Bylaws

BYLAWS OF Texas Operators Association A Texas Health Group Cooperative 

These Bylaws (the “Bylaws”) of Texas Operators Association, a Texas non-profit corporation and health group cooperative (the “Cooperative”), are hereby adopted effective as of the [1st of August], 2020, as the Bylaws of the Cooperative by the undersigned board of directors (the “Board of Directors”) of the Cooperative pursuant to Chapter 251 of the Texas Business Organizations Code (as amended from time to time, the “TBOC”) and, as applicable, Chapters 20 and 22 of the TBOC.

ARTICLE I ORGANIZATION

1.1. Formation. The Cooperative has been formed as a Texas Nonprofit Corporation by the filing of a Certification of Formation (the “Certificate of Formation”) with the Secretary of State of the State of Texas on June 15th , 2020 under and pursuant to the TBOC. The Certificate of Formation, the execution and filing thereof, and all other acts of the organizer of the Cooperative with respect to the formation of the Cooperative prior to and including the date of these Bylaws, are approved, ratified and confirmed by the undersigned.

1.2. Name. The name of the Cooperative is Texas Operators Association (the “Cooperative”) and all Cooperative business must be conducted in the name or such other names that may be selected by the Board of Directors and that comply with applicable law.

1.3. Registered Agent; Registered Office; Offices. The registered agent shall be J. M. Trippon & Company, P. C. and the registered office of the Cooperative in the State of Texas shall be [Texas Operators Association c/o J. M. Trippon & Company, P.C. 8955 Katy Freeway, Suite 310 Houston, TX 77024] as specified in the Certificate of Formation. The Cooperative may have other such offices, in Texas or elsewhere, as designated by the Board of Directors.

ARTICLE II PURPOSE AND DUTIES

2.1. The Cooperative is organized and shall be operated exclusively as: a voluntary employees’ beneficiary association under Section 501(c)(9) of the Internal Revenue Code of 1986, as amended (the “Code”), and the applicable regulations promulgated thereunder; and a Texas health group cooperative pursuant to Chapters 251, 20, and 22 of the TBOC, Chapter 1501 of the Texas Insurance Code, and Section 171.0002(c)(8) of the Texas Tax Code. The Cooperative shall not carry on any activities not permitted to be carried on by a corporation exempt from federal income tax under Section 501(c)(9) of the Code and exempt from state franchise tax under Section 171.0002(c)(8) of the Texas Tax Code.

2.2. The Cooperative is intended to be an “employee welfare benefit plan,” as defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and a multiple employer welfare arrangement (“MEWA”), as defined in Section 3(40) of ERISA, that provides group health benefits on a fully-insured basis. The Cooperative is further intended to constitute a single ERISA-covered plan at the MEWA level pursuant to the United States Department of Labor’s sub-regulatory guidance concerning association health plans.

2.3. The purpose of the Cooperative is to arrange for health benefit plan coverage on a fully-insured basis for the payment of medical, sickness, hospital or similar health benefits to Employees of Cooperative members in the State of Texas and/or the dependents of those Employees. Substantially all of the operations of the Cooperative shall be for this purpose and any earnings shall not inure to the benefit of any private individual or shareholder other than through the payment of medical, sickness, hospital or similar health benefits.

2.4. The Cooperative shall: contract with health benefit plan issuers that meet the requirements established by Texas Insurance Code § 1501.061 to purchase health coverage for Participants and to provide services to small and/or large Employers covered through the Cooperative; collect premiums to pay for the cost of health benefit coverage purchased through the Cooperative and the Cooperative’s administrative expenses; establish administrative and accounting procedures for the operation of the Cooperative; establish procedures under which an applicant for or a Participant in coverage obtained through the Cooperative may have a grievance reviewed by an impartial person; and develop and implement a plan to maintain awareness of the Cooperative and publicize eligibility requirements for and the procedures for enrollment in coverage through the Cooperative.

ARTICLE III DEFINITIONS

3.1. Employee. An individual who: (a) is a common law employee of an Employer; or (b) has an ownership interest in an Employer and performs personal services for the Employer for which the individual receives wages or income.

3.2. Employer. Any Chick-fil-A franchisee that has one or more common law employees and a principal place of business in the State of Texas. The term “Employer” does not include a sole proprietorship or other business in which the only employees are an owner and/or his/her spouse.

