Resolution Amending Bylaws of Central Region Cooperative Page 1 of 11

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1 RESOLUTION AMENDING BYLAWS OF CENTRAL REGION COOPERATIVE BE IT RESOLVED, that the Bylaws of Central Region Cooperative will be amended and restated entirely to read as follows: BYLAWS OF CENTRAL REGION COOPERATIVE ARTICLE I. Membership Section 1. Qualifications. Membership in this cooperative may be issued to or held by only (a) producers (b) who reside in the territory served by this cooperative (c) who patronize this cooperative by doing not less than $10, (or such other amount as set by the Board of Directors) in agricultural production business with this cooperative during each year, and (d) who have been approved by the Board of Directors. The term producer shall mean and include persons (individuals and entities) actually engaged in the production of any one or more agricultural products, including tenants of land used for the production of any such product, and lessors of such land who receive as rent therefore part of any such product of such land, and cooperatives of such producers. In order to become a member of this cooperative, any person or organization that is eligible for membership and that has entered into a patronage relationship with this cooperative must provide this cooperative with the prospective member s correct and current Social Security Number or Federal Tax Identification Number, and certify to this cooperative the accuracy of that number in a manner satisfactory to this cooperative. By providing this cooperative with the above required information, a member agrees to abide by the consent bylaw contained herein. Section 2. Termination. If at any time a member (a) has become ineligible for membership; (b) has failed to patronize this cooperative for a period of one (1) year in the amount of at least $10, in agricultural production business (or such other amount as set by the Board of Directors); (c) dies; (d) has failed to satisfy any condition, qualification, or other requirement for membership established by this cooperative s Articles of Incorporation, these Bylaws, or the Board of Directors; or (e) whenever the Board of Directors by resolution finds that a member has (i) intentionally or repeatedly violated any Bylaw or Article of this cooperative, or (ii) breached any contract with this cooperative, or (iii) remained indebted to this cooperative for ninety (90) days after such indebtedness first became payable or has been placed on a cash delivery basis, or (iv) willfully obstructed any lawful purpose of this cooperative; then in any such event the Board of Directors, in its sole discretion, may terminate such membership. No action taken hereunder shall impair the obligations or liabilities of either party under any contract with this cooperative which may be terminated only as provided therein. Termination shall not be deemed to revoke such member s consent to patronage, but rather such member may only revoke such consent in writing. Upon termination of membership, the member shall thereafter have no voting rights in this cooperative. Section 3. Alternative Membership. The Board of Directors may create separate classes or units of membership as may be allowed by law, which may include non-patron members. ARTICLE II. Members Meetings Section 1. Annual Meeting. The annual meeting of the members of this cooperative shall be held at such time and place as is determined by the Board of Directors and designated in the notice of the meeting. Section 2. Special Meetings. Special meetings of the members may be called at any time by a majority vote of the directors or upon the written petition of at least twenty percent (20%) of the members or as provided by law. The only matters that may be discussed and acted on at any special meeting are those matters listed in the notice of special meeting. Section 3. Notice of Meetings. Notice of meetings, both annual meetings and special meetings, shall be mailed to each and every member at the member s last known mailing address, not less than fifteen (15) days previous to the date of the meeting. In lieu of such notice by mail, the notice of the meeting may be given by publication in a legal newspaper published in the county of the principal place of business of the cooperative, Resolution Amending Bylaws of Central Region Cooperative Page 1 of 11

2 or by publication in a magazine, periodical, or other publication of the cooperative that is regularly published by or on behalf of the cooperative and circulated generally among the members, at least two (2) weeks previous to the date of the meeting. After mailing or publishing any notice of any meeting of the members, the Secretary shall execute a certificate containing a correct copy of the mailed or published notice, the date of mailing or publishing the notice, and a statement that the notice was mailed or published within the time and in the manner prescribed by law. The certificate shall be made a part of the record of the meeting. Section 4. Mail Votes. Any member who is absent from any meeting of the members may vote by mail or by utilizing any other method approved by the Board of Directors and allowed by Minnesota law, on the ballot herein prescribed, upon any motion, resolution