Manzanita Interactive Operating Agreement

Preface

This is Manzanita Interactive’s first ever ratified Operating Agreement! While this establishes the framework for how we run our Cooperative, it is only the first version of a living document. We hope to improve and evolve this document over time to fit the specific needs of our Cooperative.

Regardless, we are very proud of our first iteration, and we’re excited to share this document with fellow workers interested in forming an equitable game studio, where workers are empowered and their rights are respected.

Preamble

“Manzanita” can refer to:

“Little apple” in Spanish
Arctostaphylos, a drought-tolerant genus of shrubs from Western North America known for their beautiful red bark, ability to grow in poor soil, and hardy seeds that grow in the wake of wildfires
A short residential street in Silver Lake, visible from the window of the first US game studio to ratify a union contract
A new worker-owned games cooperative in Los Angeles, CA

Our Values

Ruthless Sustainability

Our first priority is the solvency of the Cooperative and the maintenance of our Members’ livelihoods. In an uncertain economy, we will face difficult decisions on a daily basis. Our ability to contribute to movement work is contingent on our ability to keep our own lights on.

Worker Agency

Labor is entitled to all it creates. To the furthest extent possible, workers involved in Manzanita Interactive projects for meaningful durations of time should have a path to Worker-Ownership or comparable agency and compensation. Partners and vendors should be paid fairly for their time and not taken advantage of.

Labor Movement Service

Manzanita Interactive was founded by union organizers, and we continue our obligation to that movement. To the extent to which we are able to support ourselves, our next priority is to leverage our social capital and financial capital towards the advancement of worker-lead class struggle.

We reject solidarity with the indie employer class. We believe “small business owner” is a slur.

Games Worth Playing

All Manzanita Interactive games should be worth our players’ time, accessible to a wide range of people, and carry a meaningful political message.

Article 1 - Definitions

1.1 Definitions

In this operating agreement, the following expressions mean:

The Cooperative refers to Manzanita Interactive.
A Member, also known as a Worker-Owner, is a natural person who can perform any kind of work for the Cooperative as an employee.
A Membership refers to the rights a Member has pursuant to the Cooperative’s articles, bylaws, and the law.
Majority is defined as 50 percent plus one of all Members or greater.
Supermajority is defined as 67 percent of all Members or greater.

Article 2 - Membership

2.1 Classification of Members

The Cooperative shall have one (1) class of Members.

2.2 Becoming a Member

To become a Member of this Cooperative, a person must:

Wait six (6) calendar months to have elapsed since beginning work with the Cooperative; and
Work for the Cooperative for 650 hours; this period of time is called the “Candidacy Period;” and
Be approved by the existing Members, by means of the process described in 2.3 Acceptance of Members; and
Receive a copy of the Cooperative’s Disclosure Statement and Bylaws.

The Founding Members will become Members upon execution of this agreement. There is no “buy-in” required in order to become a Member.

2.3 Acceptance of Members

The application review and approval process for a non-Member candidate is as follows:

The Cooperative shall receive the Membership application from a non-Member candidate and shall submit it to the Members for approval.
The Members shall then decide by the decision-making process described in 5.1 Process of Decision-Making for All Worker-Owner Meetings whether to approve the application.
If the application is not approved, the applicant’s employment shall be immediately terminated, unless the Members choose to specify a further Candidacy Period to be followed by a second decision of the Members on whether to approve the application.
Upon approval of the application, and meeting the qualifications listed in 2.2 Becoming a Member, the applicant shall immediately become a Member.
The Cooperative may waive the Candidacy Period and renew a former Member’s Membership immediately by a Supermajority vote of all the Members.

2.4 Members May Not Transfer Their Memberships

No Member may transfer their Membership or any right arising from that Membership. Any attempted assignment or transfer of Membership shall be void, and will not confer rights on the intended assignee or transferee.

Article 3 - Non-Members

3.1 Non-Member Candidates

A non-Member candidate is a person seeking Membership in the Cooperative through the process described in 2.2 Becoming a Member. A person may become a non-Member candidate by:

Being a union member in good standing of United Videogame Workers of C.W.A.; and
Being approved through the normal process of decision-making described in 5.1 Process of Decision-Making for All Worker-Owner Meetings.

3.2 Right to Membership

So long as a non-Member candidate meets the membership eligibility requirements outlined in 2.2 Becoming a Member, they are entitled to become a Member.

