Walnut House Cooperative By-laws

From Walnut House Cooperative

Posted to web on January 5, 2009 by Lee. Not yet proof-read to ensure accuracy. This page should not be considered the official bylaws at this time.

Bylaws of Walnut House Cooperative

Under the applicable laws of the State of California, the Articles of Incorporation, and these Bylaws, the residents of 1740 Walnut Street, Berkeley, California, hereby form and establish a limited equity housing cooperative.

Contents

ARTICLE 1: NAME AND PURPOSE

1.1 Name

The name of the corporation shall be Walnut House Cooperative.

1.2 Purpose

The purpose of this Cooperative corporation is to provide its members with limited equity housing and community facilities, if any, on a nonprofit basis consistent with applicable provisions of the California code, the Articles of Incorporation, and these Bylaws. It shall be nondiscriminatory. Membership shall be accepted and maintained for any qualified individual without regard to race, age, creed, color, sex, sexual orientation, or national origin.

ARTICLE II: MEMBERSHIP

2.1 Member.

Each member shall have a membership interest in the Cooperative. Each member shall pay assessments, perform work participation requirements, have voting rights, and other rights and duties as provided for in these Bylaws and the Articles of Incorporation. Members are required to abide by the provisions of these Bylaws, including the proprietary lease and the house rules. Failure to adhere to these requirements may result in adverse action against a member as specified in the various governing instruments; such a failure is a breach of contract and could result in termination of both proprietary lease and membership.

2.2 Membership Interest

A membership interest constitutes an ownership interest in the Cooperative coupled with an exclusive right of possession of a unit pursuant to a proprietary lease. Neither the ownership interest nor the possessory interest shall be separable one from the other, and any purported sale, conveyance, transfer, pledge, encumbrance, grant of a security interest in or other disposition of the ownership interest in the Cooperative made without the possessory interest in the unit, or of the possessory interest in the unit made without the ownership interest in the Cooperative, is void.

2.3 Ownership Interest in the Cooperative

The cost of a member’s ownership interest in the Cooperative shall be the amount of the down payment made by the Cooperative for the building located at 1740 Walnut Street, divided by the number of units in accordance with their size and quality. An ownership interest in the Cooperative may increase in value by an amount of interest not to exceed the limit set by state law and determined by the Board each year. It may be further increased by certain approved improvements as defined in Section 5.15. A membership shall at no time benefit from equity gain. The latter shall devolve solely to the Cooperative as a whole. (See Article IX)

2.4 Assessments of Members.

(a) Monthly carrying charges, specified in the proprietary lease, shall consist of portions of the mortgage commensurate with the size and quality of each unit, plus an assessment for operating and other expenses as determined by the Board. The assessments shall not be equal if any one member will derive as much as 10% more than any other member in the value of common services supplied by the Cooperative. In that event, the assessment against each member may be determined according to a formula or schedule under which the assessments against the various membership interests bear a relationship which is equitably proportionate to the value of the common services furnished to the respective membership interests.
(b) The Board may not, without the vote of a majority of the membership interests other than the subdivider, impose a regular annual assessment per membership interest which is more than 20% greater than the regular assessment for the immediately preceding fiscal year.
(c)
(1) In any fiscal year, the Board may not, without the vote of a majority of the membership interests other than the subdivider, levy special assessments to defray the costs of any action or undertaking on behalf of the Cooperative which in the aggregate exceed 5% of the budgeted gross expenses of the Cooperative for that fiscal year.
(2) Except as provided in (3) hereof, every special assessment shall be levied upon the same basis as that prescribed for the levying of regular assessments.
(3) The provisions hereof with respect to special assessments do not apply in the case where the special assessment against a member is a remedy utilized by the Board to reimburse the Cooperative for costs incurred in bringing the member and his or her membership interest into compliance with provisions of the governing instruments for the Cooperative.
(d)
(1) Regular assessments against the membership shall commence on the date of execution of the first proprietary lease.
(2) Voting rights attributable to membership interests shall not vest until assessments against those interests have been levied by the Cooperative.

2.5 Work Participation Requirement

“Work Participation Requirement” (WPR) means that amount of time which each member is required to contribute to the management and maintenance of the Cooperative. Included, subject to approval by the Board, is every kind of activity related to the operation of the Cooperative, such as committee work, attendance at general membership meetings, communications, keeping of accounts, and physical labor. As members sign up to volunteer performance of tasks posted on the bulletin board by committees, they assume responsibility for the prompt performance of the work. Completion of tasks will be indicated by submitting a “time-slip” to the participation recorder. Each committee is responsible for checking the adequacy of task performance and see to it that quality standards are maintained. The Board will issue more specific guidelines for work participation and may require a minimum number of hours of participation time once the Cooperative has gained sufficient experience to know what time commitments are required and what portion of that time members want to spend in volunteer work.

2.6 Membership Application

The Management Committee shall formulate procedures, subject to approval by the Board, by which new members are selected, and shall recommend to the Board new applicants for membership. The Management Committee will seek and consider applications from persons who are interested in being part of a cooperative effort to control and operate the property; want to be part of a democratic community where people know and assist one another; can pay for the cost of their membership interest; have a history of financial and personal responsibility; can afford to pay the assessment carrying charges (generally no more than 35% of gross income). In seeking applicants, the committee shall pursue a vigorous and active affirmative action policy, inviting people with diverse racial, ethnic, age, sexual preference backgrounds, and physical handicaps. On the basis of the information obtained, including a check of references and interviews of suitable candidates, the Management Committee or a selection committee it may designate, will recommend acceptance of particular candidates to the Board. The Management Committee (or its selection subcommittee) shall develop specific guidelines for the selection process. These guidelines must be approved by the membership and by the Board.

Once accepted, applicants will have first refusal in case of openings with priority based on the earliest date at which application was received. In the absence of a waiting list, the Management Committee shall advertise vacancies as widely as possible, and rank applicants with respect to the above guidelines and supplemental guidelines that may have been approved by the members of the Cooperative.

2.7 Acceptance of Members

The Board shall approve new members after receiving recommendations from the Management Committee.

ARTICLE III: MEMBERSHIP CERTIFICATES

3.1 Certificates

Membership certificates issued by the Cooperative shall state that the Cooperative is a nonprofit mutual benefit corporation which may not make distributions to its members except upon dissolution and except as provided for in Article IX.

3.2 Notice of Restrictions

The Cooperative shall give notice to the transferee of the transfer restrictions provided for in Sections 6.5 and 6.6.

3.3 Replacement Certificate

The Cooperative may issue a new membership certificate, in the place of any certificate hereto issued, alleged to have been lost, stolen, or destroyed.

ARTICLE IV: MEMBERSHIP MEETINGS, WRITTEN BALLOTS AND VOTING RIGHTS

4.1 Membership Meetings

Members shall meet regularly but no less frequently than biannually. The biannual meetings shall be held (1) within thirty (30) days of the first day of the Cooperative’s fiscal year and (2) within thirty (30) days of the first day of the seventh month of that same fiscal year. For purposes of establishing the meeting dates, the first day of the fiscal year shall be April 1. All meetings shall be held at 1740 Walnut Street unless otherwise designated in the notice of the meeting.

4.2 First Meeting of Members

The first meeting of the members shall be held within 45 days after transfer of the first membership interest to a member.