or amendment which the Board of Directors may, in its discretion, submit to the members for vote by them. Such ballot may be in the form prescribed by the Board of Directors and shall contain the exact text of the proposed motion, resolution or amendment to be acted upon at such meeting and the date of the meeting and space opposite the text of such motion, resolution or amendment in which said member may indicate the member s affirmative or negative vote thereon. Such member shall mark an X in the appropriate space upon such ballot. Such ballot, when received by this cooperative, shall be accepted and counted as the vote of such absent member at such meeting. Section 5. Quorum. A quorum necessary to the transaction of business at any meeting of the members shall be at least ten percent (10%) of the total number of members in this cooperative when the number of members in this cooperative does not exceed five hundred (500), but when the cooperative has a larger number of members, fifty (50) members present shall constitute a quorum; provided, however, that in determining a quorum on a question submitted to a vote by mail, members present in person or represented by mail votes shall be counted. The quorum shall be established by a registration of the members present at such meeting, which registration shall be verified by the President and Secretary and shall be reported in the minutes of the meeting. Section 6. Voting. a. One Member, One Vote. No member shall have more than one vote on any issue, and voting by proxy shall not be allowed. b. Majority. Unless otherwise provided by law or in these Bylaws, a majority vote of all members present in person or represented by mail and/or electronic ballot (if applicable) shall decide all questions at any annual or special meeting of the members. c. Assignment of Voting Rights. A member may not assign or otherwise transfer any voting right in this cooperative to another person or entity, nor shall this cooperative accept votes cast by proxy or delegate. d. Voting Eligibility Questions. The Board of Directors shall have the sole and complete discretion to resolve all issues related to voting eligibility. Section 7. Presiding Officer. The President of this cooperative shall preside at all annual and special meetings of the members and directors, and shall cast the deciding vote in all cases of a tie. Section 8. Order of Business. The order of business at annual meetings shall be set by an agenda established by the Board of Directors prior to the meeting. Members may request issues be included in the agenda by providing a written request to the Board of Directors at least thirty (30) days prior to the date of the annual meeting. In addition to those items required by Minnesota law to be addressed at the meeting, the Board of Directors may bring before the membership any other matter deemed appropriate by the Board of Directors. Section 9. Remote or Electronic Communication. Any member may participate in any regular or special meeting of the members by any method of remote or electronic communication approved by the Board of Directors. The Board of Directors may require the member(s) so participating by remote communication to bear all costs associated with remote attendance. Resolution Amending Bylaws of Central Region Cooperative Page 2 of 11

3 ARTICLE III. Board of Directors Section 1. Eligibility, Election, and Terms of Office. The number of directors of this cooperative shall be no less than five (5) (the exact number to be determined by the Board of Directors). The directors shall be elected by ballot at the annual meeting for terms of four (4) years, and shall hold office until their successors shall be elected and qualified. The terms of office of the directors shall be arranged so that as nearly as possible, the terms of office of an equal number of directors shall expire each year. If any director shall cease to be a member, his/her office shall thereupon be automatically vacated. All candidates for a director position shall also meet the qualifications established by the Board of Directors in its board policies, if any. The director nominee who, among the nominees for each directorship, receives the largest number of votes shall be declared elected for the ensuing term. If authorized by the Board of Directors, the election for directors may include mail ballots. The Board of Directors has the authority to establish procedures for handling nominations of directors to ensure that nominees meet the qualifications to be elected a director in this cooperative. The Board of Directors shall have the ability to exercise some or all of these powers through a Nominating Committee that is appointed by the Board of Directors. Section 2. Removal by Board. Nominees for a director position, as well as existing directors, must disclose to the Board of Directors activities which may result in the director or potential director being in competition with this cooperative. The Board of Directors may, by a twothirds (2/3) majority vote, remove a director by resolution if a director misses more than six consecutive meetings, is engaged in a business in direct competition with this cooperative, or is in violation of a director policy stated in a policy manual adopted by the Board of Directors. After