BYLAWS

COOPERATIVE

ARTICLE I. MEMBERSHIP

Section 1. General Qualifications. Any person, partnership, or corporation who is a producer of arts, crafts, and other handmade items or any products derived therefrom of in *, signs a membership application, and meets such other conditions as may be prescribed by the board of directors, may become a member of the association. The Association shall not discriminate on their acceptance of members on a basis of race, gender, religion, income, marital status, or nationality.

All applications for membership must be approved by the board of directors. Member status is effective as of the time the board approves the application for membership. A member may vote and hold office prior to payment in full of the membership fee [a common stock share].

Section 2. Membership Fee. The Board of Directors shall require a membership fee upon application for membership. This membership fee is/is not refundable upon the resignation, withdrawal, or expulsion from the association. The amount of membership fee shall be set from time to time by the Board of Directors, however the amount required to be paid in on share or membership capital by members shall not exceed twenty-five percent of the average monthly wage in this State, as defined by the department of labor and industrial relations. The Board at its discretion may also require the payment of annual fees by members.

Section 3. Membership Certificates. Upon the approval of the Board of Directors, the association shall issue a certificate of membership to each member. The membership certificate shall be in such form as may be prescribed by the directors and shall not be transferable or assignable. No certificate for membership shall be issued until paid for in full.

Section 4. Membership Nontransferable. No certificate of membership or common stock can or shall be assigned, either voluntarily or involuntarily, or by operation of law, nor can any membership or membership rights, or property rights of a member in the Association be assigned, transferred, alienated, or encumbered in any manner or by any means whatsoever. Any purported or attempted assignment, transfer, alienation, or encumbrance of either the certificate of membership, common stock certificate, or of the membership, or membership and property rights, shall be null and void and confer no rights upon the purported assignee, transferee or claimant.

Section 5. Suspension or Termination. In the event the board of directors of the association shall find that any of the [or membership certificate ] common stock of this association has come into the hands of any person who is not eligible for membership, or that the holder thereof has ceased to be an eligible member, or that such holder has not patronized the association the association for a period of two (2) years, or otherwise violated the Consumer Cooperative Association Act of the State of *, articles of incorporation, bylaws, or other agreements made with the association, the association may suspend such holder's rights as a member and terminate the membership.

Such member may be expelled and lose all rights and privileges in the association, by the vote of a majority of the directors voting at any validly held meeting of directors. The member against whom the charges are to be proffered shall informed thereof in writing at least ten days prior in advance of the meeting, and shall have an opportunity to be heard in person or by counsel at such meeting. On decision of the association to expel a member, the directors shall purchase the member's holdings at par or book value, whichever is less, if and when there are sufficient surplus funds. Membership fees are non-refundable.

A suspended or terminated member shall have no rights or privileges on account of any stock or membership certificate held, nor vote or voice in the management or affairs of the association other than the right to participate in accordance with law in case of dissolution.

Termination as provided in the foregoing shall not affect any lien or right which the Association has or may have against the terminating member or his property until his indebtedness to the Association is fully paid.

Section 6. Transfer of shares and membership; withdrawal. If a member desires to withdraw from the association or dispose of any or all of the members's holdings therein, the directors shall have the power to purchase those holdings by paying the member out of surplus funds the par value or book value, whichever is less, of any or all of the holdings offered. The directors shall then reissue or cancel the holdings.

If the association fails, within ninety days of the original offer, to purchase all or any part of the holdings offered, the member may dispose of the unpurchased interest elsewhere, subject to approval of the transferee by a majority vote of the directors. Any prospective transferee not approved by the directors may appeal to the members at their first regular or special meeting thereafter, and the action of the meeting shall be final. If such transferee is not approved, the directors shall exercise their power to purchase, if and when there are sufficient surplus funds.

Members who withdraw from an association under this section may not rejoin that association for six months, except with the majority approval of the directors.

ARTICLE II. MEETINGS OF MEMBERS

Section 1. Annual Meeting. The annual meeting of the members of this association shall be held in the State of *, during the month of , or as soon thereafter as is reasonably practical, at such time and in such place as the board of directors shall designate.