3.3 Contract Labor

From time to time, the Cooperative may hire external contractors as needed to conduct business. The hiring will be agreed upon through the normal process of decision-making described in 5.1 Process of Decision-Making for All Worker-Owner Meetings.

As a general principle, contracting should be rare, short-term, and reserved for specialized purposes. The Cooperative should ensure that a supermajority of the contributing work to its projects done by workers directly managed by the Cooperative is performed by Members or Non-Member candidates who have a path to ownership.

This supermajority of the contributing work on projects is defined as having at least 66% or more of the hours done per fiscal year by Members or non-Member candidates.

The Cooperative may only contract work under various circumstances:

The skills, knowledge, experience, artistic fit, or equipment are unavailable within the current workforce; or
The artist or provider is providing a short-term or one-off service for the Cooperative; or
The artist or provider seeks to maintain their independence and/or does not wish to be a Member.

A contractor who works continuously with the Cooperative for a period of 3 months or greater shall be entitled to seek non-Member candidacy provided the requirements in 3.1 Non-Member Candidates are met. Such requests for approval of non-Member candidacy shall not be unreasonably withheld.

3.4 Rights of the Contractor

A contractor is entitled to written and signed copies of their contract(s) with the Cooperative.

A contractor who contributes any amount of work to a project during the development of a project will be listed in the credits of that project upon release.

A contractor shall be granted residuals for the fiscal year, as detailed in 8.5 Residual Payouts, if they meet all of the following criteria:

The contractor performs services totaling more than eighty (80) hours in the current fiscal year for the Cooperative; and
The contractor is a member in good standing of a Union recognized by the Officers at the time that they performed these services
Have not been found in violation of their contract with the Cooperative, as determined by a Majority vote of the Members.

A contractor not meeting the above criteria may be granted residuals for the fiscal year, as detailed in 8.5 Residual Payouts, if they meet all of the following criteria:

The Officers recommend the contractor be granted residuals for the fiscal year; and
Members do not veto the recommendation by Majority vote of the Members.

3.5 Financial Transparency Rights of Contractors and Non-Member Candidates

As an appendix to any offer of employment, non-Member candidates and contractors on an hourly or ongoing basis shall be provided a “pay scale table” that lists the rate of compensation of each Member, non-Member candidate, and contractor under the Cooperative’s employ who performs substantially similar work.

Reasonable efforts should be taken to anonymize the pay scale table to only include each individual’s role and years of experience, but not their name.

3.6 Mediation

Any dispute between the Cooperative and a contractor, non-Member candidate, or Member may be submitted to mediation, after all good-faith efforts to resolve the dispute have come to an impasse. The mediating party will be chosen mutually between the parties involved in the dispute. Members in the Cooperative must take a Majority vote before a matter is submitted to mediation. Additional policies for mediation may be set in the worker handbook.

3.7 Arbitration

Any agreement entered between the Cooperative and a non-Member that requires arbitration must contain the following:

Excludes certain claims such as those under NLRA and claims for harassment;
Certain claims is defined as: claims for worker’s compensation or unemployment compensation benefits; claims or charges before any administrative agency having jurisdiction there over, if private dispute resolution procedures cannot lawfully be compelled as to such claims such as a petition or charge that could be brought before the National Labor Relations Board; claims for benefits under a plan that specifies a claim procedure inconsistent with this Agreement; claims for harassment or discrimination under California’s Fair Housing and Employment Act or Title VII of the U.S. Code; or any other claim that is not subject to arbitration under federal law.
The location of arbitration is set to Los Angeles County;
The Cooperative will cover costs particular to arbitration; and
The choice of law provision shall provide that California governs (unless the claim arises under US Federal law)

Article 4 - Termination of Membership

4.1 Resignation of a Member

Every Member has the right to resign from the Cooperative.
When a Member resigns from the Cooperative, their Membership will be terminated.
To resign from the Cooperative, a Member must provide the Secretary of the Cooperative with a written notice of resignation. The resignation shall become effective immediately without any action on the part of the Cooperative. The individual who resigned from the Cooperative will not be allowed to work for the Cooperative for one month following voluntary termination of Membership unless their Membership is renewed by the Cooperative.
Resignation shall not relieve the resigning Member from any obligation for charges incurred, dues, assessments, or fees, and this section shall not diminish any right of the Cooperative to enforce any such obligation or obtain damages for its breach.
An individual who has resigned and left in good standing may later rejoin, but as a condition of rejoining, must:
Review and acknowledge the current policies and procedures of the Cooperative,
Be approved in accordance with 2.3 Acceptance of Members (E).