4.3 Special Meetings

The Board shall promptly call a special meeting of the members upon:

(a) written request of 5 of the members
(b) a vote for such meeting by a majority of a quorum of the Board

4.4 Notice of Meetings

(a) All members who have a membership interest and have been approved by the Board as of the close of business on the business day preceding the day on which notice is given, or, if notice is waived, at the close of business on the business day preceding the day on which the meeting is held, are entitled to notice of a meeting of members.
(b) Written notice of regular and special meetings shall be given to members by the Board not less than ten (10) nor more than ninety (90) days before the date of any meeting at which the members are required or permitted to take any action. The notice shall specify the place, day and time of the meeting and (1) in the case of a special meeting, the general nature of the business to be transacted, and no other business may be transacted, or (2) in the case of the regular meeting, those matters which the Board, at the time the notice is given, intends to present for action by the members and any other business that may properly be brought before the meeting. The notice of any meeting at which directors are to be elected shall include the names of all those who are nominees and whose names have been duly presented to the Board or the secretary of the Board at the time the notice is given to members.
(c) Notice of a members’ meeting or any report shall be given either personally or by placing a notice on or under the door where the member resides, addressed to a member at the address of such member appearing on the books of the Cooperative and by posting such notice in the entryways and the laundry room. An affidavit of giving of any notice or report in accordance with the provisions of these Bylaws, executed by the secretary, or anyone else duly designated by the Board, shall be prima facie evidence of the giving of the notice or report.
(d) Upon request for a special meeting of the members, the secretary shall cause notice to be given to the members entitled to vote that a meeting will be held at a time fixed by the Board not less than thirty-five (35) or more than ninety (90) days after the receipt of the request. If the notice is not given within twenty (20) days after receipt of the request, the person entitled to call the meeting may give notice.
(e) When a members’ meeting may be adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Cooperative may transact any business which might have been transacted at the original meeting. No meeting can be adjourned for more than forty-five (45) days. Any adjournments for lack of a quorum must be approved by a vote of a majority of members present and shall be to a date not less than five (5) days and not more than thirty (30) days from the original meeting date. If a time and place for the adjourned meeting is not fixed by those in attendance at the original meeting or if for any reason a new date is fixed for the adjourned meeting after adjournment, notice of the time and place of adjourned meeting shall be given to members in the manner prescribed for regular meetings
(f) The transactions of any meeting of members however called and noticed, and wherever held, are as valid as though performed at a meeting duly held after regular call and notice, if a quorum is present in person, and if, either before or after the meeting, each of the persons entitled to vote, not present in person, signs a written waiver of notice or a consent to the holding of the meeting or an approval of the minutes thereof. All such waivers, consents, and approvals shall be filed with the Cooperative records or made a part of the minutes of the meeting, Attendance of a person at a meeting shall constitute a waiver of notice of and presence at such meeting, except when the person objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened and except that attendance at a meeting is not a waiver of any right to object to the consideration of matters required to be included in the notice but not so included, if such an objection is expressly made at the meeting. Neither the business to be transacted nor the purpose of any regular or special meetings of members need be specified in any written waiver of notice, consent to the holding of the meeting or approval of the minutes thereof, except as provided in subsection (g).
(g) Any approval of the members regarding (1) removal of a director and reduction of the number of director, (2) filling of vacancies on the Board, (3) contracts or transactions in which a director has a material financial interest, or (4) amendments to the Articles of Incorporation shall be valid only; if (i) the general nature of the proposal so approved was stated in the notice of the meeting or in any written waiver of notice, or (ii) there was unanimous approval of those entitled to vote.
(h) A court may find that notice not given in conformity with this section is still valid, if it was given in a fair and reasonable manner.

4.5 Quorum

(a) At any meeting of the members, the presence in person of members representing 66 and 3/4% of the membership interest constitutes a quorum.
(b) In the absence of a quorum, any meeting of members may be adjourned from time to time by the vote of a majority of the votes represented in person, but no other business may be transacted. Any adjournment for lack of a quorum by those in attendance shall be to a date not less than five (5) and not more than thirty (30) days from the original meeting date. If a time and place for the adjourned meeting is not fixed by those in attendance at the original meeting, or if for any reason a date is fixed for the adjourned meeting after adjournment, notice of the time and place of the adjourned meeting shall be given to members in the manner prescribed for regular meetings.

4.6 Written Ballots

The members are prohibited from taking any action by written ballot without a meeting.

4.7 Voting Rights

(a) For the purpose of voting, each membership interest shall have one vote regardless of the number of members or occupants residing in the unit.
(b) If the membership interest stands of record in the names of two (2) or more persons, whether members of a partnership, joint tenants, tenants in common, husband and wife as a community property, tenants by the entirety, or otherwise, unless the Secretary of the Cooperative is given written notice to the contrary signed and sworn to by all persons owning such membership interest, then acts with respect to voting shall have the following effect:
(1) If only one (1) person votes, such act binds all, or
(2) If more than one (1) person votes, the act of the majority so voting binds all. A tie vote is recorded as an abstention.
(c) All votes once cast are final.

4.8 Approval by Members

Unless otherwise provided by statute, the Articles of Incorporation, or Bylaws, approval by the members upon voting means an affirmative vote of 66 and 2/3% of the membership interest represented at a duly held meeting at which a quorum is present. A tie vote shall be considered a defeat or rejection of the proposal. Before submitting any action to a vote, the members and sublessees, along with adult resident nonmembers, will make every effort to resolve all issues through a consensus process which is described more fully in the House Rules.

4.9 Proxies

(a) Every person entitled to vote a membership may authorize in writing another individual to act by proxy. But no one individual may vote more than one membership. No proxy shall be voted after the expiration of eleven (11) months from the date thereof unless otherwise provided, except that the maximum term of any proxy shall be three (3) years from the date of execution. The proxy shall continue in full force and effect until revoked by the member prior to the vote. Such revocation may be effected by a writing delivered to the Cooperative stating that the proxy is revoked or by a subsequent proxy executed by the person executing the prior proxy and presented to the meeting, or as to any meeting by attendance at such meeting and voting in person by the person executing the proxy. The dates contained on the forms of proxy presumptively determine the order of execution, regardless of the postmark dates on the envelopes in which they are mailed.
(b) A proxy is not revoked by the death or incapacity of the maker or the termination of a membership as a result thereof unless, before the vote is counted, written notice of such death or incapacity is received by the Cooperative.
(c) Unless otherwise provided in the Articles or Bylaws, the proxy of a member which states that it is irrevocable for the period specified therein, notwithstanding subdivision (b) when it is held by any of the following or a nominee of any of the following:
(1) A person who has purchased or has agreed to purchase the membership.
(2) A creditor or creditors of the Cooperative or the member who extended or continued credit to the Cooperative or the member in consideration of the proxy if the proxy states that it was given in consideration of such extension or continuation of credit and the name of the person extending or continuing the credit; or
(3) A person who has contracted to perform services as an employee of the Cooperative, if the proxy is required by the contract of employment and if the proxy states that it was given in consideration of such contract of employment, the name of the employee and the period of employment contracted for.
Notwithstanding the period of irrevocability specified, the proxy becomes revokable when the agreement to purchase is terminated; the debt of the Cooperative or the member is paid; or the period of employment provided for in the contract of employment has terminated. In addition to the foregoing paragraphs (1) through (3), a proxy of a member may be made irrevocable (notwithstanding subdivision (b) if it is given to secure the performance of a duty or to protect a title, either legal or equitable, until the happening of events which, by its terms, discharge the obligations secured by it).
(d) A proxy may be revoked, notwithstanding a provision making it irrevocable, by a transferee of a membership without knowledge of the existence of the provision unless the existence of the proxy and its irrevocability appears on the certificate representing the membership.
(e) Subdivision (a) notwithstanding:
(1) No amendment of the Articles or Bylaws repealing, restricting, creating or expanding proxy rights may be adopted without approval by the members.
(2) No amendment of the Articles or Bylaws restricting or limiting the use of proxies may affect the validity of a previously issued irrevocable proxy during the term of its irrevocability, so long as it complied with applicable provisions, if any, of the Articles or Bylaws at the time of its issuance, and is otherwise valid under this section.
(f) Anything to the contrary notwithstanding, any revocable proxy covering matters requiring a vote of the members regarding removal of directors; filling of a vacancy on the Board, conflict of interest of Board members, paragraph (1) of subdivision (e) of this section; amendment to the Articles of Incorporation; sale of, lease or other disposal of Cooperative assets; merger; amendment of merger agreement; or voluntary dissolution; is not valid as to such matters unless it sets forth the general nature of the matter to be voted on.

ARTICLE V DIRECTORS AND MANAGEMENT

5.1 Powers of the Board.

Subject to member approval, the Board has the full authority to act on all policies affecting the Cooperative.