Section 2. Special Meetings. Special meetings of the members of the associaton may be called when a majority of directors, or five per cent of the, or two-hundred fifty members, whichever is less, submit a petition in writing and demand a special membership meeting, which shall be called by the secretary within thirty days of that demand.

Section 3. Notice of Meetings. Written notice of every regular and special meeting of members shall be prepared and mailed to the last known post office address of each member, or posted on prominent signs at all association locations, not less than 10 (ten) days before such meeting. Such notice shall state the nature of the business expected to be conducted and the time and place of the meeting. No business shall be transacted at any special meeting other than that referred to in the notice. In all decisions to amend the articles or bylaws, as the case may be, the members shall be informed of those decisions at least thirty (30) days in advance through a mailing or a prominent notice at all association locations.

Section 4. Voting. Unless otherwise stated in the articles of incorporation, or these bylaws, or required by applicable law, all questions shall be decided by a vote of a majority of the members voting thereon.

Each member shall be entitled to only one vote. Voting on specific preannounced items by mail or otherwise by members absent from meetings shall be permitted. Such mail or absentee vote shall specify the decision to be voted upon, and a place to mark an affirmative or negative vote. Mail or absentee votes shall be recieved by the secretary and duly recorded in the minutes of the meeting. Proxy voting shall not be allowed. Cumulative voting is not permitted.

If a membership is held by a partnership, corporation, or other legal entity, the member shall designate in writing the person who shall vote on behalf of the member. That designation shall remain in effect until written notice of a properly authorized change in the designated voter shall be received by the association.

Section 5. Quorum. ( ) members or twenty-five percent (25%) of the membership, whichever is a larger number, shall constitute a quorum at any properly called annual or special membership meeting.

ARTICLE III. DIRECTORS AND OFFICERS

Section 1. Number and Qualification of Directors. The association shall have a board of directors of ( ) members. Each director elected shall be a member of this association in good standing.

No person shall be eligible to be a director if that person is in competition with, or is affiliated with any enterprise that is in competition with, the association. If a majority of the board of directors of the association finds at any time following a hearing that any director is so engaged or affiliated that person shall thereupon cease to be a director.

Section 2. Election of Directors. At the first annual meeting of the members of this association, directors shall be elected to succeed the incorporating directors. ( ) directors shall be elected for one (1) year; ( ) directors for two (2) years and ( ) directors for three (3) years. At each annual meeting thereafter, new directors shall be elected, for a term of three (3) years each, to succeed those directors whose terms are expiring.

All directors shall be elected by secret ballot, and the nominee(s) receiving the greatest number of votes shall be elected.

Section 3. Election of Officers. The board of directors shall meet within seven (7) days after the first election and within seven (7) days after each annual election and shall elect by ballot a president, one or more vice presidents, secretary, and treasurer, each of whom shall hold office until the election and qualification of a successor, unless earlier removed by death, resignation, or for cause.

Section 4. Vacancies. Whenever a vacancy occurs in the board of directors, other than from the expiration of a term of office, the remaining directors shall appoint a member to fill the vacancy until the next regular meeting of the members. If the term of the vacating director does not expire at that regular member meeting, a special election shall be held to select a director to fill the year or years remaining in that term.

If one or more officer positions become vacant, such offices shall be filled by the board of directors, through election by ballot, at either a regular or special meeting of the board.

Section 5. Regular Board Meetings. In addition to the meetings mentioned above, regular meetings of the board of directors shall be held at least quarterly, or at such other times and at such places as the board may determine. Notwithstanding any provisions in the bylaws to the contrary, the Board of Directors may conduct business by consents in lieu of meeting, if the consent clearly states the matter decided and is signed by all of the directors of the association who would be eligible to attend and vote at a regular meeting of the board.

Section 6. Special Board Meetings. A special meeting of the board of directors shall be held whenever called by the president or by a majority of the directors. Only the business specified in the written notice shall be transacted at a special meeting. Each call for a special meeting shall be in writing, shall be signed by the person or persons calling the meeting, shall be addressed and delivered to the secretary, and shall state the time and place of such meeting.