such removal, the Board of Directors may replace the removed director until the next annual meeting. Section 3. Removal by Members. Members may remove a director at a members meeting for cause related to the duties of the position of director and fill the vacancy caused by the removal. Each vacancy occurring on the Board of Directors, other than by removal of a director by the members or by the expiration of a term, may be filled until the next annual meeting or special meeting of the members by a vote of the remaining directors. Section 4. Meetings. The Board of Directors shall meet regularly at such times and places as the Board may determine. Special meetings may be called by the President, or a majority of the directors. All meeting shall be held on such notice, if any, as the Board may prescribe, but any business may be transacted at any meeting without mention of such business in the notice, if any, of the meeting. Section 5. Action without Meeting. Any action which may be taken at a meeting of the Board of Directors or of a lawfully constituted committee thereof may be taken without a meeting if set forth and approved by a writing signed by all directors or by all committee members, as the case may be, and such action shall be effective on the date on which the last signature is placed on such writing, or such effective date as is set forth therein. Section 6. Quorum. A quorum shall consist of a majority of the directors. A majority vote of the directors present shall decide all questions, except where a greater vote is expressly required by law or these Bylaws. Section 7. Compensation. The compensation, if any, of the directors and officers shall be established by the Board of Directors. Section 8. Financial Statements. The Board of Directors shall have the financial statements of this cooperative audited at least once each fiscal year by such person or firm as it may designate and said financial statements shall be presented at the next annual meeting of the members. Section 9. Borrowings. The Board of Directors shall have power, which may be exercised only by a vote of a majority of all of the directors, to authorize and approve the borrowing of money and the pledging and mortgaging of any or all of the assets of this cooperative as security for the sums to be borrowed. Section 10. Director Districts. The Board of Directors may, in its sole discretion, establish director districts or regions and specify the number of directors from each district or region, voting for directors by district, region, or at-large, and procedures for voting for directors by mail. Resolution Amending Bylaws of Central Region Cooperative Page 3 of 11

4 Section 11. Executive Committee. The Board of Directors may appoint an Executive Committee of not less than three (3) directors, one of whom shall be the President. Such committee shall not have any authority either (i) to fill any vacancy either in any elective office or in its own membership or in the Board of Directors, or (ii) to employ or discharge any General Manager for this cooperative, or (iii) to call any meeting of the members, or (iv) to meet or otherwise to act at any time when either the Board of Directors or the members are holding a meeting, or (v) to do anything which is required by law to be done only by the Board of Directors and which said Board cannot lawfully delegate to such committee; but said committee shall have such other powers and duties as the Board of Directors may delegate to or require of it. Section 12. Indemnification. This cooperative shall, to the extent and under the circumstances provided in Section 302A.521 of the Minnesota Statutes, indemnify each person who is or has been a director, officer or employee of this cooperative against expenses, including attorney fees, judgments, fines and amounts paid in settlement, actually and reasonably incurred by such person, required or permitted under the provisions thereof. This cooperative may purchase and maintain insurance on behalf of this cooperative or any such person who may be indemnified as hereinabove provided. Section 13. Electronic Communications. A director or committee member may participate in a meeting by any means or communication through which such person, other persons so participating, and all persons physically present at the meeting may simultaneously hear each other during the meeting. Participation in a meeting by that means constitutes presence in person at the meeting. A conference among directors or committee members by any means of communication through which such persons may simultaneously hear such others during the conference is a meeting of the Board of Directors or Committee, as the case may be, if the same notice is given of the conference as would be required for a meeting, and if the number of persons participating in the conference would be sufficient to constitute a quorum at a meeting. Participation in a meeting by that means constitutes presence in person at the meeting. Section 14. Nominating Committee. The Board of Directors may appoint a Nominating Committee for the purpose of nominating directors. Section 15. Advisory Directors. The Board of Directors may select up to three (3) advisory directors to serve on the Board of Directors on terms and conditions determined