3.3. Member. An Employer that has elected to participate in the Cooperative and has met the requirements set forth in Section 4.2.

3.4. Participant. An Employee who is eligible to participate and is enrolled in the benefits provided through the Cooperative.

3.5. Participation Agreement. The agreement between a Member and the Cooperative through which the Member elects to provide certain benefits to its Employees through the Cooperative.

3.6. Plan Administrator. The Cooperative or the entity or the committee that the Board of Directors appoints in accordance with these Bylaws to act as plan administrator, as that term is defined in Section 3(16)(A) of ERISA, and who acknowledges and accepts the Board’s appointment and the attendant delegation of fiduciary responsibilities in writing with respect to the administration of the Cooperative.

ARTICLE IV MEMBERSHIP

4.1. Eligibility. Membership in the Cooperative shall be limited to Chick-fil-A franchisees that have one or more common law employees and a principal place of business in the State of Texas. Both “small employers” and “large employers,” as defined in Texas Insurance Code § 1501.002, are eligible to join the Cooperative. An “eligible single-employee business” as defined in Texas Insurance Code § 1501.051(3-a), is not eligible to join the Cooperative. The Board of Directors in its sole discretion shall determine whether an applicant meets the eligibility requirements.

4.2. Membership. No Employer shall be accepted to membership in the Cooperative unless and until: (a) such Employer’s application for membership has been approved by the Board of Directors in its sole discretion; (b) such Employer has made any required payments to the Cooperative; (c) such Employer has agreed to be bound by these Bylaws and executed a Participation Agreement; and (d) such Employer has delivered such other documents or instruments as may be deemed necessary or appropriate by the Board of Directors to effect such Employer’s admission as a Member. Such admission shall become effective on the date on which the Board of Directors determines that such conditions have been satisfied and thereafter such Employer shall be considered a “Member” of the Cooperative.

4.3. Two-Year Initial Commitment. An Employer will commit to sponsor health coverage for its Employees through the Cooperative for a minimum of two years (but may be permitted to cease purchasing coverage through the Cooperative upon demonstrating financial hardship as defined in the Participation Agreement or if they cease to meet the definition of Membership).

4.4. Annual Subscription. After the initial two-year commitment period described in Section 4.3, to continue participating in the Cooperative as a Member, an Employer must commit to purchase health coverage for its Employees through the Cooperative for a 12-month period, which is subject to renewal each year thereafter. A Member that wishes to withdraw from the Cooperative before the expiration of its 12-month subscription period shall be required to pay an early withdrawal penalty equal to one month of premiums for that Employer’s Participants (“Withdrawal Penalty”). The premium basis for the Withdrawal Penalty will be calculated as an average of the Member’s premium obligations for its Participants during the preceding three months. 4.5. Membership Fees. Each Member shall be required to pay an initial membership setup fee as established by the Board of Directors. In addition, an annual membership fee will be charged to Members which may vary from year-to-year and be subject to annual change.

4.6. Number of Members. There is no maximum number of Members. As required by Texas Insurance Code § 1501.058(c), the Cooperative shall have a minimum of ten (10) Members. If the Cooperative’s membership drops below ten (10) Members, it must add additional Members by the end of the next open enrollment period. If the Cooperative does not have at least 10 Members at the beginning of the next open enrollment period, the Cooperative shall immediately notify the existing Members for the potential of nonrenewal as required by 28 Texas Administrative Code § 26.402.

4.7. Nondiscrimination. The Cooperative may not limit, restrict, or condition an Employer’s membership in the Cooperative based on risk characteristics of a group or any member of a group or on health status related factors, duration of coverage, or any similar characteristics related to the health status or experience of a group or any member of a group.

4.8. Designated Representative. Each Member shall designate a person to whom notice should be sent by the Cooperative and to act on the Member’s behalf in conducting the affairs of the Cooperative, which designation shall remain in effect until written notice of a properly authorized change in the designated person is received by the Board of Directors in writing.

4.9. Good Standing. A Member in good standing is a Member that has paid any required member capital in full (or is paying member capital in a manner approved by the Board of Directors), paid any required membership fees, has timely deposited or paid all employer portions of insurance premiums to [the TOA Welfare Benefits Trust], (the “Trust”) and has timely deposited or paid all employee portions of insurance premiums to [the Trust] to the extent such premiums have been withheld from the employee’s wages or otherwise received from the employee.