(a) The Board shall be responsible for the overall financial affairs of the Cooperative. Specifically, this includes but is not limited to:
(1) Ensuring that all books and accounts are kept current and accurate.
(2) Ensuring that reserve funds are maintained at necessary levels.
(3) Reviewing plans for, and approving or disapproving, alterations or improvements to members’ units, as these terms are defined in Section 5.15.
(4) Properly investing surplus funds in a manner that will provide maximum benefits to members, in accordance with financial security and cooperative principles.
(5) Taking reasonable and equitable action in the event that any member falls in arrears or payments or embarks on any other activity that could have fiscal consequences for other members.
(6) Reviewing and studying any plans that could result in the outlay of funds in excess of those required by normal expenses and maintenance costs.
(7) Making such adjustments in members’ assessments as may be necessary from time to time.
(8) Prepare budgets and financial statements for the Cooperative.
(b) The Board is hereby empowered to:
(1) Call the first general membership meeting within thirty (30) days of incorporation of the Cooperative.
(2) Call at least two general membership meetings a year for the purpose of nominating and electing directors to replace those whose terms are ending.
(3) Call at any time special meetings of the members in order to discuss, explain, or present issues of concern to all.
(4) Appoint members to standing Management and Maintenance Committees. Whenever possible, these members should be volunteers. Appointments shall be subject to approval by the membership.
(5) Appoint members to temporary Committees as needed.
(6) Approve applicants for new membership after receiving recommendations from the Management Committee, in accordance with established procedures for the admission of new members.
(7) Approve house rules, including work participation requirements and grievance procedures.
(8) Execute adverse actions against member, such as the collection of fines or termination of membership, in accordance with established procedures.
(9) Represent the membership in all dealings with agencies, groups, or individuals who are not members of the Cooperative.
(10) Approve contracts for goods and/or services and direct the payment of funds for expenditures, for the common areas, and facilities of the Cooperative.
(11) Contract for casualty, liability, and other insurance on behalf of the Cooperative.
(12) Pay taxes and assessments which are or could become, a lien on the common area or a portion thereof.
(13) Direct the development of procedures for resolving grievances.
(14) Enforce applicable provisions of the Articles of Incorporation, Bylaws, and other instruments for the ownership, management and control of the Cooperative.
(15) Delegate powers to the Committees as set forth below. In case any officer is unable to fulfill his or her duties, the Board may delegate all or any of the powers of this officer to any officer or director.
(16) With reasonable notice, enter into any member’s apartment unit as necessary in connection with maintenance or emergency repair for the benefit of the Cooperative.
(17) Elect officers of the Board.
(18) Formulate rules of operation for the common areas and facilities owned and controlled by the Cooperative.
(c) The powers of the Board shall not include:
(1) The authority to contribute Cooperative funds to any group or organization without approval of the membership.
(2) The authority to take adverse action against any member who refuses appointment to any Committee, except insofar as such refusal is covered by procedures set out in the Bylaws or House Rules.
(3) The authority to make any loan of money or property to or guarantee the obligation of:
(a) Any director or officer of the Cooperative or its subsidiary, or
(b) Any person upon the security of membership of the Cooperative, unless the loan or guaranty is otherwise adequately secured, except by the approval of the members, regardless of limitations or restrictions on voting rights, other than the memberships held by the benefited director, officer or member.
(4) The authority to take any action that violates these Bylaws, the Articles of Incorporation, the members’ proprietary leases, or any other rule established pursuant to these Bylaws.
(d) The Board shall be prohibited from taking any of the following actions, except with the approval of the members.
(1) Entering into a contract with a third person wherein the third person will furnish goods or services for the common area or the Cooperative for a term longer than one year with the following exceptions:
(a) A contract with a public utility company if the rates charged for the materials or services are regulated by the Public Utilities Commission provided, however, that the term of the contract shall not exceed the shortest term for which the supplier will contract at the regulated rates.
(b) Prepaid casualty and/or liability insurance policies not to exceed three years duration provided that the policy permits short rate cancellation by the insured.
(2) Incurring aggregate expenditures for capital improvements in any fiscal year in excess of 5% of the budgeted gross expenses of the Cooperative for that fiscal year.
(3) Selling during any fiscal year property of the Cooperative having an aggregate fair market value greater than 5% of the budget gross expenses of the Cooperative for that fiscal year.
(4) Paying compensation to members of the governing body or to officers of the Cooperative for services performed in the conduct of the Cooperative’s business provided, however, that the Board may cause a member or officer to be reimbursed for expenses incurred in carrying on the business of the Cooperative.
(5) Using the equity of the Cooperative for any purpose permitted under S 33007.5 (d) (1) of the Health and Safety Code without the approval of the membership.
(6) Filling of a vacancy on the Board created by removal of a Board member.

5.2 Composition.

The Board of directors shall consist of five (5) member directors elected by the members.

5.3 Term of Office.

The term of office of a director shall begin immediately upon election or appointment, and each director so elected or appointed shall hold office until a successor is elected or appointed and enters upon the discharge of duties or until the director resigns, is disqualified or is removed from office. Directors shall serve two -year terms, with two directors elected in even-numbered years and three directors elected in odd -numbered years. Directors may not serve more than two consecutive elected terms or more than six years in any ten-year period. Members residing in the same unit may not serve as directors simultaneously. The Resident Manager may not serve as a director.

5.4 Election and Appointment of Directors.

(a) The first election of the Board shall be conducted at the first meeting of the Cooperative. All elected positions on the Board shall be filled at that time.
(b) The Board shall adopt reasonable election and nomination procedures consistent with the following provisions.
(c) Any member may nominate a member for election to the Board. Nominations may be made by written request or at any meeting of the membership or Board.
(d) Directors shall be elected by 2/3 vote of the members.
(e) Each member shall have the right to cast as many votes as there are directors to be elected, provided that in the election of two or more directors, every member may cumulate such members’ votes and give one candidate a number of votes equal to the number of directors, every member may cumulate such members’ votes and give one candidate a number of votes equal to the number of directors to be elected, multiplied by the number of votes to which the member is entitled or distribute the member’s votes on the same principal among as many candidates as the member thinks fit.
(f) No member shall be entitled to cumulate votes for a candidate or candidates unless such candidate’s name or candidates’ names have been placed in nomination prior to the voting and the member has given notice at the meeting prior to the voting of the member’s intention to cumulate votes. If any one member has given such notice, all members may cumulate their votes for candidates in nomination.
(g) Voting for directors shall be by secret written ballot.

5.5 Meetings.

(a) Meetings of the Board may be called by President, Vice-President, Secretary or any two directors. On issues of concern to the entire Cooperative, five (5) or more members may call a meeting of the Board.
(b) Regular meetings of the Board shall be held at least once a month at 1740 Walnut Street, Berkeley, CA. Notice of the time and place of a regular meeting, with agenda, shall be publicly posted at a prominent place in the common area five (5) days before the meeting and shall be communicated to Board members not less than five (5) days prior to the meeting.
(c) Special meetings of the Board shall be called by written notice signed by the President of the Cooperative or by any two members of the governing body other than the President. The notice shall specify that time and place of the meeting and the nature of any special business to be considered. Notice shall be posted in a manner prescribed for notice of regular meetings and shall be sent to all governing body members not less than 72 hours prior to the scheduled time of the meeting provided however that notice of the meeting need not be given to any governing body member who signed a waiver or notice or written consent to holding of the meeting.
(d) Regular and special meetings of the Board shall be open to all members of the Cooperative.
(e) Subject to Section 5.17 of these Bylaws, any decision of the Board must be agreed to by at least three (3) of the directors present at a meeting . The meeting must be duly held with a quorum present . A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least three (3) directors, or such greater number as is required by statute, the Articles or Bylaws.
(f) If fewer than four (4) directors approve any decision, then any director absent from a meeting may object and the Board will hold up the decision and reconsider. Any absent director(s) will be notified of any decision by another director within 48 hours (or other reasonable time agreed upon in advance). The absent director must notify the president, vice-president, or secretary of any objection within 48 hours of being notified of the Board’s action. If a director is not available at the Coop at the time, reasonable attempts will be made to notify her/him of decisions. If two directors are absent and cannot be reached, then the secretary or another director will post notice within 48 hours of any such decisions and the Board will be required to reconsider if two or more non-director members object in writing to the president, vice-president, or secretary within 48 hours of posting the decision. If reconsideration is required, the Board must post notice of its final decision to either change its decision or leave it as originally decided. The provisions of this section also apply to Committees of the Board.