by the elected directors in their sole discretion. Advisory directors shall participate in meetings along with the elected directors, and have the same obligations and responsibilities as member directors, but shall not have the power to vote. Advisory directors are also required to comply with the board policies. The compensation, if any, of the advisory directors shall be established by the elected directors. Advisory directors do not serve any term, and are subject to removal at the discretion of the Board of Directors. Advisory directors may not serve as officers of this cooperative, nor may any employee of this cooperative serve as an advisory director. ARTICLE IV. Officers Section 1. Election of Officers. Promptly following each annual meeting of the members of this cooperative, the Board of Directors shall elect from among the directors a President and a Vice President, and shall at the same time elect a Secretary and a Treasurer who may, but need not, be directors. The offices of Secretary and Treasurer may be held by the same person and, when so held, may be termed Secretary-Treasurer. The Board of Directors may appoint such additional officers with such titles, powers and duties, and for such terms, as said Board may determine. Section 2. Removal of Officers. Any of the officers identified in this Article IV of the Bylaws may be removed by the Board of Directors at any time, with or without cause, upon a two-thirds (2/3) majority vote. Section 3. Duties of the President. The President shall: a. preside over all annual and special meetings of the members of this cooperative and of the Board of Directors; Resolution Amending Bylaws of Central Region Cooperative Page 4 of 11

5 b. perform all acts and duties usually performed by an executive and presiding officer; c. sign such papers of this cooperative as the President is authorized or directed to sign by the Board of Directors; provided, however, that the Board may authorize any person to sign any or all checks, contracts, and other documents in writing on behalf of this cooperative, and the President may, after consulting with the Board, delegate to a Chief Executive Officer any authority held by the President to effectuate any decisions of the Board of Directors; and d. perform such other duties as may be prescribed by these Bylaws or by the Board of Directors. e. Perform such additional duties as may be required of him by the Board of Directors. Section 6. Duties of Treasurer. The Treasurer, if not combined with the duties of the Secretary, shall: a. Supervise the safekeeping of all funds and property of this cooperative; and b. Supervise the keeping of complete books and records of all financial transactions of this cooperative; and c. Perform such additional duties as may be required by the Board of Directors. Section 4. Duties of Vice President. The Vice President, in the absence or disability of the President, shall perform the duties of the President. Disability means any absence, inability or infirmity that prevents the President from acting in a timely manner. The Vice President shall also perform such other duties as may be assigned to the Vice President by the President, with the approval of the Board of Directors. Section 5. Duties of Secretary. The Secretary, if not combined with the duties of the Treasurer, shall: a. Take or supervise the taking of complete minutes of all meetings of the members and of the Board of Directors and of the Executive Committee; and b. Have custody of this cooperative s minute book and of its corporate seal, if any; and c. Submit to the annual meeting of the members a report covering the business of this cooperative for the previous fiscal year and showing the condition of this cooperative at the close of said fiscal year; and d. Give, or cause to be given, all notices as required by law or these Bylaws; and ARTICLE V. Membership Certificates Section 1. Membership certificates shall not be issued. ARTICLE VI. Duties and Powers of Directors Section 1. Governing the Cooperative. The Board of Directors shall govern the business and affairs of this cooperative, and shall make all necessary rules, decisions, policies, and regulations not inconsistent with law or with these Bylaws for the governance of the business and the guidance of the officers, employees, and agents of this cooperative. ARTICLE VII. The General Manager/Chief Executive Officer Section 1. Duties of the General Manager/Chief Executive Officer. The Board of Directors shall employ a general manager who may also serve as the Chief Executive Officer if so designated by the Board of Directors. The General Manager (and/or Chief Executive Officer) of this cooperative shall have general charge of the ordinary and usual business operations of this cooperative, under and subject to the direction, approval, Resolution Amending Bylaws of Central Region Cooperative Page 5 of 11