4.10. One Vote Per Member. Each Member in good standing shall have one vote in the affairs of the Cooperative. Any voting agreement or other device that is made to evade the onemember-one-vote rule is not enforceable.

4.11. Regular Annual Meeting. The Board of Directors shall call an annual meeting of the Members each fiscal year. At least thirty (30) days’ advance written notice shall be provided to the Members of the time and place within the State of Texas of such meeting, as determined by the Board of Directors.

4.12. Special Meetings. Special meetings of the Members may be called by a majority vote of the Board of Directors or by written petition of at least ten percent (10%) of the Members of the Cooperative. Notice to the Members of a special meeting shall be provided not later than the tenth day and not earlier than the thirtieth day before the date of such meeting. Each notice shall include the time and place within the State of Texas of such meeting, as determined by the Board of Directors, and shall provide a description of the purpose for which such special meeting is called. No business shall be transacted at any special meeting other than that referenced in such notice.

4.13. Voting. Each Member in good standing shall be entitled to one vote on any matter proposed at a meeting. No votes by proxy shall be allowed. Members may cast ballots in person at a meeting, or may vote by email, facsimile, other electronic means, or by mail as provided in Section 251.256(b) and (c) of the TBOC, or by any combination of those methods. 

4.14. Quorum. At any regular or special meeting of the Members, a quorum necessary for the transaction of business shall be at least 25% of the total number of Members. Votes cast by any method specified in Section 4.11 above upon any question presented at a regular or special meeting shall be counted towards fulfillment of the quorum requirement, provided such votes are submitted within the designated timeframe.

4.15. Withdrawal. Subject to the required two-year commitment set forth in Section 4.3 above, a Member may withdraw from the Cooperative by providing a written offer to the Board of Directors. Within ninety (90) days after the date the Board of Directors receives such offer from a Member, the Board of Directors may approve of such withdrawal upon Member’s satisfactory resolution of all debts to the Cooperative, including any Withdrawal Penalty if applicable. The Withdrawal Penalty will not apply to Members who cease to meet the Membership definition because of relocation.

4.16. Expulsion. A Member may be expelled by the affirmative vote of the majority of the Members voting on the matter at a regular or special meeting. Not less than eleven (11) days prior to the date of a meeting at which the Members are to vote on the expulsion of a Member, the Board of Directors shall give written notice such Member facing expulsion of the charges and such Member is entitled to be heard at the meeting through counsel or other representative. Upon the affirmative vote of the Members to expel a Member, the Board of Directors shall cause the Cooperative to repay to such Member the amount of any capital contribution by the Member to the Cooperative, subject to any offsetting of debts owed by the Member to the Cooperative and so long as such repayment does not jeopardize the solvency of the Cooperative, as determined by the Board of Directors in its sole discretion.

ARTICLE V MEMBER CAPITAL

5.1. Authorization. The Board of Directors is authorized, but not required, to establish membership capital requirements for membership in the Cooperative. Membership capital requirements for Members may be implemented, changed, or abolished from time to time by a two-thirds (2/3) majority vote of the Board of Directors.

ARTICLE VI ALLOCATION OF NET SAVINGS

6.1. Allocations. At least once a year, with a full reporting in the Annual Report to the Members, the Board of Directors shall apportion any net savings (as defined in Section 251.001(5) of the TBOC) of the Cooperative in the following order: 

  • (a) A portion of the net savings may be allocated by the Board of Directors to an educational fund, which may be used exclusively to pay for fiduciary or other appropriate training or education in connection with administering the Cooperative;

  • (b) A portion of the net savings may be allocated to a fund for the general welfare of the Participants in the Cooperative;

  • (c) A portion of the net savings may be allocated to retained earnings; and

  • (d) Any remaining net savings may be allocated to reduce Participants’ future contributions for their health insurance coverage.

ARTICLE VII ANNUAL REPORTS

7.1. Annual Financial Condition Report. Within 120 days after the end of its fiscal year, the Cooperative shall have on file at its principal office an annual report (the “Annual Report”) of the Cooperative’s financial condition stating, at a minimum: (a) the name of the Cooperative; (b) the address of the Cooperative’s principal office; (c) the name, address, occupation, and date of expiration of the term of office of each officer and director; (d) the amount and nature of the authorized, subscribed, and paid-in capital; (e) the total number of Members; (f) the number of Members who were admitted to or withdrew from the Cooperative during the year; (g) the amount of membership fees received; (h) a balance sheet; and (i) an income and expense statement.