4.2 Death of a Member

A Membership shall immediately terminate upon the death of a Member.

4.3 Expulsion of a Member

No Member may be expelled or suspended, and no Membership or Memberships may be terminated or suspended, except according to procedures satisfying the requirements of this section:

A Member may for any lawful reason be expelled from the Cooperative by a vote of the Supermajority of the Members at a duly called meeting at which a quorum minus one person is present.
If one or more Members wishes to propose the expulsion of a Member, all Members must be given notice of this intent at least 15 days prior to the member meeting at which the proposal will be considered. The notice will state the time and place of a hearing to occur not less than five days before the member meeting at which the proposal will be considered. The Member to be expelled will have the opportunity to be heard orally at that hearing and/or to submit written materials as they elect.
Any notice required under this section may be given by any method reasonably calculated to provide actual notice.
A Member who is expelled or suspended or whose Membership is terminated shall be liable for any charges incurred, dues, assessments, or fees incurred before expulsion, suspension, or termination or arising from contract or otherwise.
In rare circumstances in which it would not be reasonable to expect a Member to discuss their concerns with another Member, such as a case of alleged sexual harassment, a Majority of Members of the Cooperative may make such modifications to this process as are necessary to respect the rights of the alleged victim. Similarly, in cases of alleged extreme misconduct, a Supermajority vote of Members of the Cooperative may take measures to protect the rights of the Cooperative and its clients, such as suspending the accused’s access to financial assets, removal from communication channels, and/or authority to work on behalf of the Cooperative, pending investigation. A Majority of Members shall impose the terms and duration of suspension. The default shall be that suspension is without pay, but a consensus of Members excluding the suspended Member may provide otherwise.

4.4 Member Exclusion From Expulsion Process

Members in or recently in a romantic or familial relationship with a Member being considered for expulsion shall be excluded from the decision-making process, except in cases where accusations of sexual assault or misconduct between the afforementioned is a factor in the proposed expulsion.

In such case, a bare Majority vote of the Members of the Cooperative may be used to take measures to protect the rights of the Cooperative and its clients, outlined in 4.3 Expulsion of a Member, instead of the Supermajority vote.

Article 5 - Voting and Meetings

5.1 Process of Decision-Making for All Worker-Owner Meetings

Matters will be discussed with the goal of seeking decision-making by consensus. If it becomes apparent that consensus cannot be reached on any matter, the Members will vote on whether the issue should be tabled for future discussion and decision. If a decision cannot be made by consensus, the Members shall vote on the matter, with a Supermajority vote required to carry any decision, except as otherwise provided in these articles. All consensus decisions are to be made at meetings as defined in this agreement.

5.2 Scope of Worker-Owner Meetings

Decisions subject to the process outlined in 5.1 Process of Decision-Making for All Worker-Owner Meetings include all applicable matters outlined in California Corporations Code section 12320. In addition to these matters, examples would include removing Members, contracting with third-party vendors, decisions related to publishers and publishing negotiation, and the acceptance and dismissal of clients as would be appropriate during regular Worker-Owner meetings (5.5 Regular Worker-Owner Meetings).

Any game production meeting without financial considerations, such as meetings pertaining to art, game design, programming, and all else relevant, is not in scope of Worker-Owner meetings.

5.3 Worker-Owner Meetings Held Remotely

Any Worker-Owner Meeting may be held remotely.

Members may participate by telephone, video conference or other similar mechanism, so long as every participating Member can hear and participate. Notice with access to the remote conference should be sent out in advance of the meeting.

Participation in an in-person meeting through use of telephone, video conference, or other similar mechanism constitutes presence in person at the meeting so long as all Members are able to participate.

5.4 Types of Members at Worker-Owner Meetings

Attendance is expected for all Members and non-Member candidates at all Worker-Owner meetings. Non-Member candidates are encouraged to participate in discussion at these Worker-Owner meetings but do not vote.

5.5 Regular Worker-Owner Meetings

Regular Worker-Owner meetings of the Members and non-Member candidates shall be held not less frequently than every calendar month, as the Members may determine from time to time.

Written notice shall be given to all Members and non-Member candidates for regularly scheduled Worker-Owner meetings held at the regular time and place as determined by the Members.