6 and control of the Board of Directors. The Board of Directors shall have the power to employ and dismiss the General Manager (and/or Chief Executive Officer). ARTICLE VIII. Equity Interests of the Members and Patrons Section 1. Evidence of Equity Interests. The equity interests of this cooperative s members and patrons may be evidenced by allocated and unallocated equity credits, certificates of interest, revolving fund certificates, letters of advice, certificates or securities of other cooperatives or corporations, other property, other evidence of equity, or any combination thereof. Section 2. Restrictions on Transfers of Equity Interests. No allocated and unallocated equity credits, certificates of interest, revolving fund certificates, letters of advice, certificates or securities of other cooperatives or corporations, other property, or other evidence of equity issued by this cooperative or entered on its books and records shall be transferred, except with the written consent of the Board of Directors. ARTICLE IX. Distribution Section 1. Gross Receipts from Patronage. a. Gross Receipts from Patronage. All proceeds from the sale of products marketed for patrons of this cooperative; all sums received for supplies, equipment, commodities, and any other property procured for patrons; all sums received for services performed for patrons in marketing their products; and all sums received (including patronage dividends received) which reduce costs and expenses incurred in connection with these activities shall constitute gross receipts from patronage of this cooperative. 1. Those gross receipts which reduce the costs and expenses incurred in connection with patronage shall be used to reduce the deductions from gross receipts enumerated in Section 1(b) of this Article. 2. All other gross receipts from patronage shall be distributed by this cooperative to its patrons, subject to the deductions therefrom and to the exceptions thereto hereinafter provided. b. Deductions from Gross Receipts from Patronage. This cooperative shall deduct from gross receipts from patronage amounts attributable to gross receipts from patronage of: 1. all necessary marketing expenses; 2. the actual cost of services performed for patrons, and of supplies, commodities, equipment, and other property procured for patrons; 3. taxes; 4. all bad debts deemed worthless by this cooperative and actually charged off on the books of this cooperative; 5. all other necessary expenses; and 6. reasonable and necessary additions to reserves for depreciation, for depletion, for obsolescence of physical property, and for all other valuation reserves, all established and computed in accordance with usual and customary accounting practices. c. Annual Net Savings from Patronage. In determining the amount of annual net savings from patronage, the amounts of gross receipts from patronage as defined in Section 1(a) of this Article and deductions from gross receipts from patronage as defined in Section 1(b) of this Article shall be adjusted so as to include only such Resolution Amending Bylaws of Central Region Cooperative Page 6 of 11

7 amounts as are includable or deductible for federal income tax purposes. The amount remaining after reducing the gross receipts from patronage by the deductions specified in Section 1(b) of this Article shall constitute the annual net savings (net earnings) from patronage, which shall be distributed to the patrons of this cooperative in proportion to the amount of business done by them on a patronage basis, subject only to the deductions and the exceptions provided in Section 4 of this Article. Section 2. Gross Receipts from Sources Other than Patronage. a. Gross Receipts from Sources Other than Patronage. Gross receipts of this cooperative from all sources other than those described in Section 1(a) of this Article shall constitute gross receipts from sources other than patronage. They shall be subject to the deductions therefrom hereinafter provided, and any net amount thereof shall be held or used for the purposes and in the manner hereinafter provided. b. Deductions from Gross Receipts from Sources Other than Patronage. This cooperative shall deduct from gross receipts from sources other than patronage amounts attributable to gross receipts from sources other than patronage of: 1. taxes; 2. all bad debts deemed worthless by this cooperative and actually charged off on the books of this cooperative; 3. all other necessary expenses; and 4. reasonable additions deemed appropriate by the Board of Directors to reserves for depreciation, for depletion, for obsolescence of physical property, and for other valuable reserves, all established and computed in accordance with usual and customary accounting practices. c. Annual Net Savings from Sources Other than Patronage. In determining the amount of annual net savings from sources other than patronage, the amounts of gross receipts from sources other than patronage as defined in Section 2(a) of this Article and deductions from gross receipts from sources other than patronage as defined in Section 2(b) of this Article shall be adjusted so as to include only such amounts as are includable or deductible for federal income tax purposes. The amount remaining after reducing the gross receipts from sources other than patronage by the deductions specified in Section 2(b) of this Article shall constitute the annual net savings (net earnings) from sources other than patronage and shall not be allocated to the members or patrons. Section 3. Total Annual Net Savings. The sum of annual net savings from patronage and annual net savings from sources other than patronage shall be known as the total annual net savings. Section 4. Capital Reserve. Amounts set aside in a capital reserve shall not be allocated to the patrons of this cooperative. The Board of Directors shall cause to be created a capital reserve and may annually add to the capital reserve an amount determined in its discretion in consideration of the following amounts: 1. annual net savings from sources other than patronage; 2. annual net savings from patronage on business done for the United States or any of its agencies; 3. annual net savings from patronage attributable to patrons who are unidentified; 4. annual net savings from patronage attributable to patrons who do not consent to take into account Resolution Amending Bylaws of Central Region Cooperative Page 7 of 11

