Article VII: Non-Profit Operations

Section 1. Interest or Dividends on Capital Prohibited

The Cooperative shall at all times be operated on a non-profit basis for the mutual benefit of its patrons. No interest or dividends shall be paid or payable by the Cooperative on any capital furnished by its patrons.

Section 2. Patronage Capital in Connection with Furnishing Electric Energy

In the furnishing of electric energy the Cooperative's operations shall be so conducted that all patrons will through their patronage furnish capital for the Cooperative. In order to induce patronage and to assure that the Cooperative will operate on a non-profit basis the Cooperative is obligated to account on a patronage basis to all its patrons in an amount equal to the Cooperative’s federal taxable income with respect to the furnishing of electric energy (computed before the reduction for patronage dividends paid by the Cooperative and after reduction for any losses to be taken into account in accordance with Section 3 of this Article VII). All such amounts in excess of the Cooperative's federal taxable income at the moment of receipt by the Cooperative are received with the understanding that they are furnished by the patrons as Capital. The Cooperative is obligated to pay by credits to a capital account for each patron all such amounts in excess of its federal taxable income. The books and records of the Cooperative shall be set up and kept in such a manner that at the end of each fiscal year the amount of capital, if any, so furnished by each patron is clearly reflected and credited in an appropriate record to the capital account of each patron, and the Cooperative shall within a reasonable time after close of the fiscal year notify each patron of the amount of capital so credited to his account. All such amounts credited to the capital account of any patron shall have the same status as though they had been paid to the patron in cash in pursuance of a legal obligation to do so and the patron had then furnished the Cooperative corresponding amounts for capital. All other amounts received by the Cooperative from its operations in excess of its federal taxable income shall, insofar as permitted by law, be:

1. Used to offset any losses incurred during the current or any prior fiscal year; and
2. To the extent not needed for that purpose, allocated to its patrons on a patronage basis and any amount so allocated shall be included as a part of the capital credited to the accounts of patrons, as herein provided.

In the event of dissolution or liquidation of the Cooperative, after all outstanding indebtedness of the Cooperative shall have been paid, outstanding capital credits shall be retired without priority on a prorated basis before any payments are made on account of property rights of member. If, at any time prior to dissolution or liquidation, the Board of Directors shall determine that the financial condition of the Cooperative will not be impaired thereby, the capital then credited to patrons' accounts may be retired in full or in part. After May 25, 1995, the Board of Directors shall 12 13 determine the method, basis, priority, and order of retirement, if any, for all amounts heretofore and hereafter furnished as capital.

1. Establish a method for determining the power supply portion of capital credited to each patron for each applicable fiscal year;
2. Provide for a separate identification on the Cooperative's books of the power supply portion of capital credited to the Cooperative's patrons;
3. Provide for appropriate notification to patrons with respect to the power supply portion of capital credited to their accounts; and

Notwithstanding any other provision of the Bylaws, the Board of Directors, at its discretion, shall have the power at any time upon the death of any patron who is a natural person, if the legal representatives of his estate shall request in writing that the capital credited to any such patron be returned prior to the time such capital would otherwise be retired under the provisions of these Bylaws, to retire capital credited to any such patron immediately upon such terms and conditions as the Board of Directors, acting under policies of general applications, and the legal representatives of such patron's estate shall agree upon; provided, however, that the financial condition of the Cooperative will not be impaired thereby.

The patrons of the Cooperative, by dealing with the Cooperative, acknowledge that the terms and provisions of the Article of Incorporation and Bylaws shall constitute and be a contract between the Cooperative and each patron, and both the Cooperative and the patrons are bound by such contract, as fully as though each patron had individually signed a separate instrument containing such terms and provision. The provisions of this article of the Bylaws shall be called to the attention of each patron of the Cooperative by posting in a conspicuous place in the Cooperative's office.

Section 3.

Notwithstanding any provisions herein contained to the contrary, any member, former member or customer who fails to claim any capital credits, patronage refunds, utility deposits, membership fees, or account balances within two years after payment thereof has been made available to such person, shall have made an irrevocable assignment and gift to the Cooperative of such unclaimed money. Upon expiration of at least two years after availability of such money, the Cooperative shall give at least sixty days notification by publishing in a newspaper of general circulation published in the county within the Cooperative's service area, of the last known address or last service location of the member, former member or customer. Such notice shall contain the owner's name approximate amount, the type of owner's interest, and that if not duly claimed within sixty days of said notice, the unclaimed money shall be deemed assigned and donated to the Cooperative. If no provable claim shall have been filed within sixty days after the publication of said notice, the cooperative shall, after offsetting any outstanding amounts due and owing the Cooperative from said member, former member or customer, thereafter treat the net unclaimed amount as donated capital of the Cooperative, included in the fiscal year in which the sixtieth day after publishing notice falls. After first treating the unclaimed money of any member, former member, or customer as donated capital, any future unclaimed money of that member, former member, or customer shall be treated as donated capital without notice.