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

SEC. 8. Compensation. The compensation, if any, of the members of the board of directors and of the executive committee shall be determined by the members of the Association at any annual or special meeting of the Association; provided, however, that no member of the board of directors, other than one who is acting as an officer of the Association and is receiving a regular salary therefor, shall be employed or appointed by the Association to any position or in any capacity, for which he shall be paid a salary or other remuneration for more than 30 days' work in any one year (exclusive of the compensation to be paid for attendance at any directors' meeting as specified).

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

ARTICLE III 25

DUTIES OF DIRECTORS

SECTION 1. Management of business.--The board of directors shall have general supervision and control of the business and the affairs of the Association and shall make all rules and regulations not inconsistent with law or with these bylaws for the management of the business and the guidance of the members, officers, employees, and agents of the Association. They shall have installed an accounting system which shall be adequate to the requirements of the business, and it shall be their duty to require proper records to be kept of all business transactions. SEC. 2. Employment of manager.-The board of directors shall have power to employ or to authorize the employment of a manager and such other employees as may be deemed necessary, and to fix their compensation. The manager shall have charge of the business of the Association under the direction of the board of directors. No director shall serve as manager.

SEC. 3. Bonds and insurance.-The board of directors shall require the manager and all other officers, agents, and employees charged by the Association with responsibility for the custody of any of its funds or negotiable instruments to give adequate bonds. Such bonds shall be furnished by a responsible bonding company and approved by the board of directors, and the cost thereof shall be paid by the Association. The board of directors shall provide for the adequate insurance of the property of the Association, including fruits and/or vegetables and property of all kinds, regardless of ownership, which may be in the possession of the Associa tion, or stored by it, and in addition adequate insurance covering liability for accidents to all employees and the public.

SEC. 4. Audits.—At least once in each year the board of directors shall obtain the services of a competent and disinterested public auditor or accountant, who shall make a careful audit of the books and accounts of the association and render

25 In some States, it may be desirable to include an additional section authorizing the board of directors to enter into pro-rate, allotment, and stabilization programs.

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

SEC. 5. Marketing agreements.-The board of directors shall have the power to carry out the marketing agreements of the Association with its producer members in every way advantageous to the Association representing the producers collectively.

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

SEC. 7. Membership certificates.26 The board of directors shall cause to be issued appropriate certificates of membership.

26 If an association is formed with capital stock it is suggested that this section be changed to read as follows:

(a) Each certificate of common stock shall have the following statement printed on its face: "The stock evidenced hereby may be purchased, owned, and/or held only by producers of fruits and/or vegetables who market such products through the association, in accordance with the uniform terms and conditions prescribed thereby, and only such persons shall be regarded as eligible members of the association. In the event the board of directors of the association shall find following a hearing that any of the stock evidenced hereby has come into the hands of any person who is not an eligible member or that the holder thereof has ceased to be an eligible member, he shall have no rights or privileges on account of such stock or vote or voice in the management or affairs of the association (other thar he right to participate in accordance with law in case of dissolution and to receive the par or book valu. of such stock, whichever is less, in the event of its sale or transfer, in a manner consistent herewith), and the association shall have the right (a) to purchase such stock at its book or par value, whichever is less, as determined by the board of directors of the association, and on the failure of the holder hereof to deliver this certificate, the association may cancel the same on its books or (b) to require the transfer of any such stock at such book or par value to any person eligible to hold the same and on the failure of the holder hereof to deliver this certificate, the association may cancel the same on its books and issue a new certificate or certificates in lieu thereof to any such person. The stock evidenced hereby 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 any of such stock shall pass to any person not eligible to hold the same, any rights or privileges on account thereof, or vote or voice in the management or affairs of the association. Any eligible holder hereof shall be entitled to only one vote in any meeting of the stockholders, regardless of the number of shares of stock owned by him. The association has a lien on the stock evidenced hereby and on dividends declared thereon, for all indebtedness of the holder hereof thereto. Dividends of not to exceed six (6%) percent per annum may be paid upon the common stock evidenced hereby (when funds are available therefor), if, as, and when declared by the board of directors, after the payinent of dividends of not to exceed six (6%) percent per annum on the preferred stock. This certificate is also subject to all the other terms and conditions stated in the articles of incorporation and the bylaws of the association."

(b) Each certificate of preferred stock of this association shall have the following statement printed on its face:

"The preferred stock of the association evidenced hereby shall carry no voting rights " and may be transferred only on the books of the association; and may be redeemed or retired in whole or in part on a pro-rata basis, at par, together with all unpaid dividends thereon at any time on thirty days' notice by the association, in chronological order by years in which certificates therefor were issued. Noncumulative dividends of six (6%) percent per annum may be paid hereon when, if and as declared by the board of directors. Upon the dissolution or distribution of the assets of the association, the holder hereof shall be entitled to receive the full par value of this certificate and all unpaid dividends hereon before any distribution is made on the common stock."

See footnote 23, p. 63.

ARTICLE IV

DUTIES OF OFFICERS

SECTION 1. Duties of president.-The president shall (1) preside over all meetings of the association and of the board of directors, (2) call special meetings of the board of directors, (3) perform all acts and duties usually performed by an executive and presiding officer, and (4) sign all membership 27 certificates, revolving-fund certificates, and such other papers of the association as he may be authorized or directed to sign by the board of directors, provided, the board of directors may authorize any person to sign any or all checks, contracts, and other instruments in writing on behalf of the association. The president shall perform

such other duties as may be prescribed by the board of directors.