Section 7. Notice of Board Meetings. Oral or written notice of each meeting of the board of directors shall be given each director by, or under the supervision of, the secretary of the association not less than seventy-two (72) hours prior to the time of meeting. But such notice may be waived by all the directors, and their appearance at a meeting shall constitute a waiver of notice.

Section 8. Quorum. A majority of the board of directors shall constitute a quorum at any meeting of the board.

Section 9. Reimbursement and Compensation. The association may reimburse directors for all reasonable expenses incurred in carrying out their duties and responsibilities.

The compensation, if any, of the members of the board of directors shall be determined by the members of the association at any annual or special meeting of the association.

No member of the board of directors, or member of the immediate family of any board member, shall occupy any position in the association on regular salary.

Section 10. Removal of Directors. Whenever any director shall fail to meet the qualifications as described in Section 1 of this Article, or fails to attend three (3) consecutive board meetings, either regular or special, without just cause and provided that notice of such meetings has been given in accordance with these bylaws, then it shall be the duty of the board to remove said director and to fill the vacancy in accordance with Section 4 of this Article.

Any member may ask for the removal of a director by filing charges with the secretary or president of the association, together with a petition signed by at least five percent of the members requesting the removal of the director in question. The removal shall be voted upon at the next meeting of the members, and by two-thirds of the voting power voting thereon the association may remove the director. The director whose removal is requested shall be served with a copy of the charges not less than ten days prior to the meeting and shall have an opportunity at the meeting to be heard in person and by counsel and to present evidence; and the persons requesting the removal of a director shall have the same opportunity. Any vacancy resulting from such action shall be filled by nomination and vote of members at such meeting.

Section 11. Removal of Officers. Any member may bring charges of misconduct or incompetency against an officer by filing them with the secretary or president of the association, together with a petition signed by ten per cent of the members requesting the removal of the officer in question. The directors shall vote upon the removal of the officer at the first meeting of the board held after the hearing on the charges, and the officer may be removed by a majority vote, notwithstanding any contract the officer may have with the association, which shall terminate upon the officer's removal, anything in the contract to the contrary notwithstanding. The officer against whom the charges are made shall be served with a copy of the charges not less than ten days prior to the meeting, and shall have an opportunity at the meeting to be heard in person and by counsel, and to present evidence, and the persons making the charges shall have the same opportunity.

ARTICLE IV. DUTIES OF DIRECTORS

Section 1. Management of Business. The board of directors shall have general supervision and control of the business and the affairs of the association and shall make all rules and regulations not inconsistent with law, the articles of incorporation, or bylaws for the management of the business and the guidance of the members, officers, employees, and agents of the association.

Within ( ) days, any action taken by the directors must be referred to the members for approval or disapproval if demanded by petition of at least five percent (5%) of the, or two hundred fifty (250) members, whichever is less, or by vote of at least a majority of the directors; provided that rights of third parties which have vested between the time of action of the directors and approval or disapproval by the members shall not be impaired.

Section 2. Employment of Manager. The board of directors shall have power to employ, define duties, fix compensation, and dismiss a manager with or without cause at any time. The board shall authorize the employment of such other employees, agents, and counsel as it from time to time deems necessary or advisable in the interest of the association. The manager shall have charge of the business of the association under the direction of the board of directors.

Section 3. Bonds and Insurance. Any individual acting as manager of an association and handling funds or securities amounting to $5,000 or more, in any one year, shall be covered by an adequate bond as determined by the directors and at the expense of the association. The board of directors may require the all other officers, agents, and employees charged by the association with responsibility for the custody of any of its funds or negotiable instruments to give adequate bonds. Such bonds, unless cash security is given, shall be furnished by a responsible bonding company and approved by the board of directors, and the cost thereof shall be paid by the association.

The board of directors shall provide for the adequate insurance of the property of the association, or property which may be in the possession of the association, or stored by it, and not otherwise adequately insured, and, in addition, adequate insurance covering liability for accidents to all employees and the public.

Section 4. Accounting System and Audits. The board of directors shall have installed an accounting system which shall be adequate to meet the requirements of the business and shall require proper records to be kept of all business transactions. Such records shall be reviewed at the end of each fiscal year by a certified public accountant who shall not be an officer, director, or employee of the association. If the annual gross business income of this association amounts to less than one million dollars ($1,000,000) (which amount shall be adjusted for changes in the Consumer Price Index since May 15, 1982), the review need not be done by a certified public accountant but may be performed by a review committee of two individuals who shall not be employees, plus the association's treasurer.