5.6 Special Worker-Owner Meetings

Special Worker-Owner meetings of the Members and non-Member candidates for any lawful purpose may be called by the greater of three Members or at least 5 percent of the members if the Cooperative has more than four Members. If the Cooperative has fewer than four Members, Special Worker-Owner meetings may be called by one Member.

Written notice shall be given to all Members and non-Member candidates for scheduled Special Worker-Owner meetings, unless Members unanimously agree to skip the notice period. The notice shall state the place, date and hour of the meeting and the general nature of the business to be transacted. No other business may be transacted at such a meeting.

5.7 Annual Worker-Owner Meetings

An annual Worker-Owner meeting of Members and non-Member candidates shall be held in February each year. If the day fixed for the annual Worker-Owner meeting falls on a legal holiday, the meeting shall be held at the same time and place on the following business day. Elections of officers shall be held at the annual Worker-Owner meeting. Any other proper business may be transacted at the meeting.

5.8 No Proxies

All votes and consents on behalf of Members shall be cast or given by such Member personally and not through any proxy, agent, or other representative.

5.9 Quorum

A Majority of Members shall constitute a quorum at a meeting of Members. When a quorum is present, proposals shall be adopted using the modified consensus process as described in 5.1 Process of Decision-Making for All Worker-Owner Meetings, unless otherwise required in the Articles or Bylaws.

5.10 Loss of Quorum at a Worker-Owner Meeting

If there is a quorum present at the beginning of a meeting and then some Members leave so that less than a quorum remains, the remaining Members may continue to conduct business but no vote shall occur.

5.11 Adjournment for Lack of Quorum.

In the absence of quorum, a Majority of present Members can vote to adjourn the meeting.

Article 6 - Officers

6.1 Offices

The Cooperative shall have a Secretary, a Treasurer, and such other Officers with such titles and duties as shall be determined by the Members.

6.2 Elections of Officers

The Officers shall be elected by the Members for one year terms at the annual meeting by written ballot. The candidate receiving the highest number of votes for an office shall be elected.

If a Majority of votes is not received for an office, there shall be a run-off election for two candidates with the highest votes. The time and place shall be determined by the Members.

Officers may be removed by a vote of the Members.

6.3 Resignation

Any Officer may resign at any time upon written notice to the Cooperative without prejudice to the rights, if any, of the Cooperative under any contract to which the Officer is a party.

6.4 Vacancy

A vacancy in any office resulting from an Officer’s death, resignation, removal, or disqualification, or from any other cause, will cause it to be filled by the Members.

A Special Election may be called upon by the Members to appoint a new Officer. The time and place shall be determined by the Members.

6.5 Duties of Secretary

The Secretary’s duties are as followed:

Will keep, or cause to be kept, secure electronic records of a book of minutes of all meetings and actions of the Members;
Will keep, or cause to be kept, secure electronic records of the Cooperative required to be kept as described in 9.1 Maintenance of Records; and
Will give notice, or cause notice to be given of all Members’ meetings for which notice is required by statute or by the Articles of Organization. If the Secretary or other person authorized by the Secretary to give notice fails to act, notice of any meeting may be given by any Member of the Cooperative.

The Secretary will have such other powers and perform other duties as prescribed by the Members or by the Articles of Organization.

6.6 Duties of Treasurer

The Treasurer’s duties are as followed:

Will keep, or cause to be kept, adequate and correct books and records of accounts of the properties and business transactions of the Cooperative, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings, and shares;
Shall make available to all Members a list of each other Member’s rate of pay;
Will deposit or cause to be deposited Cooperative funds and other valuables in the Cooperative’s name and to its credit with depositaries designated by the Members;
Make disbursements of Cooperative funds as authorized by the Members;
Any non-recurring financial transaction greater than $5000 shall be signed off by the Treasurer and an Officer;
Provide quarterly treasury updates or updates upon reasonable request from the Members;
Render a statement of the Cooperative’s financial condition and an account of all transactions conducted as treasurer whenever requested by the Members; and
Have other powers and perform other duties as prescribed by the Members or the Articles of Organization.

The Treasurer will be deemed to be the Treasurer for purposes of giving any reports or executing any certificates or other documents.

Article 7 - Projects and Intellectual Property

7.1 Member Side Projects

No restriction shall be placed on members pursuing creative and commercial projects (“Member Side Projects”) in a separate capacity from their role at the Cooperative. The Cooperative shall make no claim to default Intellectual Property (“IP”) ownership of these projects.