8 patronage dividends from this cooperative in the manner provided in 26 U.S.C. Section 1385; 5. annual net savings from patronage attributable to patrons who so consent, but which result, as to any one patron, in a de minimus amount that may be established from time to time by a resolution of the Board of Directors, and which de minimus amount shall initially be a Twenty-Five Dollar ($25.00) distribution; 6. annual net savings from patronage received from other cooperatives provided that a determination by the Board of Directors as to a specific amount or the identification of the other cooperative whose patronage shall be established in the capital reserve is determined within eight and one-half (8½) months following this cooperative s tax year-end; and. 7. an amount up to one hundred percent (100%) of the annual net savings from patronage, not including the amount of patronage received from other cooperatives under Section 4 (6) of this Article IX, provided that the decision to do so is made within eight and one-half (8½) months following this cooperative s tax year-end. Amounts which have been placed in any reserve and which have been allocated to the patrons of this cooperative prior to the effective date of the provision of this Article IX, Section 4, of these Bylaws, which states that amounts set aside as a capital reserve shall not be allocated to the patrons of this cooperative, shall remain allocated on the books of this cooperative unless and until retired or disbursed. Notwithstanding anything in this Article IX, Section 4, to the contrary, the amount of the total annual net savings set aside as a capital reserve shall be calculated in a different manner in years when this cooperative carries net operating losses back or forward in accordance with the applicable provisions of the Internal Revenue Code or state taxing statutes. When a net operating loss has occurred, the Board of Directors may allocate up to one hundred percent (100%) of the total annual net savings (calculated after taking into account the net operating losses carried back or forward), or an amount equal to the net operating losses carried back or forward, whichever is less. Section 5. Distributions. The annual net savings from patronage, less any deductions therefrom or exceptions thereto as determined by Section 4 of this Article IX, shall be distributed annually (except as hereinafter provided) to the patrons of this cooperative who consent to take into account patronage distributions from this cooperative in the manner provided in 26 U.S.C Said distributions shall be made on the basis of the respective patronage of said patrons in accordance with these Bylaws, and said patrons shall be notified thereof. In making said distributions, due regard may be given to the sources from which said savings accrue, and separate allocations and distributions may be made for the various operations as separate divisions of this cooperative. Nonqualified and qualified distributions shall be distributed in cash or in membership equity or credits, allocated patronage equities, revolving fund certificates, and any other evidence of equity, or by any combination thereof designated by the Board of Directors. Said membership equity or credits, allocated patronage equities, revolving fund certificates, and any other evidence of equity may be paid or redeemed in whole or in part at such time, in such manner, and in such order as shall be determined by the Board of Directors in its sole discretion. Without limiting the generality of the foregoing, the Board of Directors shall not be required to but may by resolution establish policies and programs for the payment of or redemption of said evidence of equity upon various criteria, including the death or retirement of the holder thereof, or upon the holder reaching a specified age. No transfer or assignment of said membership equity or credits, allocated patronage equities, revolving fund certificates, and any other evidence of equity shall be binding upon this cooperative without its consent. Section 6. Losses. In the event of a loss in one or more departments, divisions of operations, or functions of this cooperative which is not of such magnitude as to cause an overall loss to this cooperative for the fiscal year, the loss may be prorated against each of the remaining Resolution Amending Bylaws of Central Region Cooperative Page 8 of 11