7.2. Additional Requirements. (a) The Annual Report shall be signed by the President and the Secretary of the Cooperative. (b) The Annual Report shall be submitted to the Members at the annual meeting of the Members. (c) The Cooperative shall file a copy of the Annual Report with the Secretary of State of the State of Texas if required by Section 251.353 of the TBOC or any successor provision in the TBOC.

7.3. Review Committee. The Board of Directors shall appoint a committee of Members who are not principal bookkeepers, accountants or employees of the Cooperative to review the Cooperative’s books and records. Such committee shall report on the quality of the Annual Report and the bookkeeping system of the Cooperative at the annual meeting of the Members.

ARTICLE VIII BOARD OF DIRECTORS

8.1. General Powers. The property, business and affairs of the Cooperative shall be managed by its Board of Directors. Subject to the restrictions imposed by the TBOC, the Certificate of Formation and these Bylaws, the Board of Directors shall exercise all of the powers of the Cooperative.

8.2. Number. The number of Directors shall be not less than five (5), each of whom shall be an Employee of a Member. The Board of Directors may increase the number of directors up to a maximum of fifteen (15) Directors by a majority vote of the Directors. Any decrease in the number of Directors must be approved by a majority vote of the Members voting at a regular or special meeting. At all times there will be an odd number of Board seats to not allow tie votes.

8.3. Terms. Except as provided in Section 8.4, Directors shall serve for a term of three (3) years and may be re-elected for an unlimited number of subsequent terms. Each person serving as a Director shall hold office until the earlier to occur of: (a) the expiration of the term for which he or she is elected or appointed; or (b) his or her death, resignation, or removal. The terms of the Board of Directors shall be staggered.

8.4. Initial Board of Directors. The initial Board of Directors shall be comprised of thirteen (13) directors. The terms of the initial Board of Directors shall be staggered as follows: The initial term for Director seats 1, 2, 3, and 4 shall expire on December 31, 2021. The initial term for Director seats 5, 6, 7, and 8 shall expire on December 31, 2022. The initial term for Director seats 9, 10, 11, 12, and 13 shall expire on December 31, 2023. These seats are assigned as follows for the initial board members: Seat 1 Bryan Bullington, Vice President Seat 2 Charles E. King, Director Seat 3 Matthew Michaels, Secretary Seat 4 Robert Henckel, Director Seat 5 Kevin Caddenhead, Vice President Seat 6 Rebecca Chin, Director Seat 7 Nissim J. Chaluh, Chairperson Seat 8 Steven Kinney, Director Seat 9 Zack Derelioglu, Treasurer Seat 10 Edward Kober, Director Seat 11 Benjamin A. Williams, Vice President Seat 12 Michael Mills, Director Seat 13 Michael Walkup, President

8.5. Election. Other than the initial Board of Directors appointed in Section 8.4 or a Director appointed by the Board of Directors to fill a vacancy as described in Section 8.7, Directors shall be elected by the Members as follows:

  • (a) Nominations. Members shall nominate candidates for each open Director seat. Each Member may nominate a maximum of one (1) candidate for each open Director seat. No person may be nominated as a candidate without his or her consent. 

  • (b) Qualifications. Each Director candidate must be a Member. No owner, officer, director or employee of an insurance carrier, reinsurer, claims administrator or other service provider to the Cooperative may be nominated for or serve as a Director. All Directors must be permanent residents of the State of Texas at all times during their term.

  • (c) Ballots. At least thirty (30) days prior to the election, the Board of Directors shall mail, email or otherwise deliver a ballot listing the candidates for the open Board of Directors’ seats to each Member of the Cooperative.

  • (d) Voting. Each Member shall be entitled to one (1) vote for each open Board of Directors’ seat. Ballots may be cast by mail, fax, email or by other reasonable means available. Write-ins shall not be counted or considered.

  • (e) Results. The Board of Directors or its delegee shall count the ballots and shall certify the candidate receiving the highest number of vote for each Director seat to be the elected Directors, provided, however, that no two Directors serving contemporaneously may be an Employee of the same Member.

8.6. Removal; Resignation. Directors may be removed for any reason, with or without cause, by the affirmative vote of two-thirds (2/3) of the remainder of the Board of Directors or by a vote of a majority of the Members voting at any membership meeting where quorum is present. The Director who is to be removed is entitled to be heard at the Board meeting or the Member meeting, as applicable. Any Director may resign by delivering a written letter of resignation to the President with at least 30 days’ notice.