5.6 Conduct of a Meeting.

All meetings of the Board shall be conducted according to “Roberts Rules of Order” unless provided otherwise by a majority of the directors of the Board.

5.7 Quorum.

Three (3) directors shall constitute a quorum of the Board.

5.8 Action by Board Without Meeting.

(a) The Board may take actions without a meeting if all of its members consent in writing to the action to be taken. Such written consent shall be filed with the minutes of the proceedings of the Board.
(b) If the Board resolves by unanimous written consent to take action, an explanation of the action taken shall be posted at a prominent place or places within the common area within three (3) days after the written consents of all Board members have been obtained.

5.9 Officers.

(a) Officers of the Cooperative shall be a president, vice-president, secretary and treasurer (or secretary-treasurer). Except for secretary-treasurer, no officer shall hold more than one office. All officers shall be selected by the Board and shall be residents and members of the Cooperative.
(b) The duties of the individual officers are as follows:
(1) The president shall preside over all meetings of the members and the Board, shall call regular and special meetings of the Board, shall see that orders and resolutions of the Board are carried out; the president or a designate authorized by the Board shall sign all proprietary leases, mortgages, deeds and other written instruments, and shall co-sign all checks and promissory notes, other than those issued for routine expenditures.
(2) The vice-president shall act for the president in the event of the president’s absence, inability, or refusal to act, and shall exercise and discharge such other duties as may be required by the Board.
(3) The secretary shall record the votes and keep the minutes of all meetings of the membership; he or she shall be responsible for keeping all records pertaining to the Board current and accurate.
(4) The treasurer shall have the responsibility to receive and deposit in appropriate bank accounts all monies of the Cooperative; to disburse funds as directed by the Board or other authority designated herein; to co-sign all checks and promissory notes of the Cooperative if required by the Board; to keep proper books of account to receive from the Management Committee a monthly balance sheet and operating statement to be distributed to directors at monthly meetings; to provide proper books of account for an independent semi-annual report to the membership derived from the independent audit; and to coordinate the preparation of an annual report to members in which the percentage appreciation on down payment shall be set up to the legal limit with appropriate justification in support of the figure; to provide the Board a statement of accounts at such time as the Board may request; and, upon reasonable request exhibit the Cooperative books of account and all securities, vouchers, papers and documents in custody of the treasurer to any member or designee of the Board. The Board may require the treasurer to give a bond for the faithful discharge of duties in such sum and form with such surety as the Board may determine. The cost of the bond shall be paid for by the Cooperative.
(c) Any officer may resign at any time by giving thirty (30) days written notice to the Board.
(d) Any officer may be removed at any time, either for cause or without cause, by the approval of two-thirds (2/3) vote of the remaining directors. The notice or waiver of notice shall specify that the Board shall consider the removal of the officer at the Board meeting. Termination of an officer’s membership shall result in automatic removal from office.
(e) Any vacancy in an office shall be filled for the unexpired portion of the term by the Board within thirty (30) days of the occurrance of the vacancy.
(f) Officers shall not receive compensation for their services as officers, unless such payment has been pre-authorized. The members may fix the compensation of officers for the ensuing year. Such compensation may be a salary or a fixed amount for each meeting attended. An officer shall be allowed his or her reasonable expenses when engaged in the business of the Cooperative. Such expenses shall be subject to audit, allowed and paid as other claims against the Cooperative.
(g) The terms of each officer shall be set by the Board and shall not exceed the duration of that officer’s directorship.

5.10 Standing Committees.

The Cooperative shall have two (2) standing Committees, a Management Committee and a Maintenance Committee. They shall be composed of three (3) voluntary members appointed by the Board to serve staggered terms of one year, except only in the first year, when, in addition to one one-year term, there shall be one term of nine months and one term of six months for the purpose of commencing the stagger. Members who serve the two shortened terms shall be eligible to succeed themselves. Members serving full terms shall not serve consecutive terms. Appointment to these Committees is subject to approval of the membership if a member requests such approval. Failure of a Committee member to assume an equitable portion of the work of the Committee may result in removal from the Committee in accordance with the procedures specified in Section 5.16.

5.11 Management Committee.

(a) Purpose. The Management Committee shall be responsible for the day-to-day operation and management of the building.
(b) Duties, responsibilities and powers.
(1) The members of the Committee shall meet periodically at a time and place of their choosing, but no less than one time per month. Meeting times and places shall be publicly posted for the convenience of interested members with agenda, if any, three days before, except in the case of emergency meetings, when posting is not required.
(2) The responsibilities of the Committee are to:
(a) Establish the house rules, subject to the approval of the Board and the membership.
(b) Develop procedures for routine building maintenance and submit a management plan to the Board at the beginning of each year.
(c) Collect rents and any special funds approved by the Board.
(d) Pay routine bills associated with management.
(e) Prepare monthly financial reports for the board.
(f) Establish procedures for the implementation of alterations and improvements as these terms are defined below.
(g) Review work participation records and make appropriate recommendations to the Board.
(h) Resolve problems related to day-to-day operation of the building, as needed.
(i) Formulate procedures, subject to the approval of the Board, by which new members are selected.
(j) With the approval of the Board, set limits on the number of occupants in each unit and establish control over the pet population.
(k) Recommend to the Board resources for professional management review and management assistance that may be needed.
(l) Take any other action deemed proper and necessary to secure the general well-being of the Cooperative, and assume other responsibilities as designated by the Board.
(3) The Committee is empowered to:
(a) Recommend to the Board new applicants for general membership in accordance with accepted procedures.
(b) Authorize the disbursement of funds for normal operating expenses including emergency maintenance or repair.
(c) Solicit the voluntary participation of members in accomplishing necessary tasks of the Committee.
(d) In the event of insufficient voluntary participation, direct the participation of members in accomplishing the necessary tasks of the Committee. Such assignment must be accomplished by procedures that ensure fair and equal treatment for all members.
(4) These powers do not include:
(a) The authority to disburse funds for any non-recurring expense, except in emergencies.
(b) The authority to take adverse action against any member for refusal or failure to participate, except when such refusal or failure is covered by established rules.

5.12 Maintenance Committee.

(a) Purpose. The Maintenance Committee shall be responsible for maintaining public areas such as halls, laundry, sidewalk, backyard, and public utilities, such as heat, hot water, and external and hallway lighting, and maintenance of other facilities that are not the responsibility of individual members.
(b) Duties, responsibilities and powers.
(1) The members of the Committee shall meet periodically at a place and time of their choosing, but no less than one time per month. Meeting times and places shall be publicly posted for the convenience of interested members (except in the case of emergency meetings, when posting is not required).
(2) The responsibilities of this Committee are to :
(a) Establish a maintenance plan, including description of maintenance-related tasks, specifying their location, nature, and expected results of completion, as well as appropriate time requirements, including the maximum amount of time that can be charged against a particular task. All such descriptions are subject to approval by the membership and by majority vote of the Board;
(b) Establish procedures by which maintenance-related complaints of members are acted upon in a prompt and timely fashion;
(c) Establish accounting procedures by which work-participation hours are logged;
(d) Schedule major maintenance and renovation and recommend to the Board how these are to be implemented.
(e) Provide an adequate supply of maintenance-related items;
(f) Establish procedures and rules governing use of tools, ladders or other cooperatively-owned items;
(g) Take any other maintenance-related actions deemed proper and necessary to ensure the general well-being of the Cooperative;
(3) This Committee is empowered to:
(a) Establish maintenance schedules in accordance with needs and task descriptions;
(b) Solicit voluntary participation in maintenance-related tasks;
(c) Keep schedules and log the time put in by each member, adult non-member resident, or sublessee;
(d) Request, in the event of insufficient voluntary participation, that the Management Committee direct participation in necessary tasks;
(e) Establish, with the Management Committee, a maintenance fund for normal expenses.
(4) These powers do not include the authority to direct any member to perform any particular task.