9 profitable departments, divisions of operation, or functions on the basis of their respective percentage of the total annual net savings during said fiscal year. In the event that this cooperative shall incur a net loss in any fiscal year, said net loss shall be charged first against any capital reserve. If the loss exceeds the amount of the capital reserve, the Board of Directors may elect to recover the loss from prior or subsequent years total annual net savings. The Board of Directors shall not have the authority to make an assessment against members; however, it shall have the authority to apply losses to members individual patronage credit accounts. This Section 6 shall not be construed or administered so as to deprive this cooperative of the right to carry back or carry forward net operating losses to past or future years in accordance with the applicable provisions of the Internal Revenue Code or state taxing statutes. Section 7. Write-Downs of Investments in Federated Cooperatives. In the event that this cooperative shall have a write-down of any investments that it holds in another cooperative (hereinafter called a Federated Cooperative ), said write-down shall be accounted for in the following manner, notwithstanding anything to the contrary in Article IX, Section 6 above: The Board of Directors shall have the discretion to apply the writedown to the outstanding reserves of this cooperative, or to allocate the write-down to the members individual patronage credit accounts. The Board of Directors shall have the authority to divide the write-down between this cooperative s reserves and the members individual patronage credit accounts, in any manner that it chooses. ARTICLE X. Equity Management Section 1. Overview. The Board of Directors shall manage this cooperative s equity in a way to preserve and build upon the cooperative s financial position while also allowing for redemptions of equity as and when this cooperative has financial strength to redeem equity. The Board of Directors may, from time to time, establish policies for redeeming all equities, regardless of the type. The Board retains the power to amend, modify, or repeal these policies and may do so retroactively, all in the Board s sole discretion. The Board of Directors retains the right and power to determine whether to approve all redemptions of equity, and whether such expenditures are in the best interests of this cooperative. The Board of Directors retains all right and power to the final review and approval of each expenditure for any redemption of equity. Any redemption or retirement of equity is solely within the discretion and on such terms as may be determined from time to time by the Board of Directors of this cooperative, which may, distinguish natural members from unnatural members such as corporations, partnerships, limited liability companies, and other business organizations, and in doing so, favor natural members with respect to equity retirements and redemptions at specific ages. The retirement of any forms of equity may be made to any such holder in person or by mailing a check from this cooperative to such equity holder at the equity holder s last known address according to the records of this cooperative. Section 2. Qualified and Nonqualified Allocations. The Board of Directors may establish and utilize qualified as well as nonqualified allocations of equity, and may implement different procedures for redeeming or paying such qualified and nonqualified allocations, at such time and in such manner as determined by the Board of Directors in its sole discretion. Section 3. Payment of Nonqualified Allocations. Nonqualified allocations will generally be retired only upon the distribution of assets on liquidation or dissolution of this cooperative and shall be treated as an allocated surplus for all purposes. The Board of Directors may, in its sole discretion, pay out nonqualified allocations on an equitable basis so long as the Board of Directors is first satisfied this cooperative has sufficient financial resources for such payment and that this cooperative has, for that year, sufficiently retired qualified written notices of allocation. Section 4. Redemption of Local Equity. The Board of Directors may, in its sole discretion, redeem that portion of equity called local allocated equity which is derived by subtracting all investments in other cooperative associations from the total allocated equity (not including reserves no matter how they are labeled), and, as to any member or patron, redeem the pro-rata portion of such member s or patron s local equity and reserve payment of the balance until a later time when this cooperative is Resolution Amending Bylaws of Central Region Cooperative Page 9 of 11