7.2 Transfer of IP to The Cooperative

At their exclusive discretion, a member may propose a transfer of IP ownership of a Member Side Project from themselves to the Cooperative.

Transfer proposals must be accompanied by a business plan that includes:

A budget;
An estimated project schedule;
An analysis of required time and resources from the Cooperative;
The financial and creative goals for the project; and
List of contractors that would be eligible for residuals upon release of the project and an estimate of hours worked by contractors.

Such transfers must be approved by a Supermajority vote of other members.

Conversion of Patronage hours for these projects shall be handled on a case-by-case basis, as agreed upon by a Majority of Members.

Article 8 - Finances

8.1 Definitions

“Expenses” means operating expenses, including rent, inventory, wages, and payments of any interest and principal on any debts of the Cooperative.
“Surplus” means the excess of revenues over Expenses on a pre-tax basis for a fiscal year attributable to Member labor. For the avoidance of doubt, Surplus will not include any capital contributions made by Members.
“Profit” means the excess of revenues over Expenses on a pre-tax basis for a fiscal year attributable to non-Member labor. For the avoidance of doubt, Profit will not include any capital contributions made by Members.
“Loss” means the excess of Expenses over revenues for a fiscal year.
The “Collective Account” consists of Surplus and reserves that are retained in the Cooperative and not distributed to Members. The Collective Account is to be held at a Community Credit Union or other financial institution operating on cooperative principles.
“Member Account” means each Member’s capital account in the Cooperative, which is calculated as written notices of allocation minus Losses plus/minus any other item that affects the balance in the Member’s capital account.
“Patronage” is equal to the sum of 1 point for each hour worked by each Member for the Cooperative. The Cooperative may set a policy to provide further guidance and interpretation on these matters. Such policy will have the same force as this Operating Agreement and may only be implemented or amended on approval of the Members. Such policy will be made available in writing to Members and non-Members upon request.
“Patronage Dividends” shall have the definition contained in Internal Revenue Code Section 1388(a) (dividends paid to Members and non-Members based on Patronage)
The “Residual Account” consists of Profit and reserves that are retained in the Cooperative and not distributed to Members or non-Members. The Residual Account is to be held at a Community Credit Union or other financial institution operating on cooperative principles.
“Residual” is equal to the sum of 1 point for each hour worked by each qualifying non-Member, as defined in 3.4 Rights of the Contractor, for the Cooperative up to a max of 650 hours. A non-Member’s Residuals must be converted to Patronage upon obtaining Membership with the Cooperative, as defined in 8.6 Conversion of Residuals to Patronage. The Cooperative may set a policy to provide further guidance and interpretation on these matters. Such policy will have the same force as this Operating Agreement and may only be implemented or amended on approval of the Members. Such policy will be made available in writing to Members and non-Members upon request.
“Residual Payouts” are an amount paid to a qualifying non-Member, as defined in 3.4 Rights of the Contractor, by the Cooperative on the basis of Residuals accrued by the non-Member. Residual Payouts are distributed from the Profits of the product the Residual was earned from. The Cooperative may set a policy to provide further guidance and interpretation on these matters. Such policy will have the same force as this Operating Agreement and may only be implemented or amended on approval of the Members. Such policy will be made available in writing to Members and non-Members upon request.
“Capital Contributions” are funds in the form of money or property paid into the Cooperative by Members. Capital Contributions may be allocated to the Collective Account or to the Member Account of the contributing Member.

8.2 Fiscal Year

The fiscal year of the Cooperative is January 1st through December 31st.

8.3 Allocations

Any Surplus will be credited to the Collective Account as necessary to bring the year’s contribution to the Collective Account up to 50% of the year’s combined Surplus. The Officers may credit less of the Surplus to the Collective Account without the need for a Member vote. The Officers may recommend more Surplus to be credited into the Collective Account, and such recommendation will be binding unless the Members veto such action by a Supermajority Vote. All other Surplus shall be allocated as Patronage Dividends in direct proportion to Patronage during the fiscal year.

Any Profit will be credited to the Residual Account.

Any Loss shall be allocated first to the Residual Account.

Any remaining Loss shall be allocated 75% to Member Accounts in direct proportion to Patronage during the fiscal year and 25% to the Collective Account, with the exception of remaining Losses occurring and/or carried over from the Cooperative’s first two fiscal years, which shall be allocated 100% to the Collective Account.