A written report of the review, which may include a statement of the amount of business transacted with members and the amount transacted with nonmembers, and which shall include a balance sheet showing the true assets and liabilities of the association, and an operating statement for the fiscal period under review, shall be submitted to the annual meeting of the association.

Within one hundred twenty (120) days of the close of the fiscal year, the Association shall file with the director of commerce and consumer affairs an annual report as prescribed by the director. A copy of the report shall be submitted to the members at their annual meeting, mailed to each member of the association, or printed in an official publication of the association.

Section 5. Depository. The board of directors shall select one or more banks to act as depositories of the funds of the association and determine the manner of receiving, depositing, and disbursing the funds of the association and the form of checks and the person or persons by whom they shall be signed, with the power to change such banks and the person or persons signing such checks and the form thereof at will.

Section 6. Committees. The board may, at its discretion, appoint from its own membership an executive committee of three (3) members, and determine their tenure of office and their powers and duties. The board may delegate to the executive committee all or any stated portion of the functions and powers of the board, subject to the general direction, approval, and control of the board. Copies of the minutes of any meeting of the executive committee shall be mailed to all directors within seven (7) days following such meeting.

The board of directors may, at its discretion, appoint such other committees as it deems appropriate.

ARTICLE V. DUTIES OF OFFICERS

Section 1. Duties of President. The president shall (1) preside over all meetings of the association and of the board of directors; (2) call special meetings of the board of directors; (3) appoint such committees as the board of directors may deem advisable for the proper conduct of the cooperative; and (4) perform all acts and duties usually performed by a presiding officer.

Section 2. Duties of Vice President. In the absence or disability of the president, the vice president shall perform the duties of the president, provided, however, that in case of death, resignation, or disability of the president, the board of directors may declare the office vacant and elect any eligible person president. In case of a three (3) member board of directors, the Vice President shall assume the responsibilities of the treasurer. A vice-president may also perform any function conferred by the Board of Directors so long as it is consistent with the Articles and Bylaws of the Association.

Section 3. Duties of Secretary. The secretary shall keep a complete record of all meetings of the association and of the board of directors and shall have general charge and supervision of the books and records of the association. The secretary shall sign papers pertaining to the association as authorized or directed by the board of directors. The secretary shall serve all notices required by law and by these bylaws and shall make a full report of all matters and business pertaining to the office to the members at the annual meeting. There shall be no corporate seal, and certification by signature of the secretary shall be sufficient in lieu thereof. The secretary shall keep all books of blank membership certificates, complete and countersign all membership certificates issued; shall keep complete membership certificate ownership records; shall make all reports required by law; and shall perform such other duties as may be required by the association or the board of directors. Upon the election of a successor, the secretary shall turn over all books and other property belonging to the association.

Section 4. Duties of Treasurer. The treasurer shall be responsible for the keeping and disbursing of all monies of the association, and shall keep accurate books of accounts of all transactions of the association. The treasurer shall perform such duties with respect to the finances of the association as may be prescribed by the board of directors. At the expiration of his term of office, the treasurer shall promptly turn over to his successor all monies, property, books, records, and documents pertaining to his office or belonging to the association.

ARTICLE VI. OPERATION AT COST AND MEMBERS' CAPITAL

Section 1. Operation at Cost. The association shall at all times be operated on a cooperative service-at-cost basis for the mutual benefit of its member patrons.

Section 2. Net Savings Allocation. In order to induce patronage and to assure that this association will operate on a service-at-cost basis in all its transactions with its members, the association is obligated to account on a patronage basis to all member patrons on an annual basis for all amounts received from business conducted with members on a patronage basis, over and above the cost of providing such services, making reasonable additions to a surplus fund, and redeeming capital credits. Such allocation shall be on the basis on the dollar value of product marketed through and/or purchased from the association.