5.13 Grievances.

“Grievance” means any complaint or allegation of violation of the Bylaws, Articles of Incorporation or House Rules that one member wishes to lodge against another member, including officers and committee members or that the Board my initiate against a member. The Board or members may recommend termination of membership as provided for in Section 6.2 or may impose monetary penalties, temporary suspension of a members’ rights in the Cooperative or any other appropriate discipline provided that the procedure for such action is fair and reasonable and provided further that any member adversely affected is given fifteen (15) days notice by the Board of the adverse action with reasons and the opportunity to be heard, orally or in writing by the Board, not less than five (5) days before the effective date of the penalty or disciplinary action.

Any notice required under this section shall be given personally or by mail, first class or registered sent to the last address of the member shown on cooperative records.

5.14 Tenants, Sublessees, Other Nonmember Adult Residents.

(a) Tenants. Within three (3) months of purchasing the building, the Cooperative shall have no tenants, unless the Board grants an exception in order to safeguard a tenant against undue hardship.
(b) Sublessees.
(1) Sublessees shall submit to the same screening process as applicants for membership.
(2) No unit shall be sublet for a period exceeding a year. The Board shall have authority to make exceptions to this rule.
(3) Any payments or other arrangements for subletting must be approved by the Board.
(4) During their tenancy, sublessees shall have the same rights and obligations as members, except they shall not hold office.
(5) The member who is subleasing shall execute a written proxy in the name of the sublessee for the period of the sublease. The sublessee with a written proxy shall have the same voting rights as a member. (See Section 4.7.)
(6) Sublessees shall not hold office or be elected to the Board.
(c) Other Adult Nonmember Nonsublessee Residents. Any nonmember nonsublessee resident of 1740 Walnut Street over the age of 18 years shall perform WPR and shall have the right to participate in membership meetings. An adult nonmember resident other than a sublessee shall not be required to pay assessments nor shall they hold office.

5.15 Improvements, Alterations, and Major Repairs.

(a) Definitions. For the purposes of these Bylaws, the following terms are hereby defined:
(1) “Improvement” shall mean a non-routine, non-cosmetic change in a unit that is paid for by a member(s) and that results in an increase in the monetary value of the unit.
(2) “Alteration” shall mean a non-routine, non-cosmetic change in a unit that is paid for by a member(s) but does not increase the monetary value of the unit.
(3) “Major repairs” shall mean a non-routine, on-cosmetic repair of a unit that is deemed properly paid for by the Cooperative.
(b) Improvements. Any member may propose an improvement to his or her unit. Such a proposal must be made in writing; it must specify the exact nature of the change to be made, the cost (including reasonable costs for labor), and the degree to which the change will affect other members. The proposal must be submitted to the Management Committee in writing and be approved by the Board.
(c) Alterations.
(1) The procedures for effecting alterations shall be the same as for making improvements. No proposed alteration may be approved if it can be shown that it will decrease the value of a unit.
(2) If there is a disagreement as to whether a proposed change is an improvement or an alteration, such disagreement shall be resolved by a vote of the Board. In case the Board is unable to decide, the change shall be considered an alteration.
(d) Major repairs. A member who believes his or her unit is in need of major repairs shall propose such repairs to the Board. If the Board disagrees and holds that the individual member is, in fact, seeking Cooperative funds for an alteration or improvement, then this disagreement shall be resolved by approval of the membership if the member so request.

5.16 Resignation or Removal of Directors, Officers or Committee Members.

(a) Resignation. Any director, officer or Committee member may resign at any time by giving thirty (30) days written notice to the Board.
(b) Removal. Any director, officer, or Committee member may be removed for cause. Such removals shall be processed by means of the formal grievance procedure and approved by the membership and the Board. Any director who fails to attend three consecutive Board meetings without good reason may be subject to removal. Unless the entire Board is removed from office by the vote of members of the Cooperative, no individual Board member shall be removed prior to the expiration of his or her term of office if the votes cast against removal would be sufficient to elect the Board member if voted cumulatively at an election at which the same total number of votes were cast and the entire number of Board members authorized at the time of the most recent election of the Board member were then being elected.
(c) Replacement. On the creation of a vacancy new Committee members may be appointed by the Board, subject to the conditions for such appointments described above. Replacement of Board members or officers shall be accomplished according to the same electoral practices that would be used for the election of individuals to these positions. The replacement Board member shall serve the unexpired portion of the term and be eligible for reelection.

5.17 Conflicts of Interest.

(a) No contract or other transaction between the Cooperative and one (1) or more of its directors, or between the Cooperative and any domestic or foreign corporation, firm or association in which one (1) or more of its directors has a material financial interest, is either void or voidable because such director or directors or such other corporation, business corporation, firm or association are parties or because such director or directors are present at the meeting of the Board or a Committee thereof which authorizes, approves or ratifies the contract or transaction, if:
(1) The material facts as to the transaction and as to such director’s interest are fully disclosed or known to the members and such contract or transaction is approved by the members in good faith with any membership interest owned by any interested director not being entitled to vote thereon; or
(2) The material facts as to the transaction and as to such director’s interest are fully disclosed or known to the Board or Committee, and the Board or Committee authorizes, approves or ratifies the contract or transaction in good faith by a vote sufficient without counting the vote of the interested director or directors and the contract or transaction is just and reasonable as to the Cooperative at the time it is authorized, approved, or ratified; or
(3) As to contracts or transactions not approved as provided in paragraph (1) or (2) of this subsection, the person asserting the validity of the contract or transaction sustains the burden of proving that the contract or transaction was just and reasonable as to the Cooperative at the time it was authorized, approved, or ratified.
A mere common directorship does not constitute a material financial interest within the meaning of this subsection. A director is not interested within the meaning of this subsection in a resolution fixing the compensation of another director as a director, officer, or employee of the Cooperative, notwithstanding the fact that the first director is also receiving compensation from the Cooperative.
(b) No contract or other transaction between the Cooperative and any corporation, business corporation or association of which one (1) or more of its directors are directors is either void or voidable because such director or directors are present at the meeting of the Board or a Committee thereof which authorizes, approves or ratifies the contract or transaction, if:
(1) The material facts as to the transaction and as to such director’s other directorship are fully disclosed or known to the Board or Committee, and the Board or Committee authorizes, approves or ratifies the contract or transaction in good faith by a vote sufficient without counting the vote of the common director or directors or the contract or transaction is approved by the members in good faith; or
(2) As to contracts or transactions not approved as provided in paragraph (1) of this subsection, the contract or transaction is just and reasonable as to the Cooperative at the time it is authorized , approved or ratified.
Subsection (b) does not apply to contracts or transactions covered by subsection (a).

Article VI – Termination of Membership

6.1 Limitations on Grievance Procedures.

Although the grievance procedures may provide for a recommendation for termination of membership, no officer, director, or Committee member, alone or in combination with each other, shall have the right to recommend termination of a member. Rather, the facts of the case shall be presented to the entire membership in accordance with the following procedures.

