Section 1. Transfer of Cooperative Assets. The Cooperative may not sell, mortgage, lease or otherwise dispose of or encumber all or any substantial portion of its property unless such sale, mortgage, lease or other disposition or encumbrance is authorized at a meeting of the members thereof by the affirmative vote of not less than two-thirds of all the members of the Cooperative, and unless the notice of such proposed sale, mortgage, lease or other disposition or encumbrance shall have been contained in the notice of the meeting; provided, however, that notwithstanding anything herein contained, the Board of Trustees of the Cooperative, without authorization by the members thereof, shall have full power and authority upon an affirmative vote of not less than two-thirds of the Board of Trustees to authorize the execution and delivery of a lease-leaseback transaction only where the Board of Trustees determines that such transaction will not impair the ability of the cooperative to use the assets as needed to serve the members; provided, however, that such transactions shall apply only to the physical assets of a cooperative and shall not be used to effect a sale or other disposition of the cooperative business entity itself; and further, shall have full power and authority to authorize the execution and delivery of a mortgage or mortgages or a deed or deeds of trust upon, or the pledging or encumbering of any or all of the property, assets, rights, privileges, licenses, franchises and permits of the Cooperative, whether acquired or to be acquired, and wherever situated, as well as the revenues and income therefrom, all upon such terms and conditions as the Board of Trustees shall determine, to secure any indebtedness of the Cooperative to the United States of America or any instrumentality or agency thereof, or to any corporation or financial institution authorized to assist in the credit and financial needs of the rural electric cooperatives.
“Substantial portion” as used in this Section shall mean 10% of the fair market value of the Cooperative’s total properties and assets.
Section 2. Merger or Consolidation. The Cooperative may consolidate or merge only with an Entity operating on a cooperative basis that provides a cooperative Service (“Consolidate or Merge”). To Consolidate or Merge, the Cooperative must comply with this Bylaw.
A. Board Approval. To Consolidate or Merge, the Board must approve an agreement or plan to Consolidate or Merge (“Consolidation or Merger Agreement”) stating the:
- terms and conditions of the Consolidation or Merger;
- name of each Entity Consolidating or Merging with the Cooperative;
- name of the new or surviving Consolidated or Merged Entity (“New Entity”);
- manner and basis, if any, of converting memberships or ownership rights of each Consolidating or Merging Entity into memberships or ownership rights of, or payments from, the New Entity;
- number of trustees of the New Entity, which must equal or exceed five;
- date of the New Entity’s annual meeting;
- names of New Entity trustees who will serve until the New Entity’s first annual meeting; and
- other information required by Law.
B. Member Approval. To Consolidate or Merge:
- After the Board approves a Consolidation or Merger Agreement, two-thirds of the Members voting in person at any Annual Meeting or special meeting thereof, must approve the Consolidation or Merger Agreement.
- Notice. The Cooperative shall notify Trustees of a Board Meeting, and Members of an Annual Meeting or special meeting thereof, at which Trustees or Members may consider a Consolidation or Merger Agreement. This notice and any material soliciting Member approval of the Consolidation or Merger Agreement must contain, or be accompanied by, a summary or copy of the Consolidation or Merger Agreement and the New Entity’s Articles of Incorporation and Bylaws.