8.7. Vacancies. Vacancies which occur for any reason will be filled by appointment by the remaining Directors. A Director appointed to fill a vacancy shall be appointed for the remainder of the unexpired term of his or her predecessor in office.

8.8. Regular Meetings. Regular meetings of the Board of Directors shall be held at least once per calendar quarter. The Board of Directors shall designate the time and place, either within or without the State of Texas, for the holding of the regular meetings. Notice of regular meetings shall be required.

8.9. Annual Meetings. An annual meeting of the Board of Directors shall be held at the date, time and place, either within or without the State of Texas, determined by the Board of Directors.

8.10. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the President or any three (3) Directors. The person or persons authorized to call special meetings of the Board of Directors may fix any place, either within or without the State of Texas, as the place for holding any special meetings of the Board of Directors called by them. Notice of special meetings shall be required.

8.11. Meetings Via Telephonic or Electronic Media. Members of the Board of Directors or members of any committee designated by the Board of Directors may participate in and hold a meeting of that Board of Directors or committee, respectively, by means of a telephone conference, video conference, or similar electronic communications equipment, provided that all persons participating in such a meeting are able to communicate via the telephonic, videographic, or other electronic means, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully created.

8.12. Proxy Attendance. A Director may vote by proxy executed in writing by the Director and submitted to the Secretary prior to the meeting.

8.13. Policies and Procedures. The Board of Directors shall enact policies and procedures as deemed appropriate to conduct the affairs of the Cooperative. Approval of said policies and procedures, and changes thereto, shall require a majority of the Board of Directors at which a quorum is present.

8.14. Notice. Notice of any regular meeting of the Board of Directors shall be given at least thirty (30) days before the meeting by written notice delivered personally or sent by email or facsimile to each Director at his or her address as shown by the records of the Cooperative. Notice of any special meeting of the Board of Directors shall be given at least 24 hours before the meeting by written notice delivered personally or sent by email or facsimile to each Director at his or her address as shown by the records of the Cooperative. Any Director may waive notice of any meeting. The attendance of a Director at any meeting shall constitute a waiver of notice of such meeting, except when a Director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board need be specified in the notice or waiver of notice of such meeting unless specifically required by law or by these Bylaws.

8.15. Quorum. A majority of the Board of Directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors; but if less than a quorum of the Directors is present at said meeting, a majority of the Directors present may adjourn the meeting without further notice.

8.16. Manner of Acting. The act of a majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors unless the act of a greater number is required by law, by the Certificate of Formation, or by these Bylaws.

8.17. Action by Written Consent. Any action required by law to be taken at a meeting of the Board of Directors, or any action which may be taken at a meeting of the Board of Directors, may be taken without a meeting if a consent in writing setting forth the action so taken shall be signed by the required number of Directors for such action taken, but not less than a majority vote of the Board of Directors.

8.18. Immunity. Directors are not liable for an act or omission made in good faith in the performance of powers and duties under Chapter 1501, Subchapter B, of the Texas Insurance Code.

8.19 Conflicts of Interest. Directors are under affirmative obligation to disclose any actual, potential, or perceived conflicts of interest with respect to the Director, any immediate family member, any significant other, and/or any member of the Director’s household. The disinterested Directors shall determine whether a conflict exists, and may consult with legal counsel as appropriate to make such determination. If a conflict of interest exists, the interested Director shall not participate in any discussion or vote in any matter to which the conflict pertains.

8.20. Compensation and Expenses. No Director will receive or be entitled to compensation for his or her service as a Director. Directors shall be entitled to reimbursement for reasonable and necessary expenses actually incurred by him or her in carrying out his or her duties in connection with the Cooperative.

ARTICLE IX OFFICERS

9.1. Officers. The initial officers of the Cooperative shall be a Chairperson, President, and Secretary. One or more Vice-Presidents (the number thereof to be determined by the Board of Directors), a Treasurer, and such other officers, as determined by the Board of Directors, may be appointed in accordance with the provisions of this Article IX. Any two or more offices may be held by the same person, except the offices of President and Secretary which must be held by two different persons.