6.2 Termination of Membership.

(a) Cause for termination of membership. Cause for termination of membership shall include failure to fulfill W.P.R.; nonpayment of assessments; serious or repeated violation of the proprietary lease, house rules, Bylaws and Articles; serious or repeated interference with the rights of other tenants; serious or repeated destruction of the project and other good cause as specified in the notice for proposed termination. Only a judgement of a court of a decision arising out of arbitration can cause a forfeiture or abridgement of a member’s right to full use and enjoyment of his or her apartment unit.
(b) Procedures. A notice for proposed termination of membership shall be made in writing by the Board or by the Management Committee to the Board. If the Board proposes the action or accepts the Management Committee’s recommendation, the Board shall give the member adversely affected fifteen (15) days notice of the proposed termination with reasons and the opportunity to be heard orally or in writing, by the members not less than five (5) days before the effective date of the Notice of Proposed Termination.
  • Within five (5) days of receipt of the notice of proposed termination, the member adversely affected must request to be heard in writing to the Board. If no request is made, the proposed termination shall be effective on the date specified in the notice. Upon written notification that the member wishes to be heard or submission of written objections, the Board will call a membership meeting to be set not less than five (5) days before the effective date of the proposed termination. The membership shall conduct a hearing and a review of the written submissions. A two-thirds vote of the membership interests shall be required to sustain the proposed termination. The member shall be notified in writing that the membership sustained the proposed termination. If the membership fails to sustain the notice of proposed termination, the member shall be informed in writing that the Board has withdrawn its proposed termination.
  • The adversely affected member shall have the right to vote at the membership meeting unless the member’s right to vote has been suspended in accordance with Section 5.13.
  • Any notices required under this section shall be given personally to the President of the Cooperative or to the member or by mail, first class or registered, sent, if to the tenant, to the last address of the member shown on the Cooperative’s records and, if to the Cooperative, to the President.
  • After the effective date of the proposed termination or, if a hearing is requested after the member has been notified in writing that a two-thirds vote of the membership interest has sustained the proposed termination, the member adversely affected shall be served with a Notice of Termination in accordance with § 1161 of the California code of Civil Procedure. The notice from the Board sustaining the proposed termination and the notice of termination in accordance with § 1161 C.C.P. may be combined.
  • If a court or an arbitrator causes a forfeiture of the member’s right to the full use and enjoyment of his or her unit or orders the eviction of the member, the member shall be required to deliver to the Cooperative his or her membership certificate and proprietary lease, subject to Section 6.5 (Transfer Value Restrictions) and 6.6 (Transfer Restrictions).
  • Amendment of This Section. Any amendment of this section shall be personally given to each member or shall be mailed to each member by first class mail. Such notice shall constitute an amendment to the member’s Proprietary Lease. The notice shall provide that the amendment to the Proprietary Lease shall be effective within 30 days.

6.3 Cancellation of Membership

(a) If a member wishes to cancel his or her membership, he or she must notify the Management Committee or the Board at least sixty (60) days prior to the expiration of the current term of the member’s Proprietary Lease. The sixty (60)-day notice requirement may be waived by the Board. During the sixty-day period or such short period as permitted by the Board, the member shall deliver to the Cooperative his or her membership certificate and proprietary lease.
(b) A selection Committee appointed for the purpose shall proceed to find a replacement for the departing member according to procedures described in the House Rules.

6.4 Survivor Rights.

Nonmember heirs shall inherit only the monetary value of the share. Any nonmember heir who wishes to occupy the unit of the deceased shall have to submit to the same admission procedure as any other new member.

6.5 Transfer Value Restrictions.

Upon the sale, conveyance, transfer, pledge, encumbrance, grant of a security interest in or other disposition of a membership interest, or any interest therein, whether voluntary or by operation of law, no member may receive or realize consideration or value for the membership interest in an amount exceeding the transfer value, which shall be the consideration or value paid for the membership interest by a member plus the value, determined by the Board of the time of completion, of any capital improvements made to the member’s unit by the member or at the member’s expense with the prior written approval of the Board, such consideration or value increasing each year at a compound rate of interest as determined annually by the Board, less any assessments duly levied by the Board during the current term of the member’s Proprietary Lease unpaid by the member and unmitigated by the Cooperative, less any assessments unpaid as of the date the member vacates the unit; any amounts necessarily expended to repair damages, if any, and put the member’s unit into marketable condition as reasonably determined by the Board, including amounts attributable to cleaning, painting, cleaning or replacing worn carpeting and draperies, making necessary structural, mechanical, electrical and plumbing repairs and repairing or replacing fixed appliances, but not including amounts attributable to reasonable wear and tear; provided, however, that in no event may the transfer value exceed the lower of

(a) The fair market value of the membership interest; or
(b) The consideration or value paid for the membership interest by the member who first occupied the unit increased by no more than 10% per year, compounded annually, of such initial consideration or value plus the value, determined by the Board as of the time of completion, of any capital improvements made to the member’s unit by the member or at the member’s expense, with the prior written approval of the Board.

6.6 Transfer Restrictions.

No member may sell, convey, transfer, pledge, encumber, grant a security interest in or otherwise dispose of a membership interest, or any interest therein, except to the Cooperative at a price not exceeding the transfer value; provided, however, that a member, with the prior written consent of the Board, may pledge, encumber, or grant a security interest in a membership interest for the purpose of securing financing to purchase the membership interest or to refinance indebtedness otherwise incurred to purchase the membership interest; provided further, however, that any lender, pledgee or other person acquiring a security interest in the membership interest pursuant to this section shall not sell, convey, transfer, pledge, encumber, grant a security interest in or otherwise dispose of the membership interest, or any interest therein, except to the Cooperative at a price not exceeding the transfer value. The Cooperative shall acquire any membership interest offered for sale, conveyance, transfer or disposition at a price not exceeding the transfer value, or the Cooperative may, at the discretion of its Board, assign its right to acquire a membership interest to any person or persons accepted by the Board as qualified for membership in the Cooperative. In the event of a sale, conveyance, transfer, pledge, encumbrance, grant of a security interest in, or other disposition of a membership interest, or any interest therein, whether voluntary or by operation of law, in contravention of this section, the Cooperative shall have the right to acquire the membership interest, and all interests therein, from the member or any transferee, or both, as their respective interests may appear, at a price not exceeding the transfer value. Any resale of a membership interest by the Cooperative to any person or persons accepted by the Board as qualified for membership in the Cooperative shall be at the price incurred by the Cooperative in acquiring the membership interest, not exceeding the transfer value.

Article VII – Indemnification of Agents

7.1 Indemnification.

(a) For the purposes of this section, “agent” means any person who is or was a director, officer, employee or other agent of the Cooperative or is or was serving at the request of the Cooperative as a director, officer, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or was a director, officer, employee or agent of a foreign or domestic corporation which was a predecessor corporation of the Cooperative or of another enterprise at the request of such predecessor corporation; “proceeding” means any threatened, pending, or completed action or proceeding, whether civil, criminal, administrative, or investigative; and “expenses” includes without limitation attorneys’ fees and any expenses of establishing a right to indemnification under subsection (d) or paragraph (3) of subsection (e).
(b) The Cooperative shall have power to indemnify any person who was or is a party to any proceeding by reason of the fact that such person is or was an agent of the Cooperative, against expenses, judgements, fines, settlements and other amounts actually and reasonably incurred in connection with such proceeding if such person acted in good faith and in a manner such person reasonably believed to be in the best interests of the Cooperative and, in the case of a criminal proceeding, has no reasonable cause to believe the conduct of such person was unlawful. The termination of any proceeding by judgement, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in the best interests of the Cooperative or that the person had reasonable cause to believe that the person’s conduct was unlawful.
(c) The Cooperative shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action by or in the right of the Cooperative, to procure a judgement in its favor by reason of the fact that such person is or was an agent of the Cooperative, against expenses actually and reasonably incurred by such person in connection with the defense or settlement of such action if such person acted in good faith, in a manner such person believed to be in the best interests of the Cooperative and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances.
(d) No indemnification shall be made under this subsection:
(1) In respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Cooperative in the performance of such person’s duty to the Cooperative, unless and only to the extent that the court in which such proceeding is or was pending shall determine upon application that, in view of all the circumstances in the case, such person is fairly and reasonable entitled to indemnity for the expenses which such court shall determine;
(2) Of amounts paid in settling or otherwise disposing of a threatened or pending action, with or without court approval; or
(3) Of expenses incurred in defending a threatened or pending action which is settled or otherwise disposed of without court approval.
(e) To the extent that an agent of the Cooperative has been successful on the merits in defense of any proceeding referred to in subsection (b) or (c) or in defense of any claim, issue or matter therein, the agent shall be indemnified against expenses actually and reasonably incurred by the agent in connection therewith.
(f) Except as provided in subsection (e), any indemnification under this section shall be made by the Cooperative only if authorized in the specific case, upon a determination that indemnification of the agent is proper in the circumstances because the agent has met the applicable standard of conduct set forth in subsection (b) or (c) by:
(1) A majority vote of a quorum consisting of directors who are not parties to such proceeding;
(2) Approval of the members with the persons to be indemnified not being entitled to vote thereon; or
(3) The court in which such proceeding is or was pending upon application made by the Cooperative or the agent or the attorney or other person rendering services in connection with the defense, whether or not such application by the agent, attorney or other person is opposed by the Cooperative.
(g) Expenses incurred in defending any proceeding may be advanced by the Cooperative prior to the final disposition of such proceeding upon receipt of an undertaking by or on behalf of the agent to repay such amount unless it shall be determined ultimately that the agent is entitled to be indemnified as authorized in this section.
(h) No indemnification or advance shall be made under this section, except as provided in subsection (e) or paragraph (3) or subsection (f) in any circumstance where it appears:
(1) That it would be inconsistent with a provision of the Articles, Bylaws, a resolution of the members or an agreement in effect at the time of the accrual of the alleged cause of action asserted in the proceeding in which the expenses were incurred or other amounts were paid, which prohibits or otherwise limits indemnification; or
(2) That it would be inconsistent with any condition expressly imposed by a court in approving a settlement.
(i) The Cooperative shall have power to purchase and maintain insurance on behalf of any agent of the Cooperative against any liability asserted against or incurred by the agent in such capacity or arising out of the agent’s status as such whether or not the Cooperative would have the power to indemnify the agent against such liability under the provisions of this section.
(j) This section does not apply to any proceeding against any trustee, investment manager or other fiduciary or any employee benefit plan in such person’s capacity as such, even though such person may also be an agent as defined in subsection (a) of the Cooperative. The Cooperative shall have power to indemnify such trustee, investment manager or other fiduciary to the extent permitted by subsection (f) of Section 207 of the Corporations Code.