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

SEC. 3. Duties of secretary.-The secretary shall keep a complete record of all meetings of the association and of the board of directors and shall have general charge and supervision of the books and records of the association. He shall sign all membership 27 certificates, and revolving-fund certificates, with the president and such other papers pertaining to the association as he may be authorized or directed to sign by the board of directors. He shall serve all notices required by law and by these bylaws and shall make a full report of all matters and business pertaining to his office to the members at the annual meeting. He shall keep the corporate seal and the book of blank membership 27 certificates and revolving-fund certificates; complete and countersign all certificates issued and affix the corporate seal to all papers requiring a seal. He shall keep membership 27 and revolving-fund certificate records. He shall act as secretary of the executive committee. He shall make all reports required by law and shall perform such other duties as may be required of him by the association or the board of directors. Upon the election of his successor, the secretary shall turn over to him all books and other property belonging to the association that he may have in his possession.

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

ARTICLE V

EXECUTIVE COMMITTEE

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

27 If an association is formed with capital stock, the word "stock" should be substituted for "membership."

ARTICLE VI

DUTIES OF MANAGER

SECTION 1. In general.-Under the direction of the board of directors the manager shall have general charge of the ordinary and usual business operations of the association, including the purchasing, marketing, and handling of all products and supplies handled by the association. He shall, so far as practicable, endeavor to conduct the business in such a manner that the members will receive

just and fair treatment. The manager shall deposit all money belonging to the association which comes into his possession in the name of the association in a bank selected by the board of directors and if authorized to do so by the board of directors shall make all disbursements by check therefrom for the ordinary and necessary expenses of the business in the manner and form prescribed by the board of directors. Upon the appointment of his successor, the manager shall deliver to him all money and property belonging to the association which he has in his possession or over which he has control.

SEC. 2. Duty to account. The manager shall be required to maintain his records and accounts in such a manner that the true and correct condition of the business may be ascertained therefrom at any time. He shall render annual and periodical statements in the form and 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.

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

ARTICLE VII

MEMBERS

SECTION 1. Qualifications.—Any person, firm, partnership, corporation, or association, including both landlords and tenants in share tenancies, who is a bona fide grower of fruits and/or vegetables in the territory tributary to the shipping point of the association may become a member of the association by executing the marketing agreement 28 and meeting such other conditions as may be prescribed by the board of directors.

SEC. 2.29 Membership certificates.-The association shall issue a certificate of membership to each member. The membership certificate shall be in such form as may be prescribed by the board of directors but shall not be transferable.

SEC. 3. Suspension or termination.30-If a member shall cease to be a producer or shall cease, fail, neglect, or refuse for any reason whatsoever to market the fruits and/or vegetables, grown or owned by him, as provided in the marketing agreement, then the board of directors, following a hearing, at their option may

29 In case of an association formed with capital stock insert, "acquiring a share of common stock."

29 In case of an association formed with capital stock, omit.

30 In case of an association formed with capital stock, this provision should be omitted.

suspend his rights as a member or terminate his membership in the association. Upon termination of membership in the association all of the rights and interests of such member in the association shall by that act be canceled, and such member shall be entitled only to payment or credit for the equitable appraised value of his property rights and interests in the association, as conclusively determined by the board of directors.31 No action taken hereunder shall impair the obligations or liabilities of either party under the association's marketing agreement, which may be terminated only as provided therein.32

SEC. 4. Withdrawal.33-Any member may withdraw from the association as provided in the marketing agreement, but such withdrawal shall not affect any right or lien which the association has against the withdrawing member or his property for his indebtedness, if any, to the association.

ARTICLE VIII
FINANCING

SECTION 1. Reserves.-The books and records of the association shall be kept in such a manner, by years, that the amount carried to general reserves accruing from patronage of each member of the association may be ascertained at any time. Whenever in a given year the operations of the association result in a net loss, such loss to the extent that general reserves are available, shall be charged against the same and they shall thereby be reduced accordingly. The board of directors shall prescribe the basis on which the reserve contributions of members by years shall be reduced on account of any such loss, so that it will be borne by the members on as equitable a basis as the board of directors find practicable. Whenever in the discretion of the board of directors the reserves are found to be in excess of the amount deemed reasonably necessary for the sound financial operations of the association, such excess shall be applied to paying off ratably, by years, the oldest unexhausted reserve contributions of members. Upon the dissolution or winding up of the association in any manner, after the payment of all debts, including revolving-fund certificates, and the retirement at par of all outstanding membership certificates 34 any balance remaining over shall be distributed ratably to the members on an equitable basis.

31 If State statutes provide a time of payment for property interests of retiring or expelled member, these requirements should be added.

32 In order to avoid the embarrassment that might result from having to pay members the amount of their property interest in the association, consideration should be given in those States where the statutes so permit to the substitution of the following in lieu of the second to the last sentence of section 3:

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

An alternative suggestion is the payment of property interests by notes or revolving-fund certificates if permitted by law.

33 In case of an association formed with capital stock, this provision should be omitted.

34 If organized with capital stock, substitute "capital stock."