Articles of Incorporation of Farmers Cooperative
1. Introduction. We, [names], are all residents and citizens of [state] and are engaged in the production of agricultural products. We voluntarily associate ourselves to form a cooperative association, without [or, with] capital stock, under the provisions of the [name] Cooperative Marketing Act of [state].
2. Name. The name of the association is [name] Association (Association).
3. Purposes. The purposes of Association are (a) to provide and obtain for its members goods or services related to the production and marketing of agricultural products; (b) to perform or make available any other services needed to operate a farm business (e.g., credit, irrigation, or pest control); and (c) to exercise all of its powers on a cooperative basis.
4. Powers. Association has the power to:
a. Borrow Money. Borrow money, without limitation, and give a lien on any of its property as security for any borrowing.
b. Advances. Make cash advances to members and other producers.
c. Act as Agent. Act as an agent or representative of anyone participating in Association's activities.
d. On Real and Personal Property. Buy or lease any real or personal property that is needed or useful in the operation of Association's business.
e. Instruments and Obligations. Draw, make, accept, indorse, guarantee, and issue promissory notes, bills of exchange, drafts, warrants, certificates, and all other kinds of obligations, including negotiable or transferable instruments, for any purpose for which Association was created, and give a lien on any of its property as security for these obligations.
f. Patents, Trademarks, Copyrights. Acquire and develop any interest in patents, trademarks, and copyrights connected with Association's business.
g. Creation of Other Cooperative Agencies. Work with other farm cooperative associations to create central, regional, or national cooperative agencies, for any of the purposes for which Association was formed, and become a member or stockholder of these agencies.
h. Other Powers. Exercise all other powers, privileges, and rights granted to ordinary corporations and cooperative marketing associations by the laws of this State, and all other powers and rights that are needed to carry out the purposes for which Association was formed, unless those powers and rights are inconsistent with the laws of the State under which Association is incorporated.
i. No Restriction on Powers. The enumeration of powers in this Section is not a limit or restriction on any general powers given to Association by law.
5. Limitation on Services to Nonmembers. Association will not market products of nonmembers in an amount greater than the value of products marketed for members. It will not purchase supplies and equipment for nonmembers in an amount greater than the value of supplies and equipment purchased for members. It will not purchase supplies and equipment for persons who are neither members nor producers of agricultural products is an amount exceeding ........ percent (........%) of its total purchases. However, business done for the United States or any of its agencies is not subject to the provisions of this Paragraph 5.
6. Place of Business. Association's principal place of business is in [city, county, state].
7. Duration. Association shall exist for [number] years from the date of its incorporation.
8. Directors. Association will have [number] Directors. The first elected Board of Directors will consist of [number] Directors elected for one year; [number] elected for two years; and [number] elected for three years. Thereafter, all Directors will be elected for three years. The names and addresses of the incorporating Directors, who will serve until the first annual meeting of members or until their successors are elected and qualified, are:
[schedule of names and addresses]
9. Membership and Voting. Association will not have capital stock, but will admit applicants to membership based on uniform conditions set out in its Bylaws. Membership will be restricted to producers of agricultural products and associations of producers. Association will be operated on a cooperative basis for the mutual benefit of its members.
Each member will have one vote on each matter submitted to a vote at any meeting of members.
Property rights and interests of each member in Association will be unequal and will be determined by the proportion that each member's patronage bears to the total patronage of all members. Upon dissolution, however, the equity interests of members will be determined as provided in the Bylaws.
9. Capital Stock and Voting.
a. Authorized Amounts; Classes. The capital stock of Association will consist of [number] shares. This is divided into [number] shares of common stock, with par value of ........ dollars ($........) per share, and [number] shares of preferred stock, with par value of ........ dollars ($........) per share.
b. Common Stock. The common stock may be purchased, owned, or held only by producers of agricultural products who patronize Association in accordance with its uniform terms and conditions, and who have been approved by the Board of Directors. "Producer" means any individual or entity that produces [product] or other agricultural products, and includes tenants of land used to produce such products, lessors of land who receive such products as rent for that land, and cooperative associations of such producers.
Each member will hold only one share of common stock. Each eligible holder of common stock will be entitled to only one vote on each matter submitted to a vote at any meeting of stockholders.
If the Board of Directors of Association finds, after a hearing, that any common stock is held by any person who is (i) not eligible for membership; (ii) no longer an eligible member; or (iii) an eligible member who has not marketed, through Association, the products covered by a marketing contract with it for a period of [number] years, or has not otherwise patronized Association, then such holder shall have no rights or privileges arising out of stock ownership, other than the right to participate in case of dissolution (as provided by law). Association has the right, at its option, to (i) purchase this stock at either book or par value, whichever is less, as determined by the Board of Directors; (ii) require the transfer of this stock, at book or par value, to any person eligible to hold it; or (iii) require the holder of this stock to convert it to preferred stock of equal value. In any such transfer or purchase, if the original holder fails to deliver the stock certificate to Association, Association may cancel the certificate on its books and issue a new common or preferred stock certificate, as he may be, to the appropriate party.
The consent of the Board of Directors is necessary to transfer the common stock of Association. This transfer must be made on the books of Association, and may only be made to persons eligible to hold common stock. Attempted assignment or transfer of common stock to any person not eligible to hold it will not confer on that person any rights or privileges on account of such stock.
Association shall have a lien on all of its issued common stock for any indebtedness of such stockholders to it. No dividends shall be paid on common stock.
c. Preferred Stock. Preferred stock may be issued in series to any person, association, co-partnership, corporation, or other organization. It shall have no voting rights. Noncumulative dividends not exceeding ........ percent (........%) per annum may be paid on this stock if declared by the Board of Directors.
Preferred stock may only be transferred on the books of Association. It may be redeemed, in whole or in part, at any time, on [number] days' notice, by Association, in the order in which it was issued, chronologically. It will be redeemed on a pro rata basis, at par value plus any declared but unpaid dividends. If the stockholder fails to deliver the certificate being redeemed, Association may cancel the stock on its books. Stock that has been redeemed may, at the discretion of the Board of Directors, be reissued or retired. Any stock being so redeemed shall not bear dividends after it has been called for redemption.
Association shall have a lien on all of its issued preferred stock for any indebtedness of such stockholders to it.
At the discretion of the Board of Directors, any dividends or distributions of Association may be paid in certificates of preferred stock, or credits on preferred stock, or ad interim certificates that will represent fractional parts of the preferred stock, subject to conversion into full shares.
The Board of Directors shall also have the power, at any time, to pay off, retire, release, or satisfy any preferred stock certificates, to settle a dispute between a preferred stockholder and Association, to settle an estate of a deceased or bankrupt stockholder, and to close out a stockholder's interest when the stockholder has moved from the territory.
In the event of dissolution or distribution of Association's assets, all preferred stockholders will be entitled to receive the par value of their stock, plus any declared, but unpaid dividend, before any distribution is made to common stockholders.
IN WITNESS WHEREOF, we have set our hands this [date].