Article VIII – Required Records and Reports and Rights of Inspection

8.1 Books and Records.

(a) The Cooperative shall keep:
(1) Adequate and correct books and records of account;
(2) Minutes of the proceedings of its members, Board and Committees of the Board; and
(3) A record of its members giving their names and unit numbers.
(b) Minutes shall be kept in written form. Other books and records shall be kept either in written form or in any other form capable of being converted into written form..
(c) The above listed documents, books and records shall be made available for inspection by any member at such place within 1740 Walnut Street as the Board shall designate.

8.2 Financial Statements.

(a) Financial statements for the Cooperative shall be regularly prepared and distributed to all members as follows:
(1) A pro forma operating statement (budget) for each fiscal year shall be distributed not less than 60 days before the beginning of the fiscal year.
(2) A balance sheet — as of an accounting date which is the last day of the month closest in time to six months from the date of closing of the first sale of an interest in the subdivision — and an operating statement for the period from the date of the first closing to the said accounting date, shall be distributed within 60 days after the accounting date. This operating statement shall include a schedule of assessments received and receivable identified by the number of the membership interest and the name of the member assessed.
(3) An annual report consisting of the following shall be distributed within 120 days after the close of the fiscal year.
(a) A balance sheet as of the end of the fiscal year.
(b) An operating (income) statement for the fiscal year.
(c) A statement of changes in financial position for the fiscal year.
(d) Any information required to be reported under Section 8.3.
(e) A statement of the place where the names and addresses of current members are located.
(b) Ordinarily the annual report referred to in (a) (3) above shall be prepared by an independent accountant for any fiscal year in which the gross income to the Cooperative exceeds $75,000.
(c) If the report referred to in (a) (3) above is not prepared by an independent accountant, it shall be accompanied by the certificate of an authorized officer of the Association that the statements were prepared without audit from the books and records of the Cooperative.

8.3 Annual Statement of Interested Persons and Indemnification Transactions.

(a) The Cooperative shall furnish annually to its members and directors a statement of any transaction or indemnification of a kind described in subsection (d) or (e), if any such transaction or indemnification took place. If the Cooperative issues an annual report to all members, this subsection shall be satisfied by including the required information in the annual report.
(b) Except as provided in subsection (c), a covered transaction under this section is a transaction in which the Cooperative or its subsidiary was a party, and in which either of the following had a direct or indirect material financial interest:
(1) Any director or officer of the Cooperative or its subsidiary.
(2) Any holder of more than ten percent (10%) of the voting power of any subsidiary of the Cooperative. For the purpose of subsection (d), an “interested person” is any person described in paragraph (1) or (2) of this subsection.
(c) Transactions approved by the members of the Cooperative, under subsection (a) of Section 4.12, are not covered transactions. For the purpose of subsection (b), a mere common directorship is not a material financial interest.
(d) The statement required by subsection (a) shall describe briefly:
(1) Any covered transaction (excluding compensation of officers and directors) during the previous fiscal year involving more than forty thousand dollars ($40,000), or which was one of a number of covered transactions in which the same interested person had a direct or indirect material financial interest, and which transactions in the aggregate involved more than forty thousand dollars ($40,000).
(2) The names of the interested persons involved in such transactions, stating such person’s relationship to the Cooperative, the nature of such person’s interest in the transaction and, where applicable, the amount of such interest; provided, that in the case of a transaction with a partnership of which such person is a partner, only the interest of the partnership need be stated.
(e) The statement required by subsection (a) shall describe briefly the amount and circumstances of any indemnifications or advances aggregating more than ten thousand dollars ($10,000) paid during the fiscal year to any officer or director of the Cooperative pursuant to Section 7.1, provided that no such report need be made in the case of indemnification approved by the members under subsection (f) (2) of Section 7.1.

8.4 Availability of Records in Written Form.

If any record subject to inspection pursuant to this article is not maintained in written form, a request for inspection is not complied with unless and until the Cooperative at its expense makes such record available in written form.

8.5 Inspections.

Any inspection under this article may be made in person or by agent or attorney and the right of inspection includes the right to copy and make extracts.

8.6 Subsidiary Records.

Any right of inspection created by this article extends to the records of any subsidiary of the Cooperative.

8.7 Prohibited Limitations on Rights.

The rights of members provided in this article may not be limited by contract or the Articles of Incorporation or Bylaws.

8.8 Inspection of Membership Rolls.

(a) Unless the Cooperative provides a reasonable alternative pursuant to subsection (c), a member may do either or both of the following as permitted by subsection (b):
(1) Inspect and copy the record of all the members’ names, unit numbers and voting rights, at reasonable times, upon five (5) business days’ prior written demand upon the Cooperative, which demand shall state the purpose for which the inspection rights are requested; or
(2) Obtain from the secretary of the Cooperative, upon written demand and tender of a reasonable charge, a list of the names, unit numbers and voting rights of those members entitled to vote for the election of directors, as of the most recent record date for which it has been compiled or as of a date specified by the member subsequent to the date of demand. The demand shall state the purpose for which the list is requested. The membership list shall be made available on or before the later of ten (10) business days after the demand is received or after the date specified therein as the date as of which the list is to be compiled.
(b) The rights set forth in subsection (a) may be exercised by:
(1) Any member, for a purpose reasonably related to such person’s interest as a member. Where the Cooperative reasonably believes that the information will be used for another purpose, or where it provides a reasonable alternative pursuant to subsection (c), it may deny the member access to the list.
(2) Any two members for a purpose reasonably related to the members’ interest as members.
(c) The Cooperative may, within ten (10) business days after receiving a demand under subsection (a), deliver to the person or persons making the demand a written offer of an alternative method of achieving the purpose identified in said demand without providing access to or a copy of the membership list. An alternative method which reasonably and in a timely manner accomplishes the proper purpose set forth in a demand made under subsection (a) shall be deemed a reasonable alternative, unless within a reasonable time after acceptance of the offer the Cooperative fails to do those things which it offered to do. Any rejection of the offer shall be in writing and shall indicate the reasons the alternative proposed by the Cooperative does not meet the proper purpose of the demand made pursuant to subsection (a).

8.9 Members’ Rights of Inspection.

The accounting books and records and minutes of proceedings of the members and the Board and Committees of the Board shall be made available for inspection upon the written demand on the Cooperative of any member at any reasonable time, for a purpose reasonably related to such person’s interests as a member.