9.2. Election and Term of Office. The officers of the Cooperative shall be elected annually by the Board of Directors at the regular annual meeting of the Board of Directors and the term of office for each officer shall be until the next succeeding annual meeting of the Board of Directors at which officers are elected. Officers are not restricted to a maximum number of terms. New offices may be created and filled at any meeting of the Board of Directors. Each officer shall hold office until his or her death, resignation, removal, or until his or her successor has duly elected and certified, whichever is earlier. All officers must remain eligible to participate in the Cooperative at all times.

9.3. Eligibility. No two officers may be Employees, officers, or owners of the same Member.

  • (a) Chairperson and President. The Board of Directors will elect a Chairperson and President from the then-serving Directors.

  • (b) All Other Officers. To be eligible to be elected to any other officer position, an individual must be a Participant and the Participant’s Employer must be in good standing with the Cooperative at the time of election. The individual must be a Director.

9.4. Resignation/Removal. An officer may resign his or her office by submitting a written letter of resignation to the Board of Directors with at least thirty (30) days’ notice. Any officer may be removed for any reason, with or without cause, by a majority of the Board of Directors at any meeting at which a quorum is present.  

9.5. Vacancies. A vacancy in any office because of death, resignation, disqualification, or otherwise, may be filled for the unexpired portion of the term by a majority of the Board of Directors at any meeting at which a quorum is present.

9.6. Chairperson. The Chairperson shall preside at meetings of the Board of Directors and Members. The Chairperson shall perform such other duties as from time to time may be assigned to him or her by the Board of Directors, including interacting with potential Cooperative members and Chick-fil-A national leadership.

9.7. President. The President shall be the principal executive officer of the Cooperative and shall, in general, supervise and control all of the business and affairs of the Cooperative. The President may sign, with the Secretary or any other proper officer of the Cooperative authorized by the Board of Directors, any deeds, mortgages, bonds, contracts, or other instruments which the Board of Directors has authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws or by statute to some other officer or agent of the Cooperative. In general, the President shall perform all duties as may be prescribed by the Board of Directors from time to time, including participating in various committee meetings as a member or chairperson thereof.

9.8. Vice-President(s). In the absence of the President or in the event of his or her inability or refusal to act, the Vice-President (or in the event there be more than one Vice-President, the Vice-Presidents in order of their election) shall perform the duties of the President, and when so acting shall have all the powers of and be subject to all the restrictions upon the President. Any Vice-President shall perform such other duties as from time to time may be assigned to him or her by the President, the Board of Directors, or by policy or procedure.

9.9. Treasurer. The Treasurer shall have charge and custody of and be responsible for all funds and securities of the Cooperative, receive and give receipts for moneys due and payable to the Cooperative from any source whatsoever, and deposit all such moneys in the name of the Cooperative in such banks, trust companies, or other depositories as shall be selected in accordance with the provisions of these Bylaws. He or she shall keep proper books of account and other books showing at all times the amount of funds and other property belonging to the Cooperative, all of which books shall be open at all times to the inspection of the Board of Directors. He or she shall also submit a report of the accounts and financial condition of the Cooperative at each annual meeting of the Board of Directors. In general, the Treasurer shall perform all the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him or her by the President or by the Board of Directors.

9.10. Secretary. The Secretary shall keep the minutes of the meetings of the Board of Directors in one or more books provided for that purpose, give all notices in accordance with the provisions of these Bylaws or as required by law, be custodian of the corporate records and of the seal of the Cooperative, and affix the seal, if any, of the Cooperative to all documents, the execution of which on behalf of the Cooperative under its seal is duly authorized in accordance with the provisions of these Bylaws. In general, the Secretary shall perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him or her by the President or Board of Directors.

ARTICLE X COMMITTEES

10.1. Appointment. The President shall appoint members of committees established by the Board of Directors, except for the Executive Committee. The Board of Directors shall appoint the chairperson of each committee by majority vote at a meeting at which a quorum is present. These committees shall perform such functions and make such reports as the President or Board of Directors shall determine.

10.2. Executive Committee. The Board of Directors may appoint an Executive Committee comprised of the President and two or more Directors as deemed necessary by the Board of Directors to serve at the pleasure of the Board of Directors. The President, unless absent or otherwise unable to do so, shall preside as chairperson of the Executive Committee. The Executive Committee shall meet at the call of the President or the Board of Directors, or any two members of the Executive Committee, and shall have and may exercise when the Board of Directors is not in session the power to perform all duties authorized by the Board of Directors that are not required by law to be performed solely by the Board of Directors.