8.4 Patronage Dividends

Patronage Dividends will be made 20% in cash and 80% to each individual Member Account as written notice of allocation, unless different proportions are approved by the Members within eight-and-a-half months of the fiscal year’s close – however at least 20% must be distributed in cash. Exactly 20% of Patronage Dividends will be distributed in cash for so long as current Members have balances in their Member Accounts that have not been redeemed under 8.7 Periodic Redemption of Member Accounts. Officers may, at their sole discretion, choose not to allocate Patronage Dividends in any given year or to allocate Patronage Dividends on a more frequent basis than annually (e.g., quarterly) (subject to confirmation with tax advisors).

Patronage Dividends may be qualified or non-qualified written notices of allocation or a combination of the two.

8.5 Residual Payouts

The Cooperative may accrue a non-Member’s Residual Payout until the sum is equal to one hundred dollars ($100.00), at which time the Residual Payout shall be paid no later than ninety (90) days following the close of the fiscal year in which it was accrued.

Residual Payouts will be made in cash.

Officers may, in years when Patronage Dividends are not allocated, choose not to allocate Residual Payouts.

8.6 Conversion of Residuals to Patronage

Non-Member candidates will be required to convert Residuals to Patronage upon receiving Membership at a rate where 1 Patronage is equivalent to 1 Residual.

8.7 Periodic Redemption of Member Accounts

The Cooperative shall aim to pay out in cash to the Members all funds credited to their Member Accounts within 3 years of the date they were first credited; however, the Cooperative may delay such repayment beyond 3 years, if it determines that repaying within 3 years threatens the financial viability of the Cooperative.

As a general rule, written notices of allocation credited to the Member Accounts (including notices now converted to debt) will be paid out in the order in which they are credited, with the oldest paid out first. However, the Cooperative can decide to accelerate the repayment of debt owed to former Members on a case-by-case basis.

If the Cooperative does not have sufficient funds to pay out all funds credited to Member Accounts, then funds will be paid out proportionally.

8.8 Payment Rights Upon Membership Termination

When a Member is terminated for any reason, including a Member’s death, the amount in the Member Account will automatically be converted to debt owed to the former Member, or if necessary, to the Member’s estate, or to another assignee designated by the Member.
The Cooperative shall repay the debt within 3 years of the Member termination with zero interest for the first six months, and thereafter interest accruing at the discount rate – as set by the Federal Reserve Bank of San Francisco – on the amount outstanding at the end of each fiscal year. However, the Cooperative may delay such repayment beyond 3 years, if it determines that repaying within 3 years threatens the financial viability of the Cooperative.
If a Member is expelled, all or any portion of their Capital Contribution may not be returned.
The Cooperative, in settling a Member Account, shall have the right to offset any and all indebtedness of the former Member to the Cooperative.

8.9 Priority of Cash Payments

Notwithstanding anything else to the contrary in this Article, the Cooperative shall make cash payments in the following order of priority:

First, to pay Expenses and set aside reasonable reserves as determined by the Officers; and
Second, to pay cash proportions of Patronage Dividends to all eligible Members; and
Third, to pay the balance owed on any Member Accounts pursuant to 8.7 Periodic Redemption of Member Accounts; and
Fourth, to pay Residual Payouts pursuant to 8.5 Residual Payouts.

8.10 Unclaimed Equity Interests

Any proprietary interest in the Cooperative held by a Member or non-Member that would otherwise escheat to the State of California as unclaimed personal property shall instead become the property of the Cooperative if the Cooperative gives at least 60 days prior notice of the proposed transfer to the affected Member by: (1) email to the last email address of the Member shown on the Cooperative’s records; (2) first-class or second-class mail to the last address of the Member shown on the Cooperative’s records; and (3) by publication in a newspaper of general circulation in the county in which the Cooperative has its principal office. No property or funds shall become the property of the Cooperative under this Section if written notice objecting to the transfer is received by the Cooperative from the affected Member prior to the date of the proposed transfer.

Article 9 - Availability of Work and Financial Wind-Down

9.1 Financial Health Monitoring and Notification

The Treasurer, with the assistance of their fellow Members, shall endeavor to maintain the Cooperative’s ability to maintain the income of Members, non-Member candidates, and any contractors. In the event that the Cooperative appears to be at risk of failing to meet its financial commitments, the Treasurer shall inform the rest of the Cooperative as soon as possible.

In times where pay or hours have been reduced due to Financial Distress, the Treasurer shall be required to provide quarterly reports on progress made towards addressing the Cooperative’s financial issues.