10 able to redeem it, including but not limited to when this cooperative receives redemptions of its investments from other cooperative associations. ARTICLE XI. Consent Each person who hereafter applies for and is accepted for membership in this cooperative and each member of this cooperative on the effective date of this Bylaw who continues as a member after such date shall, by this act alone, consent that the amount of any distributions with respect to patronage which are made in written notices of allocation, and which are received by the member from this cooperative, will be taken into account by the member from this cooperative at their stated dollar amounts in the manner provided in the taxable year in which the written notices of allocation were received. ARTICLE XII. Fiscal Year The fiscal year of this cooperative shall begin on the first day of August and end on the 31st day of July of each year, or such other date as determined by the Board of Directors to be in the best interest of this cooperative. ARTICLE XIII Dissolution Upon the dissolution of this cooperative, all of its debts and liabilities shall first be paid according to their respective priorities. Any property then remaining shall be distributed to the holders of allocated patronage equities, or any other evidence of equity. If all or any part of any reserve shall have been apportioned between and credited to any persons or organizations on the books of this cooperative, then the holders of such credits shall next be paid, and shall be limited to the gross amount of their said credits. Any property then remaining shall be distributed among the patrons in such proportions as a patronage of each patron during a base period (which base period shall be comprised of the fiscal year in which proceedings for dissolution were instituted plus the five full fiscal years next preceding said fiscal year) is in proportion to the total patronage of all patrons during said base period; provided, that in computing the amounts to be distributed to the patrons pursuant to this sentence, (a) each patron s patronage in any fiscal year during said base period when the patron was a non-participating patron by reason of the patron having disclaimed all rights to any share of the patrons net margins for said fiscal year shall be taken into account, and (b) except as above provided in clause (a), each patron s patronage in any fiscal year during said base period when the patrons share of the patrons net margins was less than One Hundred Dollars ($100.00) shall be disregarded, and any such distributions shall be subject to the provisions of Article XV below. Non-qualified written notices of allocation will generally be retired only upon the distribution of assets on liquidation or dissolution of the association and shall be treated as an allocated surplus for all purposes. The Board of Directors may, in its sole discretion, pay out non-qualified written notices on an equitable basis so long as the Board is first satisfied the cooperative has sufficient financial resources for such a payment and that the cooperative has, for that year, sufficiently retired qualified written notices of allocation. This cooperative s patronage records shall be dispositive on what patronage is paid out to each patron in such circumstances. If this cooperative dissolves prior to its receipt of any redemption of investments in other cooperatives, the members and patrons of this cooperative may only receive payment of the remaining balance upon this cooperative s receipt of cash from redemption of its investments in other cooperatives. ARTICLE XIV. Amendments to the Bylaws These Bylaws may be amended in the manner provided by the laws of the State of Minnesota. Any amendments to the Bylaws or Articles of Incorporation, including the ones herein, shall, at the discretion of the Board of Directors, apply to any prior fiscal years for which a tax return has not yet been submitted, or to amend any previously submitted tax returns and also serve to ratify any such actions of the Board of Directors consistent with these Bylaws and the proposed amendments thereto. These Bylaws may also be amended prospectively by the Board of Directors from time to time in their discretion unless such amendment or the authority to pass that amendment is prohibited by the Articles, these Bylaws, or the power to make such amendment is reserved exclusively for the members by such documents or Minnesota law. Any amendment to these Bylaws made by the Board of Directors must be distributed to the members at the next annual meeting, when the members may move to repeal any such amendment. Resolution Amending Bylaws of Central Region Cooperative Page 10 of 11

11 ARTICLE XV. Unclaimed Property and Addresses Section 1. Unclaimed Property. In accordance with Minnesota Statutes 308A.711, subd. 1, or 308B.735, subd. 1, this cooperative may, in lieu of paying or delivering to the Commissioner of Commerce, any unclaimed property, distribute the unclaimed property to a corporation or organization that is exempt from taxation under Minnesota Statutes , subd. 1, after notice as required by applicable Minnesota law has been provided. Section 2. No Addresses. Whenever the cooperative determines that it does not have a current address for the member or patron who was previously allocated equity of the cooperative, or whenever a member or patron fails to maintain a current address at the cooperative, then, in that case, and before the previously allocated equity ever becomes payable, it will be deemed to be contributed to the cooperative s unallocated surplus and in the case of a dissolution of the cooperative, the total surplus remaining, including these contributed amounts, if any, will be distributed to the members and patrons as determined by the Board of Directors and in accordance with the Articles of Incorporation and Bylaws of this cooperative. Resolution Amending Bylaws of Central Region Cooperative Page 11 of 11