (11) By signing this agreement the Grower applies 16 for membership in the Association and the signing hereof by the Association shall constitute an acceptance thereof. (12) The Association or the central agency shall establish or adopt standards for fruits and/or vegetables and shall make rules and regulations governing the handling and shipping thereof and shall provide inspectors or graders to grade the fruits and/or vegetables; and the Grower agrees to be bound by such grading and to observe such rules and regulations. The Association or said central agency shall provide for the inspection of all fruits and/or vegetables delivered hereunder, and if any such fruits and/or vegetables are not in proper condition for sale they shall be sorted and prepared for sale at the expense of the Grower. (13) After this agreement shall have been in effect 2 years from the date of its acceptance by the Association, either party hereto may terminate it in any year on the last day of the anniversary month in which this agreement was so accepted by notifying the other party in writing of this intention; such notice to be given between the first and fifteenth of the month immediately prior to the effective date of termination. If neither of the parties hereto terminates this agreement in any year, as aforesaid, it is hereby mutually agreed that this shall constitute conclusive evidence that the parties hereto have renewed this agreement for another year. 16 See footnote 12. |