9.2 Availability of Work

Where possible, projects should be chosen to maximize the availability of work for all Cooperative Members. With this said, full-time employment for all Cooperative Members may not always be available due to factors outside of the Cooperative’s control such as external funding.

9.3 Members with Part-time Hours

A Member with part-time hours is a worker who has achieved Member status at the Cooperative for whom there is not sufficient work and/or budget to guarantee full-time employment. These Members shall have all voting rights of full-time Members, but their base salary will be reduced proportionally to their part-time hours.

9.4 Furloughed Members

A furloughed Member is a worker who has achieved Member status at the Cooperative for whom there is not sufficient work and/or budget to guarantee any level of employment. Furloughed Members shall have all voting rights of full-time members, but will not draw a salary or accumulate hours in their Member Account until there is sufficient work for them.

9.5 Financial Distress

In cases where full-time work is not available for all Members, a combination of part-time hours, furloughing, and other cost-saving measures shall be taken to ensure the stability of the Cooperative.

The process of deciding upon these measures shall be handled with the normal procedure at Member Meetings.

9.6 Voting on Financial Distress Decisions

Decisions related to financial distress mitigation plans should subject to the process outlined in 5.1 Process of Decision-Making for All Worker-Owner Meetings, with the following exceptions:

If a Supermajority cannot be reached, a follow-up meeting must be planned. After this meeting, the decision may be put up to vote again by a Majority.
If a Majority cannot be reached, the Treasurer makes the final choice between the available decisions.

9.7 Financial Distress Process

In cases of financial distress, the following steps should be taken in order until the Cooperative regains financial stability:

Financial Distress Announcement:
The Treasurer shall notify the rest of Cooperative about the financial distress the organization is in, and prepare a presentation of the Cooperative’s finances no later than 1 business week from this announcement.
Call for voluntary pay cuts and/or furloughs
The Treasurer shall announce a call for Members and non-Member candidates to voluntarily reduce their own rate of pay in order to assist the Cooperative in meeting its financial obligations.
Members and non-Member candidates may also volunteer to be furloughed or reduced to part-time status
The treasurer must inform the rest of the Members of the size of the Cooperative’s deficit, and the amount of expense reduction that would be necessary to restore financial stability
Voluntary pay cuts, furloughs, and part-time hours shall be at each Member’s or non-Member candidate’s discretion, according to what they can personally afford.
Voluntary pay cuts, furloughs, and part-time statuses shall be ended as soon as the Cooperative is able to pay each Member their full rate of pay.
Decisions altering the rate of pay or contract termination of Contractors may not be discussed until the following phase
Mandatory pay cuts and/or furloughs
If the Members are not able to address the Cooperative’s deficit solely with voluntary measures, the Members must create and vote on a Financial Stability Plan that includes pay cuts, furloughs, layoffs of non-Member candidates, cancellation of contractor contracts (to the degree allowed within the terms of their contract) and/or other savings measures.
The Treasurer is responsible for creating and presenting a Financial Stability Plan, but any member may create and present an alternate plan if desired
Financial Stability Plans shall be presented and discussed at a Member Meeting.
Voting on Financial Stability Plans shall be binding. To give each Member time to consider this serious decision, a vote may not be conducted until 24 hours have passed since all Plans have been presented.
Bankruptcy and Dissolution
In cases where no Financial Stability Plan can be enacted that addresses the company’s debts, the Members may vote to declare bankruptcy and dissolve the Cooperative (11.1 Events of Dissolution).

Article 10 - Records

10.1 Maintenance of Records

The Cooperative shall securely maintain electronic records of all of the following:

A record of its Members, providing their names and addresses;
The original or a copy of its Articles of Incorporation and Bylaws and all amendments thereto;
Copies of the Cooperative’s federal, state and local income tax or information returns and reports, if any, for the six most recent taxable years;
Copies of the financial statements of the Cooperative, if any, for the six most recent Fiscal Years;
The books and records of the Cooperative as they relate to the internal affairs of the Cooperative for at least the current and past four fiscal years.

10.2 Delivery to Members and Inspection

Upon the request of a Member, for purposes reasonably related to the interest of that Person as a Member, the Cooperative shall promptly deliver to the Member, at the expense of the Cooperative, a copy of the information required to be maintained by 10.1 Maintenance of Records.