10.3. Audit Committee. The Board of Directors may appoint an Audit Committee at such times as it deems necessary. The function and purpose of the Audit Committee shall be to advise the Board of Directors on the selection and retention of auditors and to oversee any audit of the Cooperative’s finances and/or operations. A majority of the members of the Audit Committee shall be Directors. The remaining members of the Audit Committee, if any, shall be Employees of Members. 10.4. Other Committees. Other committees, not having and exercising the authority of the Board of Directors in the management of the Cooperative, may be designated by a resolution adopted by a majority of the Directors present at a meeting at which a quorum is present. Except as otherwise provided in such resolution, members of each such committee shall be appointed in accordance with this Section

10.4. Any member thereof may be removed by the person or persons authorized to appoint such member whenever in their judgment the best interests of the Cooperative shall be served by such removal. Members of such committee or committees may, but need not be, Directors.

10.5. Term of Office. Each member of a committee shall continue as such until the next annual meeting of the Board of Directors and until his or her successor is appointed, unless the committee shall be sooner terminated, unless such member be removed from such committee, or unless such member shall cease to qualify as a member thereof. Members may be reappointed for successive terms in the discretion of the Board of Directors.

10.6. Vacancies. Vacancies in the membership of any committee may be filled by appointments made in the same manner as provided in the case of the original appointments.

10.7. Quorum. Unless otherwise provided in the resolution of the Board of Directors designating a committee, a majority of the whole committee shall constitute a quorum and the act of a majority of the members present at a meeting at which a quorum is present shall be the act of the committee.

10.8. Rules. Each committee may adopt rules for its government not inconsistent with these Bylaws or with rules adopted by the Board of Directors.

10.9. Committee Dissolution. The Board of Directors may, in its sole discretion, dissolve any committee with or without cause. Except for the Executive Committee, such dissolution shall require approval by a majority of Directors present at a meeting at which a quorum is present. The Executive Committee shall only be dissolved by approval of two-thirds (2/3) vote of the members of the Board of Directors.

ARTICLE XI CONTRACTS, CHECKS, DEPOSITS, AND GIFTS

11.1. Contracts. The Board of Directors may authorize any officer or officers, agent or agents of the Cooperative, in addition to the officers so authorized by these Bylaws, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Cooperative. Such authority may be general or confined to specific instances.

11.2. Checks and Drafts, Etc. All checks, drafts, or orders for the payment of money, notes, or other evidence of indebtedness issued in the name of the Cooperative shall be signed by such officer or officers, agent or agents of the Cooperative and in such manner as shall from time to time be determined by resolution of the Board of Directors. In the absence of such determination by the Board of Directors, such instruments shall be signed by the President or Treasurer and countersigned by the Secretary or a Vice-President of the Cooperative.

11.3. Deposits. All funds of the Cooperative shall be deposited from time to time to the credit of the Cooperative in such banks, trust companies, or other depositories as the Board of Directors may select.

ARTICLE XII AMENDMENTS

12.1. Certificate of Formation.

  • (a) The Board of Directors may propose an amendment to the certificate of formation if the proposal is approved by two-thirds (2/3) vote of the Board of Directors. The Members may petition to amend the certificate of formation by a petition supported in writing by a majority of the Members.

  • (b) Written notice of the proposed amendment must sent to all of the Members no less than thirty-one (31) days prior to the date of the meeting of the Members to approve such amendment, and such notice to Members must include the full text of the proposed amendment and the text of the part of the certificate of formation to be amended.

  • (c) An affirmative vote of two-thirds (2/3) of the Members voting on the amendment is required for the adoption of any amendment to the Certificate of Formation.

  • (d) No later than thirty (30) days following the adoption of an amendment to the Certificate of Formation, the Cooperative shall cause such amendment to be filed with the Secretary of State.

12.2. Bylaws. The Bylaws may be altered, amended or repealed or new Bylaws may be adopted at any regular or special meeting of the Members by an affirmative vote of the majority of the Members voting on the matter, provided notice of the proposed alteration, amendment or repeal is provided in or with the notice of the meeting.

ARTICLE XIII DISSOLUTION

13.1. Events of Dissolution. The Cooperative shall be dissolved and its affairs wound up only upon the occurrence of any of the following events:

  • (a) the determination of the Members to dissolve the Cooperative; or

  • (b) the entry of a decree of judicial dissolution or the occurrence of any event which, as a matter of law, requires the Cooperative to be wound up.