Not less than ten percent of nets savings shall be placed in a surplus fund until such time as the fund shall equal at least fifty percent of the paid-up share or membership capital. The surplus fund may be expended for capital improvements or emergencies upon a two-thirds majority vote of the directors, or may be used to re-purchase withdrawn or expelled members holdings or to repurchase the holdings of any member in excess of the amount requisite for membership.

A portion of the net savings as determined by the Board of Directors, may be allocated to an educational fund to be used to further the understanding of the practices and principles of cooperation. The association may also choose to retain some or all its net savings and allocate it in the manner in which it will benefit the general welfare of all the members of the association.

The association is hereby obligated to pay all such amounts to the patrons in cash or by credits to a capital account of each member patron.

Section 4. Interest-Dividends. Interest-dividend interest on share or membership capital shall not exceed the current annual Consumer Price Index percentage increase, or eight percent, whichever is greater. Interest on loans by members to the association shall not be limited by this section.

Total interest-dividends distributed for any single period shall not exceed thirty percent of the net savings for that period. Interest-dividends are noncumulative and the association shall have the right to confiscate all interest-dividends not claimed within six months after the notice of the distribution has been made by either mail or by prominent sign in all the association's locations.

Section 5. Limit of Membership Capital. In accordance with §421C-12(1), the maximum percentage of capital which may be owned or controlled by one member shall not exceed percent of total membership capital of the Association.

Section 6. Records and Documentation. The books and records of the association shall be set up and kept in such a manner that at the end of each fiscal year, the amount of capital, if any, so furnished by each member is clearly reflected and credited in an appropriate record to the capital account of each member.

The association shall, within 8-1/2 months after the close of each fiscal year, notify each member of the capital so credited to the member's account. The notice shall be in the form of a written notice of allocation or per-unit retain certificate (as those terms are used in Subchapter T of the Internal Revenue Code) or other appropriate written document. The board shall have discretion to issue such notices and certificates in either "qualified" or "non- qualified" form as permitted by the Internal Revenue Code and other applicable law.

Section 7. Fiscal Year. The fiscal year of this association shall commence on the first day of and end on the last day of .

ARTICLE VII. EQUITY REDEMPTION

Section 1. Regular Redemption. It shall be the policy of the association, when other redemption priorities set forth herein have been met, and when funds are available, to redeem in cash a percentage of each member patron's capital credits, rather than ratably by year. The time and method of any such redemption shall be determined by the board of directors.

Section 2. Discretionary Special Redemptions. Notwithstanding any other provision of these bylaws, the board, at its absolute discretion, shall have the power to retire any capital credited to members' accounts on such terms and conditions as may be agreed upon by the parties in any instance in which the interests of the association and its members are deemed to be furthered thereby and funds are determined by the board to be available for such purposes.

In situations where the amount of a member's capital is or will be in violation of ARTICLE VI, Section 5, the board shall retire any capital credited to members' accounts provided funds are determined by the board to be available for such purposes.

Section 3. Specified Special Redemptions. The association shall give priority to redemption of members' capital credits held by deceased persons for the settlement of their estate. The association shall thereafter grant priority redemption to capital credits of former members who have attained their 65th birthday and are no longer actively engaged in the association. The time and method of such redemption shall be determined solely by the board of directors, dependent upon the financial condition of the association. In the case of redemption of the equities of those persons who have attained age 65, preference may be given to the oldest retirees in establishing the order of priority among those eligible.

In the case of a corporation or partnership holder of members' capital credits, such corporation or partnership shall be considered eligible for priority treatment to the same extent as the individual stockholders of such corporation or partners of the partnership would have qualified, if each individual stockholder or partner were an individual member-patron of this association. Any redemption shall be made to the corporation or partnership, and not to the individual stockholder or partner thereof.

Each corporation or partnership shall report to the association the percentage of ownership interest in the corporation or partnership of each of its stockholders or partners. Failure to report accurately the percentage of individual ownership interest shall disqualify any allocations made to the corporation or partnership by this association from redemption priority. If a corporation or partnership should dissolve, its capital credits in this association shall be prorated among, and transferred to, the individual stockholders or partners and considered for redemption on an individual ownership basis. The amount of any redemption or prorate related to a corporate or partnership member shall be determined by the percentage of ownership interest as reported by the corporation or partnership.