10.3 Reports

The Cooperative shall send or cause to be sent to each Member within 90 days after the end of each taxable year such information as is necessary to complete federal and state income tax or information returns.

10.4 Tax and Accounting Matters

The Cooperative’s taxable year and accounting method for income tax purposes shall be as determined under the Code and Treasury Regulations. The Members shall designate from time to time the “tax matters partner” within the meaning of section 6231(a)(7) of the US Code. The tax matters partner shall have all of the authority granted by the Code to a tax matters partner, provided that the tax matters partner shall keep each Member informed as to the status of any audit of the Cooperative’s tax affairs.

Article 11 - Dissolution and Liquidation

11.1 Events of Dissolution

Except as otherwise provided in this Agreement, the Cooperative shall be dissolved and its affairs shall be wound up upon the happening of the first to occur of the following:

Upon the separate vote or consent to dissolve the Cooperative of Supermajority of the Members where each Member shall have such voting rights as are provided for in 5.1 Process of Decision-Making for All Worker-Owner Meetings; or
Upon the entry of a decree of judicial dissolution pursuant to California Corporations Code section 17707.03.

11.2 Effect of Dissolution

Upon any dissolution of the Cooperative under this Agreement or the Act, except as otherwise provided in this Agreement, the continuing operation of the Cooperative’s business shall be confined to those activities reasonably necessary to wind up the Cooperative’s affairs, discharge its obligations, and liquidate its assets and properties in a businesslike manner. Upon the occurrence of an event of dissolution, unless the business of the Cooperative is continued as provided herein, the Cooperative shall file a Certificate of Cancellation under California Corporations Code section 17707.02.

11.3 Liquidation and Termination

If the Cooperative is dissolved, then an accounting of the Cooperative’s assets, liabilities and operations through the last day of the month in which the dissolution occurs shall be made, and the affairs of the Cooperative shall thereafter be promptly wound up and terminated.

The Members shall designate a liquidating trustee of the Cooperative. The liquidating trustee will be responsible for winding up and terminating the affairs of the Cooperative and will determine all matters in connection therewith (including, without limitation, the arrangements to be made with creditors, to what extent and under what terms the assets of the Cooperative are to be sold, and the amount or necessity of cash reserves to cover contingent liabilities) as the liquidating trustee deems advisable and proper; provided, however, that all decisions of the liquidating trustee will be made in accordance with the fiduciary duty owed by the liquidating trustee to the Cooperative and each of the Members. The liquidating trustee will liquidate the assets of the Cooperative as promptly as is consistent with obtaining the fair market value thereof. The proceeds therefrom, to the extent sufficient therefor, will be applied and distributed in the following order:

To the payment and discharge of all of the Cooperative’s debts and liabilities to creditors (including Members) in the order of priority as provided by law, other than liabilities for distributions to Members; and
The balance, if any, shall be distributed to one or more organizations as the Members shall select and approve with a Supermajority vote at the time of dissolution.

After all of the assets of the Cooperative have been distributed, the Cooperative shall terminate.

11.4 Certificate of Cancellation

Upon the completion of the winding up of the affairs of the Cooperative, the Cooperative shall file with the California Secretary of State a certificate of cancellation in accordance with California Corporations Code section 17707.02.

Article 12 - Indemnification

12.1 Indemnification

The Cooperative shall have the power to indemnify its Officers, Members, employees, and agents to the fullest extent permitted by the law.

Article 13 - General Provisions

13.1 Amendments

Amendments to this Agreement may be proposed by any Member. A proposed amendment will be adopted and become effective as an amendment only on the approval of Supermajority vote of the Members.

13.2 Governing Law

This Agreement and the rights and obligations of the parties under it are governed by and interpreted in accordance with the laws of the State of California (without regard to principles of conflicts of law).

13.3 Entire Agreement; Modification

This Agreement constitutes the full Operating Agreement of the Cooperative. No agreements, understandings, restrictions, representations or warranties not incorporated in this agreement or the Articles or Organizations may contradict or supersede it.

13.4 Further Effect

The parties agree to execute other documents reasonably necessary to further effect and evidence the terms of this Agreement, as long as the terms and provisions of the other documents are fully consistent with the terms of this Agreement.

13.5 Severability

If any term or provision of this Agreement is held to be void or unenforceable, that term or provision will be severed from this Agreement, the balance of the Agreement will survive, and the balance of this Agreement will be reasonably construed to carry out the intent of the parties as evidenced by the terms of this Agreement.