8.10 Directors’ Rights of Inspection.

Every director of the Cooperative shall have the absolute right at any reasonable time to inspect and copy all books, records and documents of every kind and to inspect the physical properties of the Cooperative.

8.11 Membership Lists.

(a) The membership list is a corporate asset. Without consent of the Board, a membership list or any part thereof may not be used by any person for any purpose unrelated to a member’s interest as a member. Without limiting the generality of the foregoing, without the consent of the Board a membership list or any part thereof may not be:
(1) Used to solicit money or property unless such money or property will be used solely to solicit the vote of the members in an election to be held by the Cooperative, or
(2) Used for any purpose which the user does not reasonably and in good faith believe will benefit the Cooperative, or
(3) Used for any commercial purpose or purpose in competition with the Cooperative, or
(4) Sold to or purchased by any person.
(b) As used in this section, the term membership list means the record of all the members’ names and unit numbers.

8.12 Procedures for Obtaining Copies of Requested Documents.

The Board shall establish reasonable rules with respect to:

(a) Notice to be given to the custodian of the records by the member desiring to make the inspection.
(b) Hours and days of the week when such an inspection may be made.
(c) Payment of the cost of reproducing copies of documents requested by a member.

Article IX – Distribution Restrictions

9.1 Definition of Corporate Equity.

The term “corporate equity” means the excess of the Cooperative’s assets valued at current fair market value over the sum of (i) any outstanding indebtedness contracted in the acquisition, construction, alteration, rehabilitation or maintenance of the property, (ii) all other liabilities of the Cooperative incurred in the ordinary course of its business activities undertaken in furtherance of its corporate purposes, (iii) the current fair market value of any assets held by the Cooperative upon a valid condition requiring transfer, conveyance or return, which condition has occurred or is reasonably likely to occur; and (iv) the aggregate transfer value of all the Cooperative’s membership interests currently valued.

9.2 Definition of Distribution.

The term “distribution” means any

(i) payment of money or the distribution of property by the Cooperative without consideration to any member whether out of earnings, profits, gains or capital,
(ii) offset of credit by the Cooperative without consideration against the liability of any member for dues, fees, assessments, carrying, occupancy or maintenance charges, fines, penalties, late charges or other costs (the “carrying charges”) or other financial obligations of a member to the Cooperative based upon membership status, or
(iii) expenditure of funds by the Cooperative for debt service, expenses, costs, losses, liabilities, reserves, or capital improvements in an amount exceeding the aggregate of the carrying charges assessed against and collected from the members; provided, however, that an expenditure of funds by the Cooperative in any year exceeding the carrying charges shall not be deemed a distribution if made
[a] to cover an occasional loss to the Cooperative under circumstances which were unforeseen and reasonably and in good faith can be regarded as unforeseeable,
[b] to cover carrying charges allocated to units which are vacant, or
[c] out of funded reserves for a valid and proper purpose.

9.3 Distribution Restrictions.

(a) The Cooperative shall not make any distribution except to (i) offset or credit against the liabilities of the members for future carrying charges the amount of any previous carrying charges assessed against and collected from the members in excess of the Cooperative’s expenditures for debt service, expenses, costs, losses, liabilities, reserves, or capital improvements, (ii) acquire any membership interest offered for sale, conveyance, transfer or disposition to the Cooperative at a price not exceeding the transfer value; (iii) repay any indebtedness of the Cooperative owed to a member; (iv) redeem and retire each membership interest at a price not exceeding the transfer value upon the dissolution and liquidation of the Cooperative; (v) pay to any member pursuant to Section 9.6 such member’s share of any insurance proceeds or condemnation awards in an amount, however, not exceeding the transfer value of the membership interest; or (vi) make a down payment assistance loan to a new member pursuant to Section 9.4.
(b) In accordance with Section 216 of the Internal Revenue Code of 1954, as amended, no member shall be entitled (either conditionally or unconditionally) to receive any distribution not out of earnings and profits of the Cooperative except on a complete or partial liquidation of the Cooperative; provided, however, that this subsection (b) shall not be construed as authorizing any distribution not otherwise authorized pursuant to subsection (a) of this subsection.

9.4 Restrictions on Cooperative Equity.

Corporate equity shall be held in trust by the Cooperative for the public or charitable purposes of acquiring, constructing, owning, operating, maintaining, and preserving affordable housing for persons of low- or moderate-income, and encouraging, assisting and supporting the foregoing purposes. Corporate equity may be employed or utilized by the Cooperative to (i) expand or improve the property by acquisition, construction, rehabilitation, refurbishing or remodeling; (ii) acquire and improve additional property; (iii) make a down payment assistance loan to any new member to assist the member in meeting the cost of acquiring a membership interest, subject, however, to the sole discretion of the Board and further subject to such terms and conditions as the Board shall determine and specify; and (iv) encourage, assist, and support the public or charitable purposes of acquiring, constructing, owning, operating, maintaining and preserving affordable housing for persons of low- or moderate-income.

9.5 Distributions on Dissolution.

Upon the dissolution and liquidation of the Cooperative, corporate assets to the extent available shall be allocated and distributed or set aside for distribution in accordance with the following order or priorities:

(a) payment of all debts and liabilities of the Cooperative;
(b) transfer, conveyance, or return of any assets held by the Cooperative upon a valid condition requiring the transfer, conveyance, or return, which condition has occurred or will occur;
(c) distribution to each member in satisfaction of all membership rights of an amount not exceeding the transfer value of the member’s membership interest; and
(d) distribution, without regard to priority and subject to the discretion of the Board, to any other limited equity housing cooperative, any nonprofit fund, foundation, association or corporation which has established its exemption from federal income taxation pursuant to Section 501(c) (3) or Section 501(c) (4) of the Internal revenue Code of 1954, as amended, the State of California, or any department or agency thereof, or any unit of local government, or any agency thereof, all subject to the requirement that the distribution shall be received, held, administered, exchanged or expended for public or charitable purposes.

9.6 Distributions on Condemnation or Casualty Loss.

If all or any part of a unit is acquired by eminent domain, or is damaged or destroyed and the Cooperative decides not to repair or replace such unit, the member having the exclusive right of occupancy of such unit shall receive a distribution of the condemnation award or insurance proceeds, respectively, attributable to such unit in an amount not exceeding the transfer value of the member’s membership interest.

Article X – Amendment of Bylaws and Articles of Incorporation

10.1 Interim Arrangements and Bylaw Amendments.

(a) For the period commencing with the first general meeting, the membership of the cooperative, the interim Board and standing Committees shall be established under these Bylaws.
(b) Commencing with the incorporation of the Cooperative, and for a period of eighteen (18) months thereafter, these Bylaws shall be considered interim in nature. It shall be subject to approval of the membership if any member so requests. For that period, any member can suggest an amendment to the Board and the Board shall review it and then submit it to the members for their approval in accordance with Section 10.2(d) and 10.2(e).
(c) Twelve (12) months after the date of incorporation of the Cooperative, the Board shall solicit voluntary participation in a Bylaws Review Committee. This Committee shall be charged with determining whether these Bylaws need such substantial revision that the current version needs to be totally reformulated.

10.2 Amendments to Bylaws.

After eighteen (18) months from the incorporation of the cooperative, these Bylaws may be amended only as follows:

(a) A member must prepare a proposed amendment in writing, accompanied by the rationale for the proposal, and submit it to the Management Committee.
(b) The Management Committee then reviews and comments on the proposal and submits it to the Board with recommendations for approval or disapproval.
(c) The Board then reviews and comments upon the Management Committee submissions, and in turn submits the proposal with recommendations to the membership by written notice.
(d) For any amendment to these Bylaws to be effected, it must be approved by at least 66-2/3% of all members.
(e) Notwithstanding the above, the percentage of a quorum or of the voting power of the Cooperative or of members necessary to amend a specific clause or provision in the Articles or Bylaws shall not be less than the prescribed percentage of affirmative votes required for action to be taken under that clause.

10.3 Amendments of the Articles of Incorporation.

Amendments of the Articles of Incorporation shall require the vote or written assent of at least a bare majority of the Board and at least 66-2/3% of the members.

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