When two or more persons are holders of capital credits as tenants in common, without a designation of rights of survivorship, they shall be deemed by this association to be acting as partners and shall be subject to the same requirements as a partnership.

Capital credits held in joint tenancy with rights of survivorship shall be considered for priority of redemption according to the qualifying status of the youngest member of the joint tenancy or, in the event of death of one of the joint tenants, of the survivor.

ARTICLE VIII. CONSENT

Each person who hereafter applies for and is accepted to membership in this association, and each member of this association on the effective date of this bylaw who continues as a member after such date, shall, by such act alone, consent that the amount of any distributions with respect to his patronage occurring after the effective date of this bylaw, which are made in qualified written notices of allocation or qualified per-unit retain certificates (as defined in 26 U.S.C. 1388), and which are received by him from the cooperative, will be taken into account by him at their stated dollar amounts in the manner provided in 26 U.S.C. 1385(a) in the taxable year in which such written notices of allocation and per-unit retain certificates are received by him.

Written notification of the adoption of this Article, a statement of its significance, and a copy of the provision shall be given separately to each member and prospective member before membership in the association.

ARTICLE IX. NONMEMBER BUSINESS

This association may conduct business with nonmembers on either a patronage or non-patronage basis. However, this association shall not market the products of nonmembers in an amount the value of which exceeds the value of the products marketed for members. It shall not purchase supplies and equipment for nonmembers in an amount the value of which exceeds the value of the supplies and equipment purchased for members.

ARTICLE X. NON-PATRONAGE INCOME

The non-patronage income of the association shall be its gross receipts derived from all sources which under law do not qualify as patronage income, less all expenses properly attributable to the production of such non-patronage sourced income and all income taxes payable on such receipts by the association. Non-patronage income shall be used in behalf of the association and its members in accordance with such lawful purposes, including assignment to an unallocated reserve account and allocation in whole or in part to members, as may be determined by the board of directors.

ARTICLE XI. LOSSES

Section 1. Patronage Losses. In the event the association suffers a loss during any year on business conducted with or for patrons, such loss may be apportioned among the patrons during the year of loss so that such loss will, to the extent practicable, be borne by the patrons of the loss year on an equitable basis. The board shall have full authority to prescribe the basis on which capital furnished by patrons may be reduced or such loss otherwise equitably apportioned among the patrons. In the event of a patronage loss in one or more departments or divisions of the operation of this association, but not so much as to cause an overall loss for the fiscal year, such loss or losses may be prorated against each of the remaining profitable departments on the basis of their respective percentage of the net margins during such fiscal year.

Section 2. Non-patronage Losses. If in any fiscal year the association shall incur a loss other than on patronage operations, such loss may be charged against any reserve accumulated from non-patronage earnings in prior years.

Section 3. General Provisions. The board shall have no authority to make assessments against members. This section shall not be construed to deprive the association of the right to carry backward or forward losses from any source whatsoever in accordance with the Internal Revenue Code or state taxing statutes.

ARTICLE XII. DISSOLUTION AND PROPERTY INTEREST OF MEMBERS

Upon dissolution, after all debts and liabilities of the association shall have been paid and all capital furnished through patronage shall have been retired without priority on a pro rata basis, the remaining property and assets of the association shall be distributed among the members and former members in the proportion which the aggregate patronage of each member bears to the total patronage of all such members insofar as practicable, unless otherwise provided by law.

ARTICLE XIII. INDEMNIFICATION

The association shall indemnify its officers, directors, employees, and agents to the fullest extent possible under the provisions of the * corporations law (Chapters 415 and 415-B, * Revised Statutes as amended with particular reference to sections 415-5 and 415-B, * Revised Statutes as amended).

The association may purchase liability insurance coverage for any person serving as an officer, director, employee or agent to the extent permitted by applicable State law.

ARTICLE XIV. AMENDMENT

If notice of the character of the amendment proposed has been given in the notice of meeting, these bylaws may be altered or amended at any regular or special meeting of the members at which there is a quorum present by the affirmative vote of a majority of the members present or voting by proxy.

I certify that this is a true and correct copy of the Bylaws of the *.

Dated: , *, , 200__

Secretary

Last Revised: August 27, 2001

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