13.2. Liquidation. If the Cooperative is dissolved pursuant to Section 13.1, the Cooperative shall be liquidated and its business and affairs would up in accordance with the TBOC. The Members of the Cooperative shall select three Employees of Members to be designated as trustees (the “Liquidating Trustees”) to, on behalf of the Cooperative:

  • (a) pay its debts;

  • (b) liquidate the Cooperative’s assets within the time set in the Liquidating Trustees’ delegation or any extension of time; and

  • (c) distribute the Cooperative’s assets in accordance with Section 13.3.

13.3. Distribution of Assets. The Liquidating Trustees shall distribute the Cooperative’s assets in the following order:

  • (a) First, to pay benefits to or on behalf of Participants and their beneficiaries that are properly payable from the Cooperative; and

  • (b) Second, to pay all reasonable and necessary expenses of managing and administering the Cooperative; and

  • (c) Third, if there any assets remaining after all benefits and expenses have been paid, such remaining assets will be applied to provide continuing health and welfare benefits to Participants at the time of dissolution on a pro rata basis.

ARTICLE XIV BOOKS AND RECORDS

14.1. The Cooperative shall keep correct and complete books and records of account of the activities and transactions of the Cooperative including but not limited to: the Certificate of Formation and any amendments thereto; Bylaws and any amendments thereto; the Cooperative’s application for tax-exempt status (IRS Form 1024); the Cooperative’s Return of Organization Exempt From Income Tax (IRS Form 990) if required to be filed; and minutes of the proceedings of its Board of Directors and any committees having the authority of the Board of Directors.

14.2. All books and records of the Cooperative shall be kept at such place or places within the State of Texas as the Board of Directors may from time to time determine; provided, however, that in the absence of any such determination, such place shall be the Cooperative’s principal office in the State of Texas.

14.3. Such books and records may be inspected by any Director at any reasonable time. Such books and records may be inspected by any Member or its legal representative for any proper purpose at a reasonable time and with at least five (5) business days’ notice.

ARTICLE XV INDEMNIFICATION AND INSURANCE

15.1. Indemnification. To the fullest extent permitted under state and federal law, the Cooperative’s Directors, Officers, and employees shall be defended, indemnified and held harmless by the Cooperative or, to the extent the Cooperative is not permitted under applicable law or able to so indemnify, by the Members, against any and all expenses, judgments, decrees, fines, taxes, penalties, or amounts paid in settlement or otherwise, including attorney’s fees and other costs, in defense of any claim, action, proceeding or governmental audit relating to the Cooperative unless it is determined by a court of competent jurisdiction that the affected Director, Officer, or employee was grossly negligent or committed willful misconduct with respect to the matters at issue in the claim, action, proceeding, or governmental audit. In no event will the Cooperative’s Directors, Officers, or employees be obligated or liable for any of the Cooperative’s benefits or costs except to the extent they have obligations or liability as a Member or Participant.

15.2. Fidelity Bond and Fiduciary Insurance. All Directors, Officers, and employees of the Cooperative who are required to be bonded will be so bonded at the expense of the Cooperative. In addition, the Cooperative will secure fiduciary insurance for Officers, Directors, and the Plan Administrator.

15.3. Other Insurance. The Cooperative may purchase and maintain other insurance or another arrangement, at its expense, to protect itself and any Officer, Director, employee and/or agent of the Cooperative against any expense, liability or loss, whether or not the Cooperative would have the power to indemnify such person against such expense, liability or loss under the TBOC.

ARTICLE XVI GENERAL PROVISIONS

16.1. Fiscal Year. The fiscal year of the Cooperative shall be January 1 through December 31. The Board of Directors may change the fiscal year by approval of two-thirds (2/3) vote of the members of the Board of Directors. 16.2. Seal. The Board of Directors may authorize a corporate seal. 

16.3. Applicable Law. Applicable Law refers to the laws of the United States and the State of Texas. To the extent not preempted by ERISA, the Internal Revenue Code, or any other laws of the United States, the Cooperative shall be administered, construed, and enforced according to the laws of the State of Texas with applying any conflict of law rules or principles.

16.4. Waiver of Notice. Whenever any notice is required to be given under the provisions of the TBOC or under the provisions of the Certificate of Formation or the Bylaws of the Cooperative, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time therein, shall be deemed equivalent to the